The plaintiff in this case, Pirelli Armstrong Tire Corporation Retiree Medical Benefits Trust (“Pirelli”), initiated a putative class action under the Illinois Consumer Fraud and Deceptive Business Practices Act. For tax law purposes, Pirelli is a voluntary employees’ beneficiary association, a tax exempt trust that exists to provide specified benefits to members of its related association. For our purposes, however, Pirelli is a third-party payor (typically one’s insurance company) that pays pharmacies for the portion of a drug price that exceeds its members’ co-payments. Pirelli’s lawsuit maintains that the *438 defendant, Walgreen Company (“Walgreens”), systematically took prescriptions that were written for cheap forms of two popular drugs and illegally filled the prescriptions with expensive forms. The district court granted Walgreens’ motion to dismiss, ruling that Pirelli failed to meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). We affirm the judgment of the district court.
I. Background
When a patient takes a prescription to a pharmacy, the pharmacy has some maneuvering room: it generally can fill the prescription with either the specified drug or a generic, “bioequivalent” version of the drug. Under Illinois law, however, a pharmacy cannot take a prescription for the tablet form of a drug and fill it with the capsule form of the drug, or vice-versa' — • the practice is forbidden by statute and the differences in form might affect how a person absorbs the active ingredients.
Warner-Lambert Co. v. Shalala,
Pirelli alleges that Walgreens, a company that operates roughly 7,000 pharmacies nationwide, violated the regulatory regime in Illinois with respect to two different drugs. One drug was generic Zantac (“Ranitidine”). The other was generic Prozac (“Fluoxetine”). Walgreens allegedly took prescriptions that called for the less costly form of each drug and filled them with the more costly form. Consumers, responsible for only the co-pay, were none the wiser. But Pirelli unwittingly reimbursed Walgreens for costly forms of drugs that were never prescribed.
That is the shorthand version; to explain how the alleged scheme worked, Pirelli’s complaint provides considerable detail about the drug approval process before the FDA, the drug reimbursement process, and the industry actors involved. We can summarize. Pirelli, as a third-party payor, used a Pharmacy Benefit Manager (“PBM”) to process, settle disputes over, and pay pharmacies for prescriptions. Essentially, the PBM is a go-between that processes and smoothes over transactions between the third-party payor (Pirelli) and the pharmacy (Walgreens). The PBM is not only a middleman, however; it establishes a list of Maximum Allowable Costs (“MAC”) for various drugs. The MAC list gets turned over to pharmacies like Walgreens. The list sets a reimbursement price — effectively placing a ceiling on the price of specified drugs. For drugs, or dosage forms of drugs, that are not on the MAC list, the reimbursement price is based on a benchmark, called the Average Wholesale Price (“AWP”), which comes directly from a drug’s manufacturer. Predictably, when a drug is priced based on the AWP, the reimbursement is higher than when reimbursement is based on the MAC price. Put another way, a pharmacy makes more money when it sells a drug whose reimbursement is governed by the AWP rather than by the MAC list.
According to Pirelli, Walgreens took advantage of the pricing scheme to commit fraud. Both Ranitidine tablets and Fluoxetine capsules were the most popularly prescribed forms of their respective drugs and were subject to reimbursement based on the cheaper MAC list. But, because the more expensive forms of the drugs *439 were rarely prescribed, there were no MAC-list prices for Ranitidine capsules and Fluoxetine tablets. Since mid-2001, Walgreens adopted a policy of filling prescriptions for Ranitidine tablets with the more costly capsule form. Likewise, Walgreens filled prescriptions for Fluoxetine capsules with the more costly tablet form. Each time it filled a prescription, the theory goes, Walgreens represented to the PBM that it had received a prescription for the costly form of the drug; the PBM passed on the misrepresentation to Pirelli, who then reimbursed Walgreens at the more expensive AWP price — two to four times higher than the MAC price.
