UNITED STATES EX REL. FRANK SOLIS, Plaintiff-Appellant, v. MILLENNIUM PHARMACEUTICALS, INC.; SCHERING-PLOUGH CORPORATION; MERCK & CO., Defendants-Appellees. UNITED STATES EX REL. FRANK SOLIS, Plaintiff-Appellee, v. MILLENNIUM PHARMACEUTICALS, INC., Defendant-Appellant, and SCHERING-PLOUGH CORPORATION; MERCK & CO., Defendants. UNITED STATES EX REL. FRANK SOLIS, Plaintiff-Appellee, v. SCHERING-PLOUGH CORPORATION; MERCK & CO., Defendants-Appellants, and MILLENNIUM PHARMACEUTICALS, INC., Defendant.
Nos. 15-16953, 15-17055, 15-17057
United States Court of Appeals, Ninth Circuit
March 15, 2018
D.C. No. 2:09-cv-03010-MCE-EFB. Appeal from the United States District Court for the Eastern District of California, Morrison C. England, Jr., District Judge, Presiding. Argued and Submitted October 17, 2017, San Francisco, California.
Opinion by Judge Wallace
False Claims Act
The panel affirmed in part, and vacated and remanded in part, the district court’s
Frank Solis alleged that his former employers violated state law and the federal FCA by promoting dangerous off-label uses of a cardiovascular drug, Integrilin, and by paying physicians kickbacks to prescribe Integrilin and an antibiotic drug, Avelox. The district court found that Solis’s FCA claims were foreclosed by the public disclosure bar, which deprives federal courts of subject matter jurisdiction over FCA suits when the alleged fraud has already been publicly disclosed, unless the relator is deemed an original source, and declined to exercise supplemental jurisdiction over the state law claims.
The panel held that Solis’s Integrilin claims were substantially similar to those in prior public disclosures, and were close enough in kind and degree to have put the government on notice to investigate the alleged fraud before Solis filed his complaint. The panel vacated the dismissal of Solis’s Integrilin claims and remanded for the district court to determine whether Solis qualified for the “original source” exception under United States ex rel. Hartpence v. Kinetic Concepts, Inc., 792 F.3d 1121, 1123, 1129–30 (9th Cir. 2015) (en banc).
Concerning Solis’s Avelox claims, the panel held that the district court clearly erred in finding that the Avelox claims were publicly disclosed based on court complaints that never mentioned Avelox. The panel affirmed dismissal of Solis’s Avelox claims on the alternative ground that they failed to satisfy
COUNSEL
Audra Ibarra (argued), Law Office of Audra Ibarra, Palo Alto, California; C. Brooks Cutter and John R. Parker Jr., Cutter Law P.C., Sacramento, California; for Plaintiff-Appellant/Cross-Appellee.
Kimberly A. Dunne (argued), Sean Commons, and James M. Perez, Sidley Austin LLP, Los Angeles, California; Douglas H. Hallward-Driemeier (argued) and Jonathan R. Ference-Burke, Ropes & Gray LLP, Washington, D.C.; Paul E. Kalb M.D., Sidley Austin LLP, Washington, D.C.; John P. Bueker, Ropes & Gray LLP, Boston, Massachusetts; McGregor Scott, Orrick Herrington & Sutcliffe LLP, Sacramento, California; Rocky Tsai, Ropes & Gray LLP, San Francisco, California; for Defendants-Appellees/Cross-Appellants.
Joseph F. Busa (argued), Daniel Tenny, and Michael S. Raab, Appellate Staff; Phillip A. Talbert, Acting United States Attorney; Civil Division, United States Department of Justice, Washington, D.C.; for Amicus Curiae United States.
OPINION
WALLACE, Circuit Judge:
Frank Solis appeals from the dismissal of his False Claims Act action against three pharmaceutical companies. We have jurisdiction under
I.
Millennium Pharmaceuticals, Inc. hired Solis to promote sales of a cardiovascular drug, Integrilin. He moved to Schering-Plough Corp. after Schering acquired the right to market Integrilin. There, he also promoted an antibiotic drug, Avelox. Schering later merged with Merck & Co., and Merck fired Solis a year later.
