United States Ex Rel. Osheroff v. Humana, Inc.

Case: 13-15278 Date Filed: 01/16/2015 Page: 1 of 21
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-15278
________________________
D.C. Docket No. 1:10-cv-24486-RNS
UNITED STATES OF AMERICA
ex rel. Marc Osheroff,
Plaintiff - Appellant,
versus
HUMANA, INC., et al.,
Defendants - Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(January 16, 2015)
Before TJOFLAT, JILL PRYOR and FAY, Circuit Judges.
JILL PRYOR, Circuit Judge:
Case: 13-15278 Date Filed: 01/16/2015 Page: 2 of 21
This appeal follows the district court’s dismissal of a qui tam complaint
upon holding that the lawsuit was barred by the public disclosure provision of the
False Claims Act. After careful review of the record and the briefs, and with the
benefit of oral argument, we affirm.
I.
Relator Marc Osheroff operates medical office buildings in Miami and has
considered opening a health clinic there since the early 2000s. While doing market
research on health clinics, Mr. Osheroff learned that many area clinics provide a
variety of free services to patients. Upon learning of these programs, Mr. Osheroff
began to research the clinics’ services in more detail by interviewing employees
and patients. Mr. Osheroff has never been employed by or done business with any
of the defendants.
Mr. Osheroff filed this qui tam action under seal on December 16, 2010, and
the United States declined to intervene. Mr. Osheroff amended his complaint in
December 2011, reducing the named defendants to three clinics and several health
insurers that contract with the clinics. The clinics are Pasteur Medical Center, Inc.
(“Pasteur”); CAC-Florida Medical Centers, LLC (“CAC”); and MCCI Group
Holdings, LLC, which reached a settlement with Mr. Osheroff prior to this appeal.
The health insurers are Humana Inc.; Humana Health Insurance Company of
Florida, Inc.; Humana Medical Plan, Inc.; and CarePlus Health Plans, Inc., a
2
Case: 13-15278 Date Filed: 01/16/2015 Page: 3 of 21
subsidiary of Humana Inc. (collectively, the “Humana defendants”). The Humana
defendants all provide Medicare Advantage health plans to the clinics’ patients and
are paid by Medicare on a per-patient basis; the plans in turn pay the clinics based
on patient enrollment.
The amended complaint includes information Mr. Osheroff gathered through
his interviews, as well as information from the clinics’ websites. Specifically, Mr.
Osheroff alleges that the clinics provided, and the Humana defendants either knew
of or promoted, a variety of free services for patients and health plan members,
including transportation, meals, spa and salon services, and entertainment. The
amended complaint includes a great amount of detail about these services. For
example, the amended complaint alleges that: the clinics used limo-class vehicles
to transport patients and “nearly all trips . . . contained two or fewer passengers
even though the vehicles seat 8, 10 or more” passengers, Am. Compl. at 21, ¶ 130;
CAC limos took 93 trips to Mr. Osheroff’s medical office buildings in early 2010,
88 of which carried two or fewer people, id.; lunch at a CAC clinic on October 7,
2010 included “white rice, meat, [and] plantains, but the options change daily,” id.
at 29, ¶ 201; lunch at a Pasteur clinic on June 17, 2010 included “rice and beans,
meat, bread, soft drink, and vegetables,” id. at 31, ¶ 219; the clinics provided
takeaway containers for lunch, id. at 29, ¶ 203; and the clinics held holiday and
birthday parties with meals, soda, and cake. Id. at 32, ¶ 221.
3
Case: 13-15278 Date Filed: 01/16/2015 Page: 4 of 21
Mr. Osheroff alleges that the clinics offered these services without regard for
medical purpose or financial need and that the value of the services is more than
nominal. To show the worth of the clinics’ services, the amended complaint
includes the price of comparable services, including the taxi and limo rates in
Miami-Dade County, id. at 23, ¶¶ 138-42, and the price of a Cuban sandwich and a
hot lunch special at a local restaurant. Id. at 37, ¶¶ 247-48.
The Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7b(b), prohibits
knowingly offering or providing remuneration for the purpose of inducing the
recipient to purchase a good or service for which payment may be made under a
federal health care program. The Civil Monetary Penalties Law (“CMPL”), 42
U.S.C. § 1320a-7a(5), similarly prohibits offering or providing remuneration for
the purpose of influencing the recipients to order or receive care from a particular
provider, payment for which may be made under Medicare. The amended
complaint alleges that the defendants’ actions violated both statutes. Mr. Osheroff
also alleges that this conduct violated the False Claims Act (“FCA”), 31 U.S.C. §§
3729–3733, under an implied certification theory. 1
The defendant clinics and the Humana defendants moved to dismiss the
amended complaint, and the district court granted the motions. Mr. Osheroff
1
This theory of liability proposes that a defendant impliedly certifies compliance with
underlying contractual or statutory duties when submitting claims to the government. A
violation of those duties thus renders the claims false for purposes of the FCA. See, e.g., Shaw v.
AAA Eng'g & Drafting, Inc., 213 F.3d 519, 531 (10th Cir. 2000). We express no opinion as to
the viability of this theory.
4
Case: 13-15278 Date Filed: 01/16/2015 Page: 5 of 21
moved for reconsideration of the dismissal, which the district court denied. Mr.
Osheroff timely appealed.
II.
We review a district court’s decision on a motion to dismiss de novo.
Martes v. Chief Exec. Officer of S. Broward Hosp. Dist., 683 F.3d 1323, 1325
(11th Cir. 2012). We also review questions of statutory interpretation and
retroactivity de novo. Gonzalez v. McNary, 980 F.2d 1418, 1419 (11th Cir. 1993);
Goldsmith v. City of Atmore, 996 F.2d 1155, 1159 (11th Cir. 1993). We review a
district court’s denial of an evidentiary hearing for an abuse of discretion. United
States v. Brown, 441 F.3d 1330, 1350 (11th Cir. 2006).
III.
The FCA prohibits fraud against government programs. Section 3730 of the
act allows either the United States government or private citizens to file civil
lawsuits to enforce the FCA, but it bars private qui tam suits based on publicly
disclosed information. In 2010, Congress amended the FCA’s public disclosure
bar as part of the Patient Protection and Affordable Care Act (“PPACA”), Pub. L.
No. 111–148, 124 Stat. 119 (2010). This case raises issues related to the impact of
the amendments and the current application of the public disclosure bar. In this
appeal, we must decide four questions: (1) whether the 2010 amendments to
§ 3730 of the FCA apply retroactively; (2) whether the amended public disclosure
5
Case: 13-15278 Date Filed: 01/16/2015 Page: 6 of 21
bar remains jurisdictional in nature; (3) whether the district court erred in
considering documents extrinsic to the complaint and not holding an evidentiary
hearing; and (4) whether the FCA’s public disclosure provision bars this action.
We address each question in turn.
A.
The district court held that the 2010 amendments to the public disclosure
provision do not apply retroactively, citing Graham County Soil & Water
Conservation District v. United States ex rel Wilson, 559 U.S. 280, 283 n.1 (2010).
The court applied the prior version of § 3730 to alleged conduct that occurred
before the effective date of the amendments, March 23, 2010, and the amended
version to conduct that occurred after that date.
Mr. Osheroff argues that the amended statute should apply to all conduct
alleged in the amended complaint, regardless of when it occurred. But he waived
this argument because he failed to raise it in the district court. See Sterling Fin.
Inv. Grp., Inc. v. Hammer, 393 F.3d 1223, 1226 (11th Cir. 2004). In fact, his
argument in the district court assumed the opposite. While he contended that
certain state court filings should not be considered because the amended § 3730
removed them from the realm of “public” disclosures, he made this argument only
in relation to alleged conduct that occurred on or after March 23, 2010, effectively
conceding that the statute does not apply retroactively. Accordingly, we hold that
6
Case: 13-15278 Date Filed: 01/16/2015 Page: 7 of 21
Mr. Osheroff has waived his argument regarding retroactive application of the
amendments. For purposes of this appeal, we will apply the amended FCA
provisions only prospectively.
B.
Next, we must decide whether the amended statute is jurisdictional or
presents grounds for dismissal for failure to state a claim. 2 Before 2010, the FCA’s
public disclosure bar provided that “[n]o court shall have jurisdiction” over an
action based on publicly disclosed allegations or transactions. 42 U.S.C.
§ 3730(e)(4) (2006). The PPACA amended this section, which now provides that a
“court shall dismiss an action or claim under this section, unless opposed by the
Government, if substantially the same allegations or transactions as alleged in the
action or claim were publicly disclosed” in certain enumerated sources. 42 U.S.C.