That is a lot of detail 1 , although detail (“particularity”) is what a plaintiff needs in alleging fraud to satisfy the requirements of the Federal Rules of Civil Procedure. The particularity requirement ensures that plaintiffs do their homework before filing suit and protects defendants from baseless suits that tarnish reputations. And the requirement dovetails with lawyers’ ethical obligations to ensure they conduct a precomplaint inquiry before signing off on their clients’ contentions. What sort of pre-complaint inquiry is evidenced by Pirelli’s complaint? The complaint points to three grounds for its suspicion that Walgreens defrauded it. The first ground is a “preliminary review” of Pirelli’s reimbursement data: during the course of the (apparently nationwide) review, Pirelli discovered “several instances in which [Pirelli] paid Walgreens for the more expensive dosage forms, when lesser [sic] expensive dosage form [sic] were available.” That allegation, at least in a vacuum, is not impressive. The data include a five-year window, and one would expect some number of instances when the more expensive forms of the drugs were prescribed: Pirelli found 11 members on whose behalf it reimbursed Walgreens for the more expensive form of Ranitidine and just a single member on whose behalf it reimbursed Walgreens for the more expensive form of Fluoxetine. Only one member’s reimbursements occurred in Illinois. Moreover, the fact that the drug companies make multiple forms suggests that there are markets for them. And since the body may absorb capsules and tablets differently, there could be medical reasons for preferring one form of the drug over another in specific cases.
The more interesting aspect of Pirelli’s preliminary look comes from a subset of its data. Pirelli found three members — one in Illinois, one in Louisiana, and one in Iowa — who filled some prescriptions at Walgreens and others at different pharmacies. The data are presented in tables for each of the three members; the tables list the date of each transaction, the pharmacy involved in the transaction, and the dosage form for which Pirelli reimbursed the pharmacy. The three histories show that non-Walgreens pharmacies filled each member’s Ranitidine prescription with tablets, while Walgreens filled the same member’s prescription with more costly capsules. For example, Pirelli’s exhibit shows that its single Illinois patient had 16 prescriptions for Ranitidine filled at 3 different pharmacies. Only Walgreens filled *440 prescriptions with the more costly form of the drug. In each case, one cannot see if the reimbursements were made under the same prescription, although it does appear that something suspicious was happening: the transactions involving Walgreens are sandwiched between transactions from other pharmacies, and no one has suggested that a person might receive prescriptions for both the tablet form of a drug and the capsule form. 2 The pattern of reimbursements suggests that the three members were supposed to get the cheaper form of Ranitidine and they did not, either the result of a prescription-filling error or fraud.
The second ground for Pirelli’s suspicion, and where Pirelli gets most of its information about how the alleged fraud worked, is a complaint filed in a 2003 qui tarn action in the Northern District of Illinois (the “qui tam case”). The allegations in that whistleblower suit, based on accusations made by a pharmacist, indicate that “[u]pon receiving a [Ranitidine] tablet prescription, Walgreens’ pharmacy personnel could not process the orders as written, but instead filled the prescriptions with capsules.” The pharmacist in question did not actually work for Walgreens. Rather, the pharmacist worked for other pharmacies; when he would receive prescriptions that were being transferred from Walgreens to one of the pharmacies where he worked, the Walgreens pharmacists “regularly indicated” how their prescription-filling system functioned. See Compl. ¶¶ 16-17, United States ex rel. Lisitza v. Walgreens Co., No. 03-cv744 (N.D.Ill. Jan. 31, 2003).
The third ground for Pirelli’s suspicion comes from an investigation that was conducted by another PBM, not the one that Pirelli used. The PBM looked at transaetions that it had facilitated with Walgreens, drawing most of its data from St. Louis, Boston, and Phoenix. The investigation indicated that, for the transactions that the PBM facilitated, Walgreens filled an overwhelmingly large percentage (97 percent) of Ranitidine prescriptions with capsules, while every other pharmacy filled prescriptions for Ranitidine with capsules at a meager rate (3 percent). Given the relative popularities of the two dosage forms, the data indicate that something suspicious was happening and that clerical errors do not dispel the suspicion. The PBM’s investigation was the basis of a lawsuit (the “ESI suit”).
In 2009, Pirelli filed a suit of its own. Pirelli initiated a putative class action on behalf of all third-party payors who reimbursed Walgreens for Ranitidine capsules, Fluoxetine tablets, or both, between 2001 and 2005. Pirelli initially contended that Walgreens’ actions violated 35 different states’ unfair or deceptive acts laws, including the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, et seq. In addition to the fraud claims, Pirelli brought an unjust enrichment claim under Illinois law. However, the laws of all of the states besides Illinois have been pruned from the litigation: the parties litigated the case as if Illinois law applied to Pirelli’s claims, the district court indicated that it was considering this only as an Illinois case, and Pirelli has not attempted to expand the scope of the litigation.
