United States v. Allergan, Inc.

• Decision Date: 25 August 2022
• Docket Number: 21-15420
• Citation: 46 F.4th 991
• Parties: UNITED STATES of America; State of California; State of Colorado; State of Connecticut ; State of Delaware; State of Florida ; State of Georgia; State of Hawaii; State of Illinois ; State of Indiana; State of Iowa; State of Louisiana; State of Maryland; State of Michigan ; State of Minnesota ; State of Montana; State of Nevada ; State of New Jersey ; State of New Mexico; State of New York; State of North Carolina; State of Oklahoma; State of Rhode Island; State of Tennessee; State of Texas; State of Vermont; State of Washington ; Commonwealth of Massachusetts; Commonwealth of Virginia ; District of Columbia, ex rel Zachary Silbersher, Relator, Plaintiffs-Appellees, v. ALLERGAN, INC.; Allergan USA, Inc.; Allergan Sales, LLC ; Forest Laboratories Holdings, Ltd.; Adamas Pharma LLC; Adamas Pharmaceuticals, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

46 F.4th 991

UNITED STATES of America; State of California; State of Colorado; State of Connecticut ; State of Delaware; State of Florida ; State of Georgia; State of Hawaii; State of Illinois ; State of Indiana; State of Iowa; State of Louisiana; State of Maryland; State of Michigan ; State of Minnesota ; State of Montana; State of Nevada ; State of New Jersey ; State of New Mexico; State of New York; State of North Carolina; State of Oklahoma; State of Rhode Island; State of Tennessee; State of Texas; State of Vermont; State of Washington ; Commonwealth of Massachusetts; Commonwealth of Virginia ; District of Columbia, ex rel Zachary Silbersher, Relator, Plaintiffs-Appellees,
v.
ALLERGAN, INC.; Allergan USA, Inc.; Allergan Sales, LLC ; Forest Laboratories Holdings, Ltd.; Adamas Pharma LLC; Adamas Pharmaceuticals, Inc., Defendants-Appellants.

No. 21-15420

United States Court of Appeals, Ninth Circuit.

Argued and Submitted January 10, 2022 San Francisco, California
Filed August 25, 2022

Erin E. Murphy (argued), M. Sean Royall, Olivia Adendorff, Kasdin M. Mitchell, and James Y. Xi, Kirkland & Ellis LLP, Washington, D.C., for Defendants-Appellants Allergan, Inc.; Allergan USA, Inc.; Allergan Sales, LLC; and Forest Laboratories Holdings, Ltd.

Andrew Hoffman II (argued), Matthew Holian, Courtney Saleski, and Lianna Bash, DLA Piper LLP (U.S.), Los Angeles, California, for Defendants-Appellants Adamas Pharma LLC, and Adamas Pharmaceuticals, Inc.

Tejinder Singh (argued), Goldstein & Russell P.C., Bethesda, Maryland; Nicomedes Sy Herrera and Bret D. Hembd, Herrera Kennedy LLP, Oakland, California; Warren T. Burns and Christopher J. Cormier, Burns Charest LLP, Dallas, Texas; for Plaintiffs-Appellees.

Jeffrey S. Bucholtz and Jeremy M. Bylund, King & Spalding LLP, Washington, D.C.; Andrew R. Varcoe and Paul V. Lettow, U.S. Chamber Litigation Center, Washington, D.C.; James C. Stansel and Melissa B. Kimmel, Pharmaceutical Research and Manufacturers of America; for Amici Curiae Chamber of Commerce of the United States of America and Pharmaceutical Research and Manufacturers of America.

Gordon D. Todd, Kimberly A. Leaman, Christopher S. Ross, Alaric R. Smith, and Katy (Yin Yee) Ho, Sidley Austin LLP, Washington, D.C.; Jack E. Pace III, Peter J. Carney, and Kevin M. Bolan, White & Case LLP, New York, New York; for Amici Curiae Johnson & Johnson and BTG International Ltd.

Justin T. Berger, Cotchett Pitre & McCarthy LLP, Burlingame, California; Jacklyn DeMar, Taxpayers Against Fraud Education Fund, Washington, D.C.; for Amicus Curiae Taxpayers Against Fraud Education Fund.

Alexandra H. Moss, Public Interest Patent Law Institute, La Quinta, California, for Amicus Curiae Public Interest Patent Law Institute.

Before: Ronald M. Gould, Mark J. Bennett, and Ryan D. Nelson, Circuit Judges.

GOULD, Circuit Judge:

46 F.4th 993

Defendant-Appellants ("Appellants") challenge the district court's denial of their motion to dismiss relator Zachary Silbersher's qui tam action. In his qui tam action, Silbersher alleged that Appellants violated the False Claims Act (FCA). Silbersher contended that Appellants fraudulently obtained patents on two drugs to combat Alzheimer's disease and, by virtue of these fraudulent patents, prevented generic drug competitors from entering the market. According to Silbersher, preventing generic drug competitors from entering the market permitted Appellants to charge Medicare inflated prices for the two drugs. We have jurisdiction pursuant to 28 U.S.C. § 1292(b), and we reverse the district court's denial of Appellants' motion to dismiss and remand.

I. BACKGROUND

A. The FCA

The FCA creates civil liability for "any person who (A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval; [or] (B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim."

46 F.4th 994

31 U.S.C. § 3729(a)(1). A private person, known as a qui tam relator, may bring a civil action under the FCA in the name of the U.S. government. 31 U.S.C. § 3730(b). The government may proceed with the action or decline to take over the action; if the government declines, then the relator can still pursue the action.¹ Id. § 3730(b)(4). The FCA incentivizes whistleblowers to come forward by offering successful relators up to thirty percent of the recovery. Id. § 3730(d).

"The FCA was enacted in 1863 with the principal goal of stopping the massive frauds perpetrated by large private contractors during the Civil War." Vt. Agency of Nat. Res. v. United States ex rel. Stevens , 529 U.S. 765, 781, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000) (cleaned up). When it was originally enacted, "the FCA placed no restriction on the sources from which a qui tam relator could acquire information on which to base a lawsuit." Schindler Elevator Corp. v. United States ex rel. Kirk , 563 U.S. 401, 412, 131 S.Ct. 1885, 179 L.Ed.2d 825 (2011).

The current version of the FCA, though, provides limits on who can bring a qui tam action and the sources of information upon which they can base their suit. See United States ex rel. Bennett v. Biotronik, Inc. , 876 F.3d 1011, 1013 (9th Cir. 2017) ("[T]he right to bring qui tam suits is not absolute," and "even if the Government does not intervene and take over the action, the FCA still does not allow every relator to bring a suit, but rather contains a series of ‘bars’ to such suit."). These "bars" to suit are intended to prevent "parasitic" or "opportunistic" qui tam actions. Schindler , 563 U.S. at 412–13, 131 S.Ct. 1885. Here, the parties dispute the proper interpretation of the FCA's public disclosure bar.

We have previously noted that the public disclosure bar is triggered when: "(1) the disclosure at issue occurred through one of the channels specified in the statute; (2) the disclosure was ‘public’; and (3) the relator's action is ‘based upon’ the allegations or transactions publicly disclosed." United States ex rel. Solis v. Millennium Pharms., Inc. , 885 F.3d 623, 626 (9th Cir. 2018) (analyzing the 1986 version of the public disclosure bar). The public disclosure bar seeks to strike a balance between "encourag[ing] suits by whistle-blowers with genuinely valuable information, while discouraging litigation by plaintiffs who have no significant information of their own to contribute." United States ex rel. Mateski v....