United States Ex Rel. Estate of Cunningham v. Millennium Laboratories of California, Inc.
713 F.3d 662
1st Cir.2013Background
- Relator is the Estate of Robert Cunningham, filing an FCA action against Millennium Laboratories of California and John Doe physicians for allegedly fraudulent billing practices.
- Millennium had previously filed a California state-court suit against Calloway Laboratories, attaching emails alleging Millennium’s improper billing, which the district court treated as a jurisdictional public-disclosure bar.
- Relator’s amended complaint divides the alleged fraud into three aspects: Aspect 1 multiple billing for a single test kit; Aspect 2 excessive, medically unnecessary testing; Aspect 3 misleading confirmation testing.
- The district court dismissed the FCA complaint as barred by the FCA public-disclosure provision, without addressing potential live Claims under Fed. R. Civ. P. 12(b)(6) and 9(b).
- The First Circuit held that Aspect 1 and Aspect 3 were publicly disclosed and substantially similar to Millennium’s California suit, but Aspect 2 was not publicly disclosed and required further consideration on remand.
- The court vacated in part and remanded for the district court to determine whether Aspect 2 survives 12(b)(6) and 9(b) dismissal, and affirmed dismissal as to Aspects 1 and 3.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether public disclosure bars Aspects 1 and 3 | Cunningham argued California suit did not disclose all aspects, so FCA bar should not apply to 2 and 3. | Millennium argued the California suit disclosed the fraud, including multiple-billing and confirmation testing. | Aspects 1 and 3 barred by public disclosure. |
| Whether Aspect 2 is barred by public disclosure | Relator contends Aspect 2 was not disclosed in the California suit and thus not barred. | Millennium contends all aspects were disclosed through the California complaint and emails. | Aspect 2 not barred; remanded for 12(b)(6) and 9(b) considerations. |
| Whether Relator can qualify as an original source | Relator claimed independent knowledge from investigation could save jurisdiction under original source. | Defendant argued Relator failed to establish direct, independent knowledge and waived the argument. | Relator waived original source argument; even if raised, proof insufficient; still remand for Aspect 2. |
Key Cases Cited
- United States ex rel. Ondis v. City of Woonsocket, 587 F.3d 49 (1st Cir. 2009) (test for 'based upon' public-disclosure similarity examining substance)
- United States ex rel. Poteet v. Bahler Med., Inc., 619 F.3d 104 (1st Cir. 2010) (disclosure must be of fraud and substantially similar to relator's claim)
- Schindler Elevator Corp. v. United States ex rel. Kirk, 131 S. Ct. 1885 (S. Ct. 2011) (careful public-disclosure of potential fraud does not immunize liability)
- Warren Freedenfeld Assocs. v. McTigue, 531 F.3d 38 (1st Cir. 2008) (practice for raising new legal theories on appeal)
- United States ex rel. Hutcheson v. Blackstone Med., Inc., 694 F.Supp.2d 48 (D. Mass. 2010) (original source analysis limitations in FCA context)