United States ex rel. Duxbury v. Ortho Biotech Prods., L.P.
| Decision Date | 12 June 2013 |
| Docket Number | No. 12–2141.,12–2141. |
| Citation | 719 F.3d 31 |
| Parties | UNITED STATES, ex rel. Chinyelu DUXBURY, Relator, Appellant, v. ORTHO BIOTECH PRODUCTS, L.P., Defendant, Appellee. |
| Court | U.S. Court of Appeals — First Circuit |
OPINION TEXT STARTS HERE
Jan R. Schlichtmann for appellant.
Ethan M. Posner, with whom Patrick S. Davies, Michael M. Maya, and Covington & Burling LLP, were on brief, for appellee.
Before LYNCH, Chief Judge, TORRUELLA and KAYATTA, Circuit Judges.
This is the second appeal to reach this court in the decade-long litigation of relator Mark Duxbury's qui tam action against defendant Ortho Biotech Products, L.P. (“OBP”) for alleged violations of the federal False Claims Acts (“FCA”), 31 U.S.C. §§ 3729–3733, arising from OBP's marketing of the pharmaceutical drug Procrit. Following Mark Duxbury's death in October 2009, the district court permitted his surviving spouse, Chinyelu Duxbury, to substitute herself as relator.
Duxbury's amended complaint alleged three separate violations of the FCA arising from OBP's efforts to promote Procrit, an FDA-approved medication for the treatment of certain types of anemia, from approximately 1992 to 2003.1 The parties voluntarily dismissed Count II of the amended complaint prior to Duxbury's initial appeal. Thereafter, in United States ex rel. Duxbury v. Ortho Biotech Products, L.P. (Duxbury I), 579 F.3d 13 (1st Cir.2009), we affirmed the district court's dismissal of Count III, and certain portions of Count I, for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). Id. at 34. We reversed and remanded, however, as to its determination that Duxbury's “kickback” claims from 1992 to 1998 in Count I of the amended complaint were not pled with sufficient particularity under Fed.R.Civ.P. 9(b). Id. at 32.
On remand, the district court sensibly imposed limitations on the scope of Duxbury's discovery for these claims based upon its reading of Duxbury I, the FCA's statute of limitations, and the FCA provision limiting the court's subject matter jurisdiction to those claims as to which a relator has “direct and independent knowledge,” 31 U.S.C. § 3730(e)(4)(A)–(B) (2006).2See United States ex rel. Duxbury v. Ortho Biotech Prods., L.P., Civil No. 03–12189–RWZ, 2010 WL 3810858 (D.Mass. Sept. 27, 2010). At the conclusion of discovery, the parties entered a joint stipulation stating that Duxbury had not identified any admissible evidence to support the remaining Count I claims. The district court granted OBP's motion for summary judgment on that basis. United States ex rel. Duxbury v. Ortho Biotech Prods., L.P., Civil No. 03–12189–RWZ, 2012 WL 3292870 (D.Mass. Aug. 13, 2012).
Duxbury now appeals, saying that the district court improperly limited the Count I kickback claims as a matter of fact and of law. We affirm.
The relevant FCA provisions, facts, and procedural history in this case are set out in some detail in Duxbury I, 579 F.3d at 16–21, and in the district court's numerous prior orders and opinions, see, e.g., United States ex rel. Duxbury v. Ortho Biotech Prods., L.P., 551 F.Supp.2d 100, 102–04 (D.Mass.2008). We narrow our present discussion to the information central to this appeal.
The FCA's qui tam provisions authorize private persons (called “relators”) to bring civil enforcement actions on behalf of the United States against any person alleged to be in violation of section 3729 of the Act. 31 U.S.C. § 3730(b). Qui tam complaints are initially filed under seal, and relators must allow the government sixty days to intervene and assume primary responsibility for prosecuting the action. Id. § 3730(b)(2)–(3), (c). If the government declines to intervene, a relator may continue to pursue the action on the government's behalf. Id. § 3730(b)(4). “Either way, the relator is eligible to collect a portion of any damages awarded.” United States ex rel. Ondis v. City of Woonsocket, 587 F.3d 49, 53 (1st Cir.2009).
“Although this financial incentive encourages would-be relators to expose fraud,” United States ex rel. Poteet v. Bahler Med., Inc., 619 F.3d 104, 107 (1st Cir.2010), it also attracts “ ‘parasitic’ relators who bring FCA damages claims based on information within the public domain or that the relator did not otherwise discover,” United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720, 727 (1st Cir.2007) (quoting United States ex rel. S. Prawer & Co. v. Fleet Bank of Me., 24 F.3d 320, 324 (1st Cir.1994)), overruled on other grounds by Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662, 128 S.Ct. 2123, 170 L.Ed.2d 1030 (2008). “Accordingly, Congress has amended the FCA several times ‘to walk a fine line between encouraging whistle-blowing and discouraging opportunistic behavior.’ ” Duxbury I, 579 F.3d at 16 (quoting S. Prawer, 24 F.3d at 326).