Walgreens moved to dismiss the complaint, and the district court granted the motion, first without prejudice and then with prejudice. The district court reasoned that Pirelli did not adequately meet the heightened pleading requirement of *441 Federal Rule of Civil Procedure 9(b) because Pirelli did not “provide facts showing that any individual at a Walgreens store made a misrepresentation or concealed a material fact.” Moreover, relying on case law from this circuit, the district court observed that Pirelli had failed sufficiently to allege that it had been injured by Walgreens’ fraudulent scheme, a prerequisite to recovery under Illinois law. Finally, the district court concluded that the complaint in the qui tam case “helpfed] lay the foundation for Pirelli’s argument about Walgreens’ corporate policy, [but did] not substantiate Pirelli’s claim that it was itself defrauded by Walgreens.” Thus, the court ruled that the complaint failed to plead fraud with sufficient particularity as the federal rules require.
II. Discussion
The sufficiency of a complaint is a question of law that we decide without deference to the district court’s ruling.
Crichton v. Golden Rule Ins. Co.,
A. Pirelli’s Fraud Claim
Pirelli maintains that Walgreens’ alleged scheme violated the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”). The ICFA makes it unlawful to use deception or fraud in the conduct of trade or commerce.
3
In addition to its general proscriptions, the act provides a right of action for a person who suffers “actual damage” as a result of a violation. 815 ILCS 505/10a(a). When a plaintiff in federal court alleges fraud under the ICFA, the heightened pleading standard of Federal Rule of Civil Procedure 9(b) applies.
Davis v. G.N. Mortg. Corp.,
The concepts involved are relatively straightforward, but this appeal implicates important wrinkles that merit discussion. Under Rule 9(b) of the Federal Rules of Civil Procedure, a party who alleges fraud or mistake “must state with particularity the circumstances constituting fraud or mistake.” As one district court has noted, the particularity requirement of Rule 9(b) is designed to discourage a “sue first, ask questions later” philosophy.
Berman v. Richford Indus., Inc.,
In adding flesh to the bones of the word particularity, we have often incanted that a plaintiff ordinarily must describe the “who, what, when, where, and how” of the
*442
fraud — “the first paragraph of any newspaper story.”
United States ex rel. Lusby v. Rolls-Royce Corp., 570
F.3d 849, 854 (7th Cir.2009). Yet, because courts and litigants often erroneously take an overly rigid view of the formulation, we have also observed that the requisite information— what gets included in that first paragraph — may vary on the facts of a given case.
Emery v. Am. Gen. Fin., Inc.,
Here is the wrinkle and the rub. A plaintiff who alleges fraud can provide all the detail in the world, but does not have unlimited leeway to do so on “information and belief.” When a plaintiff sets out allegations on information and belief, he is representing that he has a good-faith reason for believing what he is saying, but acknowledging that his allegations are “based on secondhand information that [he] believes to be true.” Black’s Law Dictionary 783 (7th ed.1999);
see also Pirraglia v. Novell, Inc.,
That insight about Pirelli’s allegations has consequences. Even though it sounds more like an ethical issue than an evaluation of the amount of detail in a complaint, we have ruled that a plaintiff generally cannot satisfy the particularity requirement of Rule 9(b) with a complaint that is filed on information and belief.
Bankers Trust Co. v. Old Republic Ins. Co.,
Here, Pirelli’s complaint skips the phrase “information and belief’ and just provides the grounds for its suspicions: besides its preliminary look at its own reimbursement data, the complaint relies on the ground that other people have sued Walgreens and detailed their allegations. But when someone alleges fraud based on information and belief, not just any grounds will do. The grounds for the plaintiffs suspicions must make the allegations
plausible,
even as courts remain sensitive to information asymmetries that may prevent a plaintiff from offering more detail.
See In re Rockefeller Center Props., Inc. Sec. Litig.,
It is appropriate to accord limited corroborative weigh to allegations in another’s lawsuit. To appreciate why, consider the 2003
qui tam
case. We take judicial notice of the complaint in the
qui tam
case, even though only portions were cited in Pirelli’s complaint.
