United States v. Omnicare, Inc.
903 F.3d 78
3rd Cir.2018Background
- Relator Marc Silver sued PharMerica under the False Claims Act (FCA), alleging PharMerica "swapped": offering below-cost per‑diem drug pricing for Medicare Part A nursing‑home patients to secure lucrative Part D/Medicaid business, thereby violating the Anti‑Kickback Statute and causing false claims.
- Silver’s claim relied on non‑public nursing‑home contract per‑diem rates he inspected plus public industry reports and PharMerica’s 10‑K financials to infer below‑cost pricing.
- PharMerica moved to dismiss/for summary judgment invoking the FCA public‑disclosure bar; the District Court found the alleged fraud publicly disclosed and dismissed pre‑2010 claims for lack of jurisdiction and later claims on summary judgment.
- The Third Circuit reviewed de novo whether public documents disclosed the essential elements (X + Y = Z) of the alleged fraudulent transactions such that Silver’s suit was barred.
- The court held the public materials (HHS‑OIG reports, Lewin Group report, CMS‑related reports, and PharMerica’s 10‑Ks) described the risk/possibility of swapping industry‑wide but did not disclose specific, attributable transactions or PharMerica’s alleged below‑cost per‑diem rates—the non‑public information Silver supplied was the necessary ‘‘missing link.’n ### Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether public disclosures barred the FCA suit under the pre‑2010 public‑disclosure bar | Silver: public reports only described a general risk; his non‑public per‑diem data supplied the decisive element and thus the fraud was not publicly disclosed | PharMerica: public HHS‑OIG/CMS reports + Lewin Report + 10‑Ks cumulatively disclosed swapping and identified PharMerica as a likely actor | Held: Reversed — public documents did not disclose the specific transactions; relator’s non‑public info was necessary, so the bar did not apply |
| Whether courts may rely on a relator’s testimony that he used public documents instead of independently assessing those documents | Silver: court must independently assess whether public documents actually disclose the fraud; relator’s testimony is immaterial to step one | PharMerica: relator’s testimony that he relied on public sources demonstrates the disclosures supported the inference | Held: Reversed — court must independently evaluate public materials; relying solely on relator’s statement is improper |
| Whether generalized industry‑wide disclosures identifying a problem alone can bar suits against specific firms | Silver: industry‑wide descriptions of opportunity do not disclose transactions attributable to a particular defendant | PharMerica: industry reports could identify PharMerica as directly identifiable and therefore disclose the transaction | Held: Industry‑wide possibility is insufficient; absent concrete allegations or direct identifiability, the bar does not apply |
| Whether district court properly declined supplemental jurisdiction over state‑law claims after dismissing federal claims | Silver: if FCA claim survives, district court should reconsider supplemental jurisdiction | PharMerica: district court declined jurisdiction after dismissal | Held: Vacated and remanded for the district court to re‑consider supplemental jurisdiction in light of reversal |
Key Cases Cited
- United States ex rel. Zizic v. Q2Administrators, LLC, 728 F.3d 228 (3d Cir.) (explains X + Y = Z framework for public‑disclosure analysis)
- United States ex rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506 (3d Cir. 2007) (requires that both misrepresented and true facts be publicly disclosed to trigger bar)
- United States ex rel. Mistick PBT v. Housing Auth. of City of Pittsburgh, 186 F.3d 376 (3d Cir. 1999) (distinguishes complaints ‘‘based on’’ vs. ‘‘supported by’’ public disclosures)
- Foglia v. Renal Ventures Mgmt., 754 F.3d 153 (3d Cir. 2014) (Rule 9(b) requires particularity and strong inference of submitted false claims)
- United States ex rel. Gear v. Emergency Med. Assocs. of Illinois, Inc., 436 F.3d 726 (7th Cir. 2006) (industry‑wide disclosures barred suit where fraud was concretely alleged industry‑wide and defendants were directly identifiable)
- United States ex rel. Mateski v. Raytheon Co., 816 F.3d 565 (9th Cir. 2016) (public industry reports of generic problems do not bar suits identifying specific instances requiring nonpublic proof)