§ 3730(e)(4) (2012).
The prior version of § 3730(e)(4) was explicitly a jurisdictional bar, and
motions to dismiss based on this section were considered under Federal Rule of
Civil Procedure 12(b)(1). See Rockwell Int’l Corp. v. United States, 549 U.S. 457,
467-68 (2007). Some courts have held that the amended version of § 3730(e)(4)
2
If the statute presents a jurisdictional bar, then a motion to dismiss would be considered under
Federal Rule of Civil Procedure 12(b)(1). Under that rule, a court must weigh the parties’
evidence, at least for factual attacks, as are made here. Lawrence v. Dunbar, 919 F.2d 1525,
1529 (11th Cir. 1990). If the statute instead presents grounds for dismissal, a motion to dismiss
would be considered under Rule 12(b)(6), and a court must take the facts alleged in the
complaint as true, construing them in the light most favorable to the plaintiff. Williams v. Bd. of
Regents, 477 F.3d 1282, 1291 (11th Cir. 2007).
7
Case: 13-15278 Date Filed: 01/16/2015 Page: 8 of 21
merely provides grounds for dismissal, rather than a jurisdictional bar. See, e.g.,
United States ex rel. May v. Purdue Pharma L.P., 737 F.3d 908, 916-917 (4th Cir.
2013), petition for cert. filed, 82 U.S.L.W. 3586 (U.S. March 25, 2014) (No. 13-
1162) (“In our view, these changes make it clear that the public-disclosure bar is
no longer a jurisdiction-removing provision.”); United States ex rel. Harman v.
Trinity Indus., No. 2:12-CV-00089-JRG, 2014 WL 47258, at *3 (E.D. Tex. Jan. 6,
2014) (“[The 2010 revision] recharacterizes the public disclosure bar as a ground
for dismissal—effectively, an affirmative defense—rather than a jurisdictional
bar.”). Here, however, the district court assumed that the amended statute presents
the same jurisdictional bar as the prior version and analyzed the defendants’
motions to dismiss under Rule 12(b)(1).
We conclude that the amended § 3730(e)(4) creates grounds for dismissal
for failure to state a claim rather than for lack of jurisdiction. The plain language
of the new provision commands this interpretation: it instructs courts to dismiss an
action when the public disclosure provision applies. Further, Congress removed
the prior language that rendered the public disclosure bar jurisdictional in nature.
Brewster v. Gage, 280 U.S. 327, 337 (1930) (“The deliberate selection of language
so differing from that used in the earlier acts indicates that a change of law was
intended.”); DirecTV, Inc. v. Brown, 371 F.3d 814, 817 (11th Cir. 2004)
(“[C]hanges in statutory language generally indicate an intent of Congress to
8
Case: 13-15278 Date Filed: 01/16/2015 Page: 9 of 21
change the meaning of the statute.”) (internal quotation marks, alterations, and
citations omitted). We also find it significant that Congress did not remove similar
jurisdictional language from surrounding provisions, § 3730(e)(1) and (2),3 which
suggests that the amended § 3730(e)(4) should operate differently than those other
provisions. The amended section also provides that the government can oppose
dismissal, allowing the case to proceed even if the public disclosure provision
would otherwise apply. Given this language, we cannot read the clause as a
jurisdictional bar because doing so would allow the government to cure a
jurisdictional defect simply by opposing a motion to dismiss. See, e.g., McCoy v.
United States, 266 F.3d 1245, 1249 (11th Cir. 2001) (“[P]arties cannot by
acquiescence or agreement confer jurisdiction on a federal court. . . .”).
Accordingly, we will treat defendants’ motions to dismiss as motions made
under Federal Rule of Civil Procedure 12(b)(6) as to the claims based on alleged
conduct that occurred on or after March 23, 2010.
C.
Mr. Osheroff next makes two separate but related arguments: (1) the district
court should not have considered documents extrinsic to the complaint because
3
Section 3730(e)(1) states that “[n]o court shall have jurisdiction over an action brought by a
former or present member of the armed forces under subsection (b) of this section against a
member of the armed forces arising out of such person’s service in the armed forces.” Section
3730(e)(2)(A) states that “[n]o court shall have jurisdiction over an action brought under
subsection (b) against a Member of Congress, a member of the judiciary, or a senior executive
branch official if the action is based on evidence or information known to the Government when
the action was brought.”