See 520 S. Mich. Ave. Assocs., Ltd. v. Shannon,
That is not to say that the complaint in that case would have been inadequate as to *444 that plaintiff. The allegations in the qui tarn case were made by a whistle-blower. The qui tarn relator surely lacked access to reimbursement data from third-party payors that would have allowed him to provide additional circumstances corroborating the existence of fraud. But the same conclusion obviously would not apply to a third-party payor itself. It would be odd if a complaint like this, itself based on information and belief, could constitute plausible corroboration for a fraud claim brought by a third-party payor, without pointing to any meaningful indication that the plaintiff had been injured. Imagine the possibilities under a contrary approach: Case Number 1 in one jurisdiction could be filed on information and belief, which would prove insufficient. Yet, a second litigant could bring Case Number 2, alleging a fraud based on the complaint in Case Number 1 and survive a motion to dismiss, having done sufficient pre-complaint inquiry by doing little more than reading a daily law bulletin. The outcome would be odd indeed.
The allegations in the ESI suit, too, are problematic, though for a slightly different reason. The matter pled in the ESI suit not only speaks to the existence of a fraud but attempts to address whether Pirelli was injured by a fraudulent scheme. ESI learned that an overwhelmingly large percentage of prescriptions for Ranitidine in primarily three geographic areas (none in Illinois) was filled with the more expensive, less prescribed dosage form of the drug. Those allegations tend to show that ESI was injured by a fraudulent scheme.
The district court was correct not to place weight on the allegations in the ESI suit. Again, Pirelli is relying on the mere fact of someone else’s allegations, which evince little pre-complaint inquiry on Pirelli's part and which speak to potential fraud in three other jurisdictions outside of Illinois in any event. A plaintiff pleading fraud on information and belief has to show that the missing pieces are outside of its control.
Ackerman v. Nw. Mut. Life Ins. Co.,
Because it is appropriate to give limited if any weight to the ESI suit, we turn to Pirelli’s preliminary reimbursement data. Those data comprise an exhibit to Pirelli’s complaint showing only that it reimbursed Walgreens for the more expensive form of Ranitidine for eleven of its members since 2001. (Only one of the members was in Illinois.) In addition, it reimbursed Walgreens for the more expensive form of Fluoxetine for two members since 2001. (Neither member was in Illinois.) Pirelli has not placed the data in context, however, and there is no reason to think that reimbursements for a total of eleven members nationwide is suspicious — among all of the pharmacies with which Pirelli had dealings, did only Walgreens seek reimbursement for the more expensive form of Ranitidine over this period? Are prescriptions for that form so exceedingly rare that the mere fact of reimbursement should raise eyebrows? Pirelli has not pled or argued that the answer to these questions is yes, and common sense,
cf. Ashcroft v. Iqbal,
— U.S. -,
We see no reason why Pirelli, which apparently has mined its national data in search of these transactions, could not easily have done more. Something along the lines of the allegations underpinning the ESI suit would have improved Pirelli’s pleading fortunes. But a better presentation of its data might have done the trick, too. Putting the numbers in context could tell us whether Pirelli also reimbursed Walgreens for the cheaper form of the drugs in the five-year period that Pirelli examined. To the extent it did not, the fraud claim would be supported; to the extent it did, it would be undermined. Or we could see if reimbursements for the more expensive forms of the drugs outstripped reimbursements for the cheaper versions in an unlikely way. Pirelli did not have to dance to ESI’s comprehensive statistical tune, but did need to provide firsthand facts or data to make its suspicions plausible. Pirelli’s
de minimis
showing tells us little and does not fulfill Rule 9(b)’s purpose of “forcfing] the plaintiff to do more than the usual investigation before filing his complaint.”
Ackerman,
In an effort to stave off dismissal, Pirelli does point to the subset of three members from its preliminary data, but those data, too, suffer from fatal shortcomings. Recall that Pirelli examined a subset of the twelve members on whose behalf it reimbursed Walgreens. Pirelli broke out the reimbursement patterns for three of its members who had Ranitidine prescriptions filled by both Walgreens and other pharmacies. The records show that Walgreens reimbursed Pirelli for the more expensive form of Ranitidine while other pharmacies were reimbursing Pirelli for the cheaper form. The reimbursements came during overlapping time periods, so it looks as if Walgreens was either intentionally switching prescriptions or as if there were clerical errors at work.