Solis filed this action in 2009. He alleged that his former employers violated state laws and the False Claims Act (FCA) by promoting dangerous off-label uses of Integrilin and by paying physicians kickbacks to prescribe Integrilin and, in the case of Schering and Merck (collectively, Schering), Avelox. Following a three-year investigation, the United States and all twenty-four states named in Solis’s initial complaint chose not to intervene.
II.
We review de novo the district court’s dismissal for lack of subject matter jurisdiction. United States ex rel. Hartpence v. Kinetic Concepts, Inc., 792 F.3d 1121, 1126 (9th Cir. 2015) (en banc). Plaintiff bears the burden to establish subject matter jurisdiction by a preponderance of the evidence. United States ex rel. Mateski v. Raytheon Co., 816 F.3d 565, 569 (9th Cir. 2016). We review for clear error the findings of fact underlying the subject matter jurisdiction determination. Hartpence, 792 F.3d at 1126–27.
III.
The FCA allows whistleblowers, known as relators, to bring an action on the government’s behalf against companies that “knowingly present[], or cause[] to be presented . . . a false or fraudulent claim for payment or approval” to the federal government.
“Under our case law, for a relator’s allegations to be based upon a prior public disclosure, the publicly disclosed facts need not be identical with, but only substantially similar to, the relator’s allegations.” Id. at 573 (internal quotation marks and citation omitted). A prior disclosure and an allegation may be substantially similar when the prior public disclosure put the government “on notice to investigate the fraud before the relator filed his complaint.” Id. at 574.
IV.
We first consider Solis’s Integrilin claims. These claims, brought in 2009, fall into three categories: combination use claims, other off-label claims, and kickback claims. The district court held the combination use claims were substantially similar to those in a complaint filed in state court by an unrelated plaintiff in 2006. It further held the other off-label use and kickback claims were substantially similar to those in five complaints filed in federal court by unrelated plaintiffs in 2007.
We compare Solis’s combination use claims to those in the 2006 complaint to determine whether they are substantially similar. Solis alleged that Millennium and
The publicly disclosed allegations from the 2006 complaint are substantially similar to Solis’s 2009 combination use claims. Both sets of allegations point to the same actors (Schering and Millennium), the same conduct (marketing Integrilin for use in combination with tenecteplase and heparin), and the same risk (increased bleeding). While there may be some differences in the focus and framing of the 2006 complaint compared with Solis’s 2009 combination use claims, the degree of overlap is sufficient to show substantial similarity.
Solis argues that his combination use claims are not substantially similar to those in the 2006 complaint because he provided “139 more pages of detail.” But much of his complaint amounts to legal boilerplate, reciting the elements of dozens of federal and state law counts. As to the few unique details about the studies, he fails to explain how they would be material to a government investigation. See Mateski, 816 F.3d at 579 (explaining that a relator must provide “genuinely new and material information”). Solis’s
Solis also contends that his combination use claims are not substantially similar because he alleged fraud, while the 2006 complaint alleged only negligence. We disagree. The absence of any explicit allegation of wrongdoing in the prior public disclosure “is simply of no moment” so long as “the material transactions giving rise to the [defendant’s] allegedly unlawful . . . schemes were publicly disclosed.” A-1 Ambulance Serv., Inc. v. California, 202 F.3d 1238, 1245 (9th Cir. 2000); see also United States v. Alcan Elec. & Eng’g, Inc., 197 F.3d 1014, 1019–20 (9th Cir. 1999). Here, the 2006 complaint revealed the material transactions or allegations giving rise to Solis’s later claims: that Schering and Millennium “market[ed] the drug [Integrilin] for use in combination with tenecteplase and heparin” and that this combination increased the risk of bleeding.
Solis does not argue that his other off-label use and kickback claims allege more detail than those in the 2007 federal court complaints, and for good reason. These claims closely mirror those in the 2007 complaints. Rather, Solis argues that the 2007 complaints are not substantially similar because they “discuss[] many ‘subject drugs’ as a group, of which Integrilin was only one.” We reject this argument. Solis cites no legal authority suggesting the public disclosure
Finally, we disagree with Solis that his claims contain “more current allegations, including facts which transpired after the 2007 cases.” Each 2007 complaint alleged that the “acts and omissions as alleged herein . . . continue[] to be undertaken.”
We are satisfied that Solis’s Integrilin claims are substantially similar to those in the prior public disclosures. They are close enough in kind and degree to have put the government on notice to investigate the alleged fraud before Solis filed his complaint. See Mateski, 816 F.3d at 574.