9
Case: 13-15278 Date Filed: 01/16/2015 Page: 10 of 21
Rule 12(b)(6) standards apply, and (2) even if Rule 12(b)(1) applies, the district
court should not have ruled on the defendants’ factual challenge without first
allowing discovery and/or holding an evidentiary hearing. Mr. Osheroff has
forfeited his second argument, however, because he failed to request an evidentiary
hearing or further discovery in the district court. See United Techs. Corp. v.
Mazer, 556 F.3d 1260, 1280-81 (11th Cir. 2009).
As regards Mr. Osheroff’s first argument, all of the evidence at issue here
was properly before the district court, regardless of which Rule 12 standard
applies. For purposes of Rule 12(b)(1) review for a factual attack on jurisdiction,
which applies to conduct alleged to have occurred on or prior to March 23, 2010,
the district court was permitted to consider extrinsic documents, including all of
the documents in the record here. See Morrison v. Amway Corp., 323 F.3d 920,
924 n.5 (11th Cir. 2003). For purposes of Rule 12(b)(6) review, which applies to
conduct alleged to have occurred on or after March 23, 2010, a court generally
may not look beyond the pleadings. See Garcia v. Copenhaver, Bell & Assocs.,
M.D.’s, P.A., 104 F.3d 1256, 1266 n.11 (11th Cir. 1997). The pleadings include
any information attached to a complaint. Fed. R. Civ. P. 10(c); Crenshaw v. Lister,
556 F.3d 1283, 1291 (11th Cir. 2009). We have explained, however, that a district
court may consider an extrinsic document even on Rule 12(b)(6) review if it is (1)
central to the plaintiff’s claim, and (2) its authenticity is not challenged. SFM
10
Case: 13-15278 Date Filed: 01/16/2015 Page: 11 of 21
Holdings, Ltd. v. Banc of Am. Sec., LLC, 600 F.3d 1334, 1337 (11th Cir. 2010). In
addition, a district court may consider judicially noticed documents. Bryant v.
Avado Brands, Inc., 187 F.3d 1271, 1278 (11th Cir. 1999).
Here, the district court considered documents that were attached to Mr.
Osheroff’s amended complaint and were part of the pleadings. The court also took
judicial notice of the complete list of documents in the defendants’ unopposed
motion for judicial notice, including five Miami Herald articles, two
advertisements in the Miami Herald, the transcript of a hearing in another case
involving a defendant clinic in state court, and the Special Master’s Report in that
case.4 None of these documents was improperly considered for the purposes of a
Rule 12(b)(6) motion.
D.
Having disposed of the preliminary issues, we now consider whether the
FCA’s public disclosure provision bars this lawsuit. The prior version of
§ 3730(e)(4) prohibited qui tam suits “based upon” publicly disclosed allegations
or transactions unless the plaintiff was an “original source” of the information
contained in the complaint. 42 U.S.C. § 3730(e)(4) (2012).
4
Even if Mr. Osheroff had preserved an objection to the defendants’ motion, the court properly
took notice of these documents. Courts may take judicial notice of publicly filed documents,
such as those in state court litigation, at the Rule 12(b)(6) stage. Fed. R. Evid. 201; Lozman v.
City of Riviera Beach, 713 F.3d 1066, 1075 n.9 (11th Cir. Fla. 2013). And courts may take
judicial notice of documents such as the newspaper articles at issue here for the limited purpose
of determining which statements the documents contain (but not for determining the truth of
those statements). See Bryant, 187 F.3d at 1278 n.10.
11
Case: 13-15278 Date Filed: 01/16/2015 Page: 12 of 21
In Cooper v. Blue Cross Blue Shield of Florida, Inc., this Court articulated a
three-part test for deciding if the public disclosure bar in the prior version of the
statute applies: “(1) have the allegations made by the plaintiff been publicly
disclosed; (2) if so, is the disclosed information the basis of the plaintiff’s suit; and
(3) if yes, is the plaintiff an ‘original source’ of that information.” 19 F.3d 562, 565
n.4 (11th Cir. 1994).
The amended public disclosure provision prohibits lawsuits where the
allegations in the complaint are “substantially the same” as (rather than “based
upon”) allegations or transactions contained in public disclosures, unless the
plaintiff is an original source. 42 U.S.C. § 3730(e)(4) (2012). We will apply this
standard in place of the second prong of the Cooper test when analyzing claims
governed by the amended provision.
