Hagerty Ex Rel. United States v. Cyberonics, Inc., 844 F.3d 26

Relator Andrew Hagerty, a former Cyberonics sales rep, filed a qui tam FCA suit alleging Cyberonics induced medically unnecessary Vagus Nerve Stimulator (VNS) battery replacement surgeries, causing false claims to government healthcare programs.
Hagerty alleged Cyberonics pressured sales reps with aggressive quotas and encouraged premature device replacements; he identified multiple hospitals, several doctors, and estimated >10,000 unnecessary replacements since 2007.
The government declined to intervene; Cyberonics moved to dismiss for failure to state a claim and for lack of particularity under Fed. R. Civ. P. 9(b).
The district court dismissed Hagerty’s FCA-based claims for failing to plead with the particularity Rule 9(b) requires and later denied leave to file a Second Amended Complaint due to undue delay.
On appeal, the First Circuit reviewed the dismissal de novo and the denial of leave to amend for abuse of discretion and affirmed the district court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether First Amended Complaint met Rule 9(b) for FCA claims	Hagerty: identified who, where, when, providers, doctors, and provided statistical allegations to infer fraudulent claims	Cyberonics: allegations fail to tie misconduct to actual false claims or government reimbursements; too speculative	Court: Affirmed dismissal — allegations did not sufficiently connect misconduct to submission of false claims to government programs
Whether district court abused discretion by denying leave to file Second Amended Complaint (undue delay)	Hagerty: delay excusable; could not anticipate district court’s deficiencies; only four months elapsed after dismissal	Cyberonics: Hagerty waited over a year after the motion to dismiss and failed to remedy known defects; undue delay warranted denial	Court: Affirmed denial — Hagerty failed to justify prolonged delay and court did not abuse discretion

Hochendoner v. Genzyme Corp., 823 F.3d 724 (1st Cir.) (standard for reciting facts from complaint)
Ge v. Takeda Pharm. Co., 737 F.3d 116 (1st Cir.) (Rule 9(b) requires alleging who/what/when/where/how; FCA requires false claims submission)
Kelly v. Novartis Pharms. Corp., 827 F.3d 5 (1st Cir.) (more flexible Rule 9(b) standard in qui tam actions and examples of required factual/statistical allegations)
Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13 (1st Cir.) (identifying providers and claims satisfied Rule 9(b) in close case)
United States ex rel. Escobar v. Universal Health Servs., Inc., 780 F.3d 504 (1st Cir.) (systematic failure allegations can support inference of widespread false claims)
Rost v. Pfizer, Inc., 507 F.3d 720 (1st Cir.) (mere possibility of fraud insufficient)
In re Lombardo, 755 F.3d 1 (1st Cir.) (movant must explain lengthy delay when seeking leave to amend)
Foman v. Davis, 371 U.S. 178 (U.S.) (factors for denying leave to amend such as undue delay, futility)