The small-% analysis, however, is problematic, particularly given that we still lack any context for the data. The bare fact of inconsistent reimbursements for three patients in a five-year time period is not sufficient to raise allegations of fraud above the speculative level. Without knowing anything else about the overall numbers involved, the dearth of transactions does not tend to corroborate the existence of a fraud. Indeed, according to its complaint, Pirelli does business in at least California, Connecticut, Florida, Illinois, Louisiana, and Tennessee. For an entity with national reach, laboring under a system in which prescriptions are transferred from one pharmacy to another, see Compl. ¶ 16, United States ex rel. Lisitza v. Walgreens, No. 03-cv-744 (N.D.Ill. Jan. 31, 2003), one would expect some number of prescription-filling errors. See also To Err is Human: Building a Safer Health System 28-31 (Linda T. Kohn, Janet M. Corrigan, & Molla S. Donaldson, eds., 2000) (stating that medication related errors are among the most common types of errors and suggesting that their frequency may be higher than it appears because *446 studies focus on adverse effects from medication errors rather than errors that cause no harm). Pirelli has offered us no reason to think that these three instances are representative of something broader, and its pleading betrays its own timidity on that score. The complaint characterizes the handful of transactions it identifies as “suspiciously consistent” with the unlawful scheme alleged in the qui tam case and the ESI suit. To satisfy the particularity requirement of Rule 9(b) when it made allegations based on information and belief, however, Pirelli needed corroboration, not just consistency.
We do note, however, that both the district court and Walgreens overstated the extent of Pirelli’s burden. In order to survive the motion to dismiss phase, Pirelli needed some firsthand information to provide grounds to corroborate its suspicions. A preliminary look at data, in theory, would have been an appropriate means of accomplishing that task. Had the data showed an unlikely pattern of reimbursements, it would have helped make Pirelli’s claim plausible. Moreover, Walgreens is incorrect inasmuch as it suggests that Pirelli necessarily needed Illinois data to establish the existence of a fraudulent scheme.
See Corley v. Rosewood Care Ctr.,
As a proposed end run around the complaint’s particularity problems, Pirelli argues that Rule 9(b) does not apply and that it should get the benefit of Rule 8 of the Federal Rules of Civil Procedure. Rule 8, which governs the allegations in most suits, substitutes particularity for the lesser showing of “fair notice” of the nature of the claim. Fed.R.Civ.P. 8(a)(2);
Tamayo v. Blagojevich,
However, the practices alleged in Pirelli’s complaint constitute fraudulent activity, and the dictates of Rule 9(b) apply to allegations of fraud, not claims of fraud.
Borsellino v. Goldman Sachs Grp., Inc.,
In sum, Pirelli’s allegations were insufficient. Although a plaintiff generally receives the benefit of reasonable inferences at the motion to dismiss phase,
e.g., Bonte v. U.S. Bank, N.A.,
B. Pirelli’s Unjust Enrichment Claim
One loose end remains. Pirelli argues that it has a claim for unjust enrichment even if its fraud claim is not viable. The district court dismissed the claim under Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim upon which relief can be granted, concluding that the dismissal of the fraud claim took the unjust enrichment claim with it. We agree.
Under Illinois law, unjust enrichment is not a separate cause of action. “Rather, it is a condition that may be brought about by unlawful or improper conduct as defined by law, such as fraud, duress, or undue influence, and may be redressed by a cause of action based upon that improper conduct.”
Alliance Acceptance Co. v. Yale Ins. Agency, Inc.,
But again, it is allegations of fraud, not claims of fraud, to which Rule 9(b) applies. Pirelli’s complaint does not contend merely that Walgreens erred in filling prescriptions, violated the Illinois Pharmacy Act by
*448
doing so, and should therefore be disgorged of erroneously obtained benefits. Nor did Pirelli set out its unjust enrichment claim in the alternative, pursuant to Federal Rule of Civil Procedure 8(d)(2).
See Holman v. Indiana,
In
Caremark RX,
we reaffirmed that “when the plaintiffs particular theory of unjust enrichment is based on alleged fraudulent dealings and we reject the plaintiffs claims that those dealings, indeed,
were
fraudulent, the theory of unjust enrichment that the plaintiff has pursued is no longer viable.”
III. Conclusion
For the reasons set forth above, the judgment of the district court is Affirmed.
Notes
. Perhaps more than we needed in some respects, particularly in terms of minutiae about the drug industry and its regulatory workings and commercial contours.
See, e.g., Bankers Trust Co. v. Old Republic Ins. Co.,
. Pirelli does not know what form the doctors actually prescribed for these members; it says that it lacks access to the prescriptions, and Walgreens does not say otherwise.
. The provision provides: “Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact, or the use or employment of [specified practices] in the conduct of any trade or commerce are hereby declared unlawful....” 815 ILCS 505/2 (footnotes omitted).