1.
Under the Cooper test, we first ask whether the allegations or transactions at
issue were publicly disclosed. To answer this question, we must consider whether
the sources on which the defendants rely fall into the statute’s enumerated
categories of sources that are considered public. This appeal concerns two of those
categories: court filings and news media.
The defendants rely in part on disclosures made in Florida state court in the
case of Pasteur Med. Center, Inc. v. Wellcare of Florida, Inc., 943 So. 2d 144 (Fla.
12
Case: 13-15278 Date Filed: 01/16/2015 Page: 13 of 21
Dist. Ct. App. 2006) (“the Wellcare litigation”). Before the 2010 amendments to
the FCA, information disclosed in both federal and state court proceedings was
considered publicly disclosed. Graham Cnty., 559 U.S. at 283. After the 2010
amendments, only information disclosed in federal court proceedings may be
considered public disclosures. 42 U.S.C. § 3730(e)(4)(A)(i) (2012). Accordingly,
the Wellcare litigation disclosures are public for purposes of the FCA only with
respect to allegations in the amended complaint based on conduct that occurred
before March 23, 2010.
Documents from the Wellcare litigation disclose information about Pasteur’s
practices, including providing food and haircuts.5 The Special Master’s Report in
the case also discussed at length Pasteur’s provision of free coffee and pastries,
various holiday parties featuring free food and entertainment, free breakfast and
lunch, and free transportation. The special master concluded that Pasteur’s
practices could violate the AKS in the aggregate and recommended that Pasteur
“be required to create a costs tracking methodology to ensure compliance” with the
AKS. Special Master’s Final Report & Recommendation at 94.
Next, the defendants rely on disclosures that they contend qualify as “news
media,” and thus are public disclosures under the statute, including articles in the
5
While the Wellcare litigation documents only qualify as public disclosures for alleged conduct
prior to March 23, 2010, as discussed below, Pasteur’s website is sufficient to disclose the
alleged conduct on or after March 23, 2010.
13
Case: 13-15278 Date Filed: 01/16/2015 Page: 14 of 21
Miami Herald, newspaper advertisements, and the clinics’ own websites.
Newspaper articles clearly qualify as news media. See Graham Cnty., 559 U.S. at
300. The Miami Herald articles describe various clinic services. For example, the
article “Upbeat Checkups” disclosed in March 2007 that the defendants provided
“free exercise classes,” “free lunch,” daily social events, “free coffee and breakfast
pastries,” and free transportation to and from the clinics. 6 John Dorschner, Upbeat
Checkups, MIAMI HERALD, Mar 12, 2007 at 22. The article noted that “patients get
Ritz-Carlton treatment” and “everything is paid for by taxpayer dollars.” Id.
Another Miami Herald article from 2001 described a CAC clinic as providing a
“wealth of services, including transportation to and from the clinics.” Shannon
Tan, Diagnosis is Confusion as Patients Flood Clinics, MIAMI HERALD, Dec. 8,
2001, at 1C.
This Court has not yet determined whether the scope of “news media” as
used in § 3730(e)(4) includes sources such as advertisements or websites. The
Supreme Court has noted, though, that the term has “a broad[] sweep.” Graham
Cnty., 559 U.S. at 290; see also Schindler Elevator Corp. v. United States ex rel.
Kirk, __ U.S. __, 131 S. Ct. 1885, 1891 (2011). District courts in the Eleventh
Circuit and in other circuits have determined that the term includes publicly
available websites. See, e.g., United States ex rel. Simpson v. Bayer Corp., No. 05-
6
The article specifically mentions CAC health clinics and Humana.
14
Case: 13-15278 Date Filed: 01/16/2015 Page: 15 of 21
3895, 2013 WL 4710587, at *7 (D.N.J. Aug. 30, 2013) ( “[P]romotional website[s]
geared toward the dissemination of information” could qualify as news media);
United States ex rel Green v. Serv. Contract Educ. & Training Trust Fund, 843 F.
Supp. 2d 20, 32-33 (D.D.C. 2012) (“readily accessible” promotional websites
qualified as news media); see also United States ex rel. Brown v. Walt Disney
World Co., No. 6:06-cv-1943, 2008 WL 2561975, at *13 (M.D. Fla. June 24,
2008) (Wikipedia pages and legal notices in newspapers constitute “news media”).
