X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Before WIENER, ELROD, and HIGGINSON, Circuit Judges. STEPHEN A. HIGGINSON, Circuit Judge: Stephanie Schweizer appeals the district court’s dismissal of her qui tam claims under the False Claims Act (FCA), 31 U.S.C. §§ 3729–3733, alleging that Canon[1] overcharged the United States for office equipment and provided non-compliant products. The district court dismissed Schweizer’s claims under the FCA’s public disclosure bar, id. § 3730(e)(4), because they were based upon, or were substantially the same as, Schweizer’s prior FCA suit which the government settled years earlier. We AFFIRM. Background The FCA imposes civil liability on any person who “knowingly presents . . . a false or fraudulent claim for payment or approval,” or “knowingly makes [or] uses . . . a false record or statement material to a false or fraudulent claim.” 31 U.S.C. § 3729(a)(1)(A), (B). The FCA permits private parties to enforce the statute by filing qui tam suits “in the name of the Government,” id. § 3730(b)(1), and incentivizes such whistleblower suits by awarding a substantial share of the fraudulent payments that are recovered, plus attorney’s fees and costs, id. § 3730(d). However, the FCA limits the types of actions that private plaintiffs can bring, including those for which the government is a party (the “government action bar”[2]) or for which the allegations have already been publicly disclosed (the “public disclosure bar”[3]). These limitations prevent rewarding “parasitic” suits which “add nothing to the exposure of fraud.” United States ex rel. Jamison v. McKesson Corp., 649 F.3d 322, 332 (5th Cir. 2011) (quoting United States ex rel. Reagan v. E. Tex. Med. Ctr. Reg’l Healthcare Sys., 384 F.3d 168, 174 (5th Cir. 2004)); see also Graham Cnty. Soil & Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280, 294–95 (2010) (describing Congress’ “effort to strike a balance between encouraging private persons to root out fraud and stifling parasitic lawsuits”). At issue in this appeal is whether Schweizer’s claims against Canon are barred by these limitations. Schweizer filed her first FCA suit in 2006 against Océ North America Inc. Océ sold printers, copiers, and related services to the government. Schweizer worked as a General Services Administration (GSA) contracts manager for Océ from November 2004 until her termination in December 2005. In that role, Schweizer alleged that she noticed “irregularities,” including that the United States was overpaying Océ for copiers and services, and that its products were manufactured in non-compliant countries including China. After Schweizer tried to correct these and other non- compliance problems, Océ fired her. Schweizer then sued Océ in the District Court for the District of Columbia asserting FCA claims for (1) violating the contract’s “Price Reductions Clause” because it overcharged the government for the same products it sold to non-government customers; and (2) violating the Trade Agreements Act (TAA) by selling products that were made in China and other non-TAA-compliant countries.[4] The government intervened and, over Schweizer’s objections, settled the qui tam claims with Océ in 2009. Océ agreed to pay the government $1,200,000 in exchange for release of the asserted FCA claims from April 1, 2001, to December 31, 2008.[5] In 2013, the district court approved the settlement and dismissed the qui tam claims against Océ.[6] Prior to the Océ action becoming final, Canon acquired Océ in 2012. On January 5, 2016, Schweizer subsequently commenced this action—her second FCA suit—alleging that Canon fraudulently overcharged the government for printers, copiers, and other office equipment, and that such products were produced in non-compliant countries. Schweizer alleges that Canon, after it acquired Océ, continued the fraud by (1) violating its contracts’ Price Reduction Clauses, and (2) providing non-TAA compliant products that were manufactured in China and other non-designated countries, in violation of the FCA, 31 U.S.C. § 3729(a)(1).[7] Specifically, Schweizer asserts that Canon violated the terms of the same GSA contracts alleged in her first FCA suit which Schweizer says Canon novated after acquiring Océ, and also violated the same Price Reduction and TAA clauses in additional contracts. For example, Schweizer asserts that Canon novated, and continued to violate, the GS-25F-0060M (“60M”) contract, which Schweizer asserted in her first FCA suit against Océ, and for which the government specifically settled in 2009. She alleges that Canon continued the fraudulent scheme “between January 2010 and January 2016,” which includes both before and after Canon acquired Océ in 2012, and after the government settled the prior Océ action for claims between April 1, 2001, to December 31, 2008. Though Schweizer was no longer employed with Océ or Canon since her termination in 