V.
Solis can still establish subject matter jurisdiction, however, if he can show that he qualifies as an “original source.”
Intervening circuit law, however, has undercut the basis for the district court’s conclusion. In our recent en banc decision in Hartpence, we repudiated the third part of our original source test, holding that it had no basis in the statutory text. Id. at 1128. After Hartpence, only the first two parts—those explicitly provided in the statute—are relevant to the original source inquiry. Id.
Without the benefit of Hartpence, the district court determined Solis could not qualify as an original source on the sole ground that he failed to show he had a hand in the prior public disclosure. Solis, 95 F. Supp. 3d at 1220. Because that requirement is inapplicable after Hartpence, we remand so that the district court can determine, in the first instance, whether Solis meets the other two parts of the original source test. Hartpence, 792 F.3d at 1129–30.
Solis argues the district court “already found” he met the remaining two parts of the original source test. This is incorrect. The district court simply observed in dicta that Solis “may well have direct and independent knowledge of the subject matter of the allegedly fraudulent claims” and that Solis “claims he did provide the information to the government before filing his suit.” Solis, 95 F. Supp. 3d at 1220; United States ex rel. Solis v. Millennium Pharm., Inc., No. 2:09-CV-03010-MCE-EFB, 2014 WL 1270581, at *9 (E.D. Cal. Mar. 26, 2014). These observations are neither legal conclusions nor findings of fact. At most, they are assumptions made by the district court for the sake of argument en route to finding that Solis did not satisfy the hand-in-the-public-disclosure requirement. A straightforward reading of the district court’s orders demonstrates the district court did not consider whether Solis satisfied the other two requirements of the original source test.
VI.
We now turn to Solis’s Avelox claims, which relate only to the payment of kickbacks. Defendants do not argue that the public disclosure bar applies to Solis’s Avelox claims. This is because none of the disclosures deemed to bar the Integrilin claims even mentions Avelox. The district court clearly erred in finding that the Avelox claims were publicly disclosed based on court complaints that never mention Avelox.
We may affirm, however, on any ground supported by the record. See United States ex rel. Kelly v. Serco, Inc., 846 F.3d 325, 330 (9th Cir. 2017). FCA claims are subject to
Solis’s only particularized allegations show efforts by Schering to get Avelox placed “on formulary” at two hospitals. Even assuming these efforts established a scheme to submit false claims, Solis has failed to identify a single claim submitted pursuant to the scheme. Nor has he provided reliable indicia supporting a strong inference that such claims were submitted. For example, Solis does not allege that being “on formulary” meant such claims would be submitted, or even that being on formulary meant Avelox would be prescribed. Being “on formulary” merely means the drug is available to be used or prescribed. See Consolidated Second Cross-Appeal Brief of Defendants-Appellees/Cross-Appellants at 75; accord J.B.D.L. Corp. v. Wyeth-Ayerst Labs., Inc., 485 F.3d 880, 884 (6th Cir. 2007) (“Formularies are, generally, a listing of medications for which [a managed care organization] provides coverage”). Solis’s complaint provides no other details linking the alleged scheme to any claim submitted to a federal healthcare program. It was Solis’s burden to supply these missing links and he has failed to do so. Solis has not pleaded with the particularity required by Rule 9(b).
Solis argues that we should direct the district court to grant him leave to amend his complaint for the third time if deemed deficient. The district court had no occasion to consider this question, having denied Schering’s Rule 12(b)(6) and 9(b) motion before granting its Rule 12(b)(1) motion. United States ex rel. Solis v. Millennium Pharm., Inc., No. 2:09-CV-03010-MCE-EFB, 2015 WL 1469166, at *7 (E.D. Cal. Mar. 30, 2015). On remand, we instruct the district court to decide this question in the first instance.
In conclusion, we vacate the dismissal of Solis’s Integrilin claims and remand for the district court to determine whether Solis qualifies for the original source exception under Hartpence. We do not reach the sufficiency of Solis’s Integrilin claims. We affirm dismissal of Solis’s Avelox claims on the alternative ground that they fail to satisfy Rule 9(b). Finally, we remand with instructions to the district court to determine whether to grant Solis leave to amend his Avelox claims.
Each party shall bear its own costs.
AFFIRMED in part; VACATED in part; REMANDED.