District courts in other circuits have found that advertisements in a newspaper also
qualify. See, e.g., United States ex rel. Colquitt v. Abbott Labs., 864 F. Supp. 2d
499, 519 (N.D. Tex. 2012); United States ex rel. Ondis v. City of Woonsocket, R.I.,
582 F. Supp. 2d 212, 217 (D.R.I. 2008).
Because the term “news media” has a broad sweep, we conclude that the
newspaper advertisements and the clinics’ publicly available websites, which are
intended to disseminate information about the clinics’ programs, qualify as news
media for purposes of the public disclosure provision. Like the Miami Herald
articles, these sources also discuss the clinics’ free services and programs. An
advertisement in the Miami Herald stated that one of the Humana defendants,
CarePlus, provided health plans with benefits including “$0 for unlimited
transportation.” CarePlus Advertisement, MIAMI HERALD, Oct. 26, 2010, at 20A.
In addition, CAC’s website, in the version attached to the amended complaint,
15
Case: 13-15278 Date Filed: 01/16/2015 Page: 16 of 21
disclosed “free transportation services and a variety of educational programs and
group activities,” Am. Compl. Ex. 1 at 3; “[c]omplimentary lunch . . . on a daily
basis,” id.; and “massage, [and] monthly birthday parties.” Id. at 4. Pasteur’s
website, in the version attached to the amended complaint, disclosed “unlimited
transportation services,” spa centers, social activities, and beauty salons. Am.
Complaint, Ex. 2 at 1.
Based on the sources in question here, the first prong of the Cooper test is
met. The allegations or transactions on which the defendants rely in support of
their motions to dismiss have been publicly disclosed.
2.
The second part of the Cooper test asks whether the disclosed information
forms the basis of the plaintiff’s lawsuit. “[A] plaintiff basing an FCA qui tam
claim in any part on . . . publicly disclosed information must demonstrate that the
plaintiff is an original source of that information.” Battle v. Bd. of Regents, 468
F.3d 755, 762 (11th Cir. 2006) (emphasis added). Under the amended statute, we
must also analyze whether the complaint’s allegations are “substantially the same”
as the publicly disclosed allegations or transactions. 31 U.S.C. § 3730(e)(4)
(2012). We have described the second prong of the Cooper test as a “‘a quick
trigger to get to the more exacting original source inquiry.’” Cooper, 19 F.3d at
16
 Case: 13-15278 Date Filed: 01/16/2015 Page: 17 of 21
568 n.10 (quoting United States ex rel. Precision Co. v. Koch Ind., 971 F.3d 548,
552 (10th Cir. 1993)).
Mr. Osheroff argues that his amended complaint is not “based on” or
“substantially the same” as the public disclosures because the disclosures do not
contain any allegations of wrongdoing. He relies on language in Cooper, where
we stated that a source was not a public disclosure because it did “not allege that
[defendant] in its capacity as a primary insurer actually engaged in wrongdoing.”
Id. at 567. We agree with the district court that Mr. Osheroff reads Cooper too
narrowly. In Cooper, we rejected the disclosure in question because it discussed
the defendant “only in the context of its role as an intermediary responsible for
monitoring payment to hospitals” and not “in its capacity as a primary insurer,”
which was the focus of the complaint. Id. Cooper does not require each source to
contain an allegation of wrongdoing. Indeed, § 3730(e)(4) itself requires only
disclosures of “allegations or transactions,” suggesting that allegations of
wrongdoing are not required. 42 U.S.C. § 3730(e)(4) (2012) (emphasis added).
And, in any case, the disclosures here, particularly that the clinics’ free services
were all “paid for by taxpayer dollars,” Dorschner, supra, at 22, are sufficient to
raise an inference of fraud under the AKS or CMPL.
The amended complaint plainly is based, at least “in . . . part,” on the
publicly disclosed information discussed above. Battle, 468 F.3d at 762. The
17
Case: 13-15278 Date Filed: 01/16/2015 Page: 18 of 21
allegations in the complaint are also substantially similar to the publicly disclosed
information. Mr. Osheroff’s essential allegation is that the clinics provided a
wealth of free services. The public sources fully disclose that the defendant clinics
provided such services, including transportation, meals, entertainment, and spa
services, at no cost. Because the second prong is a “quick trigger,” Cooper, 19
F.3d at 568 n.10, the significant overlap between Mr. Osheroff’s allegations and
the public disclosures is sufficient to show that the disclosed information forms the
basis of this lawsuit and is substantially similar to the allegations in the complaint.
