United States ex rel. Duxbury v. Ortho Biotech Prods., L.P.

United States ex rel. Duxbury v. Ortho Biotech Prods., L.P.

Opinion

 [*15]  TORRUELLA, Circuit Judge. This appeal concerns the qui tam provisions of the False Claims Act (the  [**2] "FCA"), 31 U.S.C. § 3730, which allow whistleblowers (called "relators") to bring certain fraud claims on behalf of the United States. ² The relators in this case, the plaintiffs-appellants Mark Duxbury and Dean McClellan (together, the "Relators"),  [*16]  alleged that defendant-appellee Ortho Biotech Products, L.P. ("OBP") violated the FCA in unlawfully promoting the sale of its drug Procrit. The district court dismissed all of the Relators' claims, and this appeal followed. After careful consideration, we affirm in part and reverse in part.

I. Background

A. The FCA

To provide context, we start with the statutory scheme. ] The FCA contains qui tam provisions that "supplement federal law enforcement resources by encouraging  [**3] private citizens to uncover fraud on the government." Rost, 507 F.3d at 727. The qui tam provisions permit whistleblowers (known as relators) to bring certain fraud claims on behalf of the United States; in return, "[a] private relator is entitled to a portion of any proceeds from the suit, whether the United States intervenes as an active participant in the action or not." Id. at 727.

] "The qui tam mechanism has historically been susceptible to abuse, however, by 'parasitic' relators who bring FCA damages claims based on information within the public domain or that the relator did not otherwise uncover." Id. Accordingly, Congress has amended the FCA several times "to walk a fine line between encouraging whistle-blowing and discouraging opportunistic behavior." See United States ex rel. S. Prawer v. Fleet Bank of Me., 24 F.3d 320, 324-26 (1st Cir. 1994) (quoting United States ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 651, 304 U.S. App. D.C. 347 (D.C. Cir. 1994) (detailing the history of such amendments to the FCA's qui tam provisions)).

As a result of these amendments, the FCA includes jurisdictional bars that limit a district court's subject matter jurisdiction over qui tam actions. Two of  [**4] these bars are relevant to this action. The first, known as the "public disclosure" bar, provides that a court does not have subject matter jurisdiction over any qui tam action that is "based upon the public disclosure of allegations or transactions" concerning the alleged fraud, unless, among other things, "the person bringing the action is an original source of the information." 31 U.S.C. § 3730(e)(4)(A). A relator qualifies as an "original source" if (1) she has "direct and independent knowledge" of the information supporting her claims and (2) she "provided the information to the Government before filing an action." Id. § 3730(e)(4)(B). The second, known as the "first-to-file" bar, provides that when a potential relator brings an FCA action, "no person other than the Government may intervene or bring a related action based on the facts underlying the pending action." Id. § 3730(b)(5).

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