To that end, the FCA's “public disclosure bar” provides that “[n]o court shall have jurisdiction” over a qui tam action that is based upon a prior “public disclosure of allegations or transactions” found in any of a number of statutorily specified sources. 31 U.S.C. § 3730(e)(4)(A) (2006); see Poteet, 619 F.3d at 107. There is, however, an exception to the “public disclosure bar” for persons deemed an “original source” of the information in question. 31 U.S.C. § 3730(e)(4)(A) (2006). To qualify as an “original source,” a relator must (1) have “direct and independent” knowledge of the information supporting her claims that (2) she “provided ... to the Government before filing an action.” Id. § 3730(e)(4)(B) (2006); see Duxbury I, 579 F.3d at 16.
In 1992, OBP hired Mark Duxbury as a Product Specialist in its Western Division Oncology sales group. In that capacity, and later as Regional Key Account Specialist, Duxbury was responsible for marketing Procrit to health care providers in the western United States, particularly in the state of Washington. On July 20, 1998, OBP fired Duxbury for cause. See Duxbury v. Ortho Biotech, Inc., No. 52348–1–I, 2004 WL 938588, at *1–2 .
Duxbury's complaint, filed under seal in the District of Massachusetts on November 6, 2003, and amended in October 2006, alleged that OBP “engaged in a common nationwide scheme” to induce Medicare providers to submit false and fraudulent reimbursement claims for Procrit. The action was unsealed on July 12, 2005, after the United States declined to intervene following investigation. The amended complaint contained three counts, only the first of which is involved in this appeal.3
Count I of the amended complaint alleged that from “December 1992 to the present[ 4],” OBP offered “kickbacks” to healthcare providers “across the United States” to encourage them to prescribe Procrit to their patients. “These kickbacks included free Procrit, off-invoice discounts and cash in the form of rebates, consulting fees, educational grants, payments to participate in studies or trials, and advisory board honoraria.” The amended complaint further alleged that these purported kickbacks “caused providers and hospitals to submit false claims for payment to Medicare for Procrit” in a number of ways.5
On January 17, 2007, OBP filed its motion to dismiss the amended complaint with prejudice, which the district court granted in full on January 28, 2008. Duxbury, 551 F.Supp.2d at 116. As to Count I, the district court found that (1) all of the amended complaint's kickback allegations had been publicly disclosed in an earlier suit, id. at 107–08; (2) Duxbury “qualifie [d] as an original source only with regard to allegations concerning the 1992–1998 time period,” id. at 109 (citing Rockwell Int'l Corp. v. United States, 549 U.S. 457, 473–76, 127 S.Ct. 1397, 167 L.Ed.2d 190 (2007)); and (3) none of the 1992 to 1998 kickback allegations had been pled with sufficient particularity under Fed.R.Civ.P. 9(b), id. at 114–116.
On February 29, 2008, the district court denied Duxbury's motion for reconsideration and he appealed.
In Duxbury I, 579 F.3d 13, this court largely affirmed the district court's dismissal of the amended complaint. Like the district court, we found that the kickback allegations supporting Count I had been publicly disclosed in an earlier suit, id. at 21, and that Duxbury qualified as an “original source” only for those of his claims arising from 1992 to 1998 ( i.e., during his employment at OBP), id. at 28, 32. But we reversed the district court's determination that the allegations supporting Duxbury's claims from this period were not pled with sufficient particularity under Rule 9(b) in the amended complaint. Id. at 29–32.
The reasons for that determination are stated in our opinion. In short, we concluded that Duxbury had done more than merely “suggest fraud was possible.” Id. at 29–30 (quoting Rost, 507 F.3d at 733). Rather, in paragraph 211 of the amended complaint, subsections a-h, Duxbury “set[ ] forth allegations of kickbacks provided by OBP that resulted in the submission of false claims by eight healthcare providers in the Western United States.” Id. at 30. These providers, all located in the state of Washington, included:
(1) St. Joseph's Hospital in Tacoma, Washington; (2) Rainier Oncology of Puyallup, Washington; (3) Memorial Clinic in Olympia, Washington; (4) Western Washington Cancer Treatment Center; (5) Mid Columbia Kidney Center in Kennewick, Washington; (6) St. Peter's Hospital in Olympia, Washington; (7) Memorial Clinic Oncology Group in Washington; (8) Swedish Hospital in Seattle, Washington.
Id. (citations omitted). As to each provider, the amended complaint asserted that paragraph 211's allegations were based upon Duxbury's “personal knowledge, observation and direct communications with the accounts,” R.App. 60, and furnished specific “information as to the dates and amounts of the false claims filed by these providers with the Medicare program,” Duxbury I, 579 F.3d at 30.
With respect to the eight medical providers in question, the amended complaint had reasonably set forth “the who, what,...
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