3.
Our final inquiry under Cooper is whether Mr. Osheroff is an original source
of the information in the amended complaint. Under the prior version of § 3730,
the plaintiff’s knowledge must have been direct and independent for the plaintiff to
qualify as an original source. 31 U.S.C. § 3730(e)(4)(B) (2006). In Cooper, we
held that the plaintiff met this standard because he had acquired his information
through years of processing his own claims with Blue Cross Blue Shield of
Florida. 19 F.3d at 568. We also noted that the plaintiff’s information was
“potentially specific, direct evidence” of fraud and was “more than background
information which enables him to understand the significance of a more general
public disclosure.” Id. at 568 n.12. In contrast, in McElmurray v. Consolidated
Government of Augusta-Richmond County, this Court held that the plaintiffs were
18
Case: 13-15278 Date Filed: 01/16/2015 Page: 19 of 21
not original sources because they merely possessed background information about
the defendants’ environmental violations that allowed them to understand, based
on public disclosures, that the defendants were committing fraud. 501 F.3d 1244,
1254 (11th Cir. 2007). Having background knowledge “does not mean that they
had knowledge independent of the publicly disclosed information as to the
certifications alleged to be false.” Id.
Under the amended statute, an original source is someone who has
“knowledge that is independent of and materially adds to the publicly disclosed
allegations or transactions.” 42 U.S.C. § 3730(e)(4)(B) (2012). This Court has not
yet interpreted this statutory provision.
Mr. Osheroff argues that he is an original source because he conducted his
own investigation of the programs offered at the clinics. The amended complaint
includes some details that are not present in the public disclosures, such as the type
of food the clinics served for lunch, the destinations of some of the free
transportation, the frequency of salon services, and the price of substitute services
or goods. Mr. Osheroff claims that this information is direct and independent
because of his investigation and that it materially adds to the public disclosures
because it shows that the clinics’ services were more than nominal in value. 7
7
The Office of the Inspector General has interpreted the AKS not to prohibit gifts of nominal
value, which are defined as gifts or services that have a retail value of no more than $10
individually and $50 in the aggregate per patient per year. 65 Fed. Reg. 24400, 24410-11.
19
Case: 13-15278 Date Filed: 01/16/2015 Page: 20 of 21
We are not persuaded. Under the AKS, any remuneration or offer of
remuneration is illegal. 42 U.S.C. § 1320a-7b(b). The public disclosures show
that the clinics offered many free services to their patients. At most, Mr.
Osheroff’s complaint adds background information and details relating to the value
of the services offered, making it somewhat more plain that the clinics’ programs
could violate the AKS. However, background information that helps one
understand or contextualize a public disclosure is insufficient to grant original
source status under the previous version of the statute. McElmurray, 501 F.3d at
1254; Cooper, 19 F.3d at 568.
Similarly, under the amended statute, we conclude that Mr. Osheroff’s
information does not materially add to the public disclosures, which were already
sufficient to give rise to an inference that the clinics were providing illegal
remuneration to patients. See United States ex rel. Kraxberger v. Kan. City Power
& Light Co., 756 F.3d 1075, 1079 (8th Cir. 2014) (holding that a plaintiff’s
information did not materially add to the public disclosures because the disclosures
already revealed “‘the essential elements comprising that fraudulent transaction . . .
so as to raise a reasonable inference of fraud.’”) (quoting United States ex rel.
Rabushka v. Crane Co., 40 F.3d 1509, 1514 (8th Cir. 1994)). Our holding also
comports with the purpose of the original source doctrine, which is to “increase
private citizen involvement in exposing fraud . . . while preventing opportunistic
20
Case: 13-15278 Date Filed: 01/16/2015 Page: 21 of 21
suits by private persons who heard of fraud but played no part in exposing it.”
Cooper, 19 F.3d at 565. We do not think that Mr. Osheroff’s complaint is of the
sort meant to be protected by the original source doctrine.
IV.
Under the prior or amended version of § 3730 of the FCA, Mr. Osheroff
cannot overcome the public disclosure bar. Accordingly, we affirm the district
court’s dismissal of his complaint with prejudice.
AFFIRMED.
21