Richard Mark v. Shamir USA, Inc. ( 2022 )

FILED
NOT FOR PUBLICATION
FEB 3 2022
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
RICHARD MARK, Relator; ex rel United No. 20-56280
States of America,
D.C. No.
Plaintiff-Appellant, 2:18-cv-09426-RGK-PLA
and
MEMORANDUM*
UNITED STATES OF AMERICA; et al.,
Plaintiffs,
v.
SHAMIR USA, INC.; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Argued and Submitted January 13, 2022
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: RAWLINSON and WATFORD, Circuit Judges, and RAKOFF,** District
Judge.
Appellant Richard Mark, as qui tam Relator and on behalf of the United States
Government and various states and municipalities, brought an action under the False
Claims Act (FCA), the Anti-Kickback Statute (AKS), and related state laws1 against
Shamir USA, Inc., Shamir Optical Industry, Ltd., Shamir Optica Holdings A.C.S.
Ltd., and Shamir Insight, Inc. (collectively “Shamir”).
Shamir develops, manufactures, and markets progressive lenses. Mark,
Shamir’s former Key Account Manager for North America, alleged that Shamir,
through its reward programs, violated the FCA and AKS “by submitting [and causing
others to submit] fraudulent bills to the Government . . . as a result of kickbacks
provided to eyecare professionals (ECPs).” Specifically, Mark alleged that “Shamir
knew that [Government] insurance plans . . . reimbursed optical lenses based on the
purported invoice price.” With this knowledge, Shamir induced ECPs to purchase
Shamir’s products by offering discounts and rebates to ECPs to lower the prices of
Shamir’s products, and subsequently providing ECPs with invoices containing
**
The Honorable Jed S. Rakoff, United States District Judge for the
Southern District of New York, sitting by designation.
1
Because the state law claims are not at issue in this appeal, we focus on the
Government’s payments.
2
inflated prices. This scheme resulted in the Government, rather than Shamir, paying
for the ECP discounts.
The district court held that Mark’s allegations were barred by the FCA’s public
disclosure bar because the allegations were substantially similar to promotional
articles Shamir publicly disclosed through optical industry publications. Concluding
that Mark did not qualify as an “original source,” the court granted Shamir’s motion
to dismiss and denied leave to amend. Mark timely appealed.
We review dismissal of claims under the FCA de novo. See United States ex
rel. Hendow v. Univ. of Phx., 461 F.3d 1166, 1170 (9th Cir. 2006). We assume the
facts as alleged are true, and examine only whether relator’s allegations support a
cause of action under the theories presented. See id. Whether a particular disclosure
triggers the public disclosure bar is a mixed question of law and fact that we review
de novo. See United States ex rel. Found. Aiding The Elderly v. Horizon W., Inc., 265
F.3d 1011, 1013 (9th Cir. 2001) (citation omitted), amended on denial of reh’g, 275
F.3d 1189 (9th Cir. 2001).
The AKS prohibits the knowing and willful solicitation, receipt, offer or
payment of any remuneration in return for referral to a health care provider; or
arranging the use of any health service, facility, or item. See 42 U.S.C. § 1320a-7b(b);
see also Hanlester Network v. Shalala, 51 F.3d 1390, 1394 (9th Cir. 1995). The
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payment of illegal kickbacks is a violation of the FCA. See 42 U.S.C.§ 1320a-7b(g)
(referencing the False Claims Act).
The FCA permits relators to bring an action on behalf of the government
“against companies that knowingly present, or cause to be presented a false or
fraudulent claim for payment or approval to the federal government.” United States
ex rel. Solis v. Millennium Pharms., Inc., 885 F.3d 623, 625–26 (9th Cir. 2018)
(citations, alterations, footnote reference, and internal quotation marks omitted). “The
statute, however, deprives federal courts of subject matter jurisdiction over FCA suits
when the alleged fraud has already been publicly disclosed, unless the relator is
deemed an original source.” Id. at 626 (citation omitted). The public disclosure bar
is triggered if the disclosure was “public[ly]” disseminated through news media and
“the relator’s action is based upon the allegations or transactions publicly disclosed.”
Id. (citation and internal quotation marks omitted).
As examples of Shamir’s public disclosure, the district court referenced one
announcement that stated: “Vision West members are able to offer their patients the
latest in progressive lens technology, and they automatically receive rewards back,
making it a win-win for everyone,” and another announcement “describing [a]
program whereby customers who use a Shamir affiliated laboratory would receive
personalized YouTube channels designed in part to promote Shamir lenses.”
4
From these announcements, the district court concluded that “[t]he only
available conclusion from the publicly disclosed facts is that rebates through the
[rewards] program were not deducted from any insurance reimbursement.” We
disagree. We have explained the dangers of allowing a generalized description of a
program that could give rise to fraud in public documents to prevent the pursuit of
legitimate fraud:
Allowing a public document describing “problems”—or even some
generalized fraud . . . to bar all FCA suits identifying specific instances
of fraud . . . would deprive the Government of information that could
lead to recovery of misspent Government funds and prevention of further
fraud.
United States ex rel. Mateski v. Raytheon Co., 816 F.3d 565, 577 (9th Cir. 2016).
Even assuming that the websites on which the announcements were made constitute
news media, the information disseminated was so innocuous that there was no public
disclosure of a transaction or allegation of fraud in the first instance, as required under
the FCA. Accordingly, the district court erred in applying the public disclosure bar.
See id. at 580. In light of this determination, we need not address the original source
issue or denial of leave to amend. See Simeonov v. Ashcroft, 371 F.3d 532, 538 (9th
Cir. 2004).
REVERSED AND REMANDED.
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