2005, she claims to have “reviewed the modification history of the GSA Contracts involved here,” and based on “conversations with several Océ employees” and “information and belief,” the production “either continued in the Océ facilities in China and Malaysia, or were moved to the manufacturing facilities that Canon already owned in China.” The government declined to formally intervene in Schweizer’s second FCA suit. Canon moved to dismiss the complaint, asserting that Schweizer’s claims were barred by the government action and public disclosure bars, and alternatively failed to allege fraud with particularity under Federal Rules of Civil Procedure 12(b)(6) and 9(b). Schweizer opposed the motion in full, and the United States filed a statement of interest in opposition as to Canon’s interpretation of the government action bar, but noted that “[t]he United States takes no position on any other aspect of Canon’s Motion.” Following further summary judgment briefing, the magistrate judge recommended dismissing the claims because, based on the prior Océ litigation and settlement, both the government action and public disclosure bars applied to Schweizer’s claims against Canon. Both the United States and Schweizer timely objected. The United States, as in its prior statement, objected only to the government action bar, but took “no position on the Magistrate Judge’s Memorandum and Recommendation as it relates to the FCA’s public disclosure bar, 31 U.S.C. § 3730(e)(4), an alternative grounds for dismissal of relator’s case.” Schweizer objected to both grounds for dismissal. The district judge adopted in part the magistrate judge’s recommendation that Schweizer’s claims were publicly disclosed and therefore barred Schweizer’s complaint against Canon. However, the district judge declined to reach whether the government action bar applied, overruling that portion of the recommendation. The district judge also denied Schweizer’s subsequent Rule 59(e) motion for reconsideration. This appeal timely followed. Standard of Review We review motions for summary judgment de novo. United States ex rel. Jamison v. McKesson Corp., 649 F.3d 322, 326 (5th Cir. 2011). A challenge under the FCA’s public disclosure bar “is necessarily intertwined with the merits and is, therefore, properly treated as a motion for summary judgment.” Id. (internal quotation marks and citation omitted). Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Discussion The primary issue on appeal is whether Schweizer’s claims against Canon were barred by the FCA’s public-disclosure provision. The current version of the FCA’s public disclosure bar states: The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed– in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information. For purposes of this paragraph, “original source” means an individual who either (i) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) [sic] who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section. 31 U.S.C. § 3730(e)(4) (2010).[8] As a threshold matter, Schweizer argues that the public disclosure bar cannot apply because the government objected to dismissal of Schweizer’s claims, and thus was “opposed by the Government.” Id. § 3730(e)(4)(A). Not so. Both of the government’s filings below expressly stated that it opposed only the government action bar and that it took no position as to dismissal of Schweizer’s claims under the public disclosure bar. Moreover, as Schweizer concedes, she “has not located caselaw”—and we have likewise found none—to support her novel interpretation that any opposition, no matter how limited, forecloses dismissal under the public disclosure bar. As to whether Schweizer’s claims are barred under the FCA’s public- disclosure provision, this court traditionally applies “a three-part test, asking ’1) whether there has been a “public disclosure” of allegations or transactions, 2) whether the qui tam action is “based upon” such publicly disclosed allegations, and 3) if so, whether the relator is the “original source” of the information.’” Jamison, 649 F.3d at 327 (quoting Fed. Recovery Servs., Inc. v. United States, 72 F.3d 447, 450 (5th Cir. 1995)). “[C]ombining the first two steps can be useful, because it allows the scope of the relator’s action in step two to define the ‘allegations or transactions’ that must be publicly disclosed in step one.” Id.[9] We have previously applied the FCA’s public disclosure bar when “a qui tam action is ‘even partly based upon public allegations or transactions’ . . . . Even if [the relator] uncovered some nuggets of new, i.e., non-public, information, [the relator's] claims of fraud are based at least in part on allegations already publicly disclosed.” United States ex rel. Fried v. W. Indep. Sch. Dist., 527 F.3d 439, 442 (5th Cir. 2008) (quoting United States ex rel. Fed. Recovery Servs., Inc. v. E.M.S., Inc., 72 F.3d 447, 451 (5th Cir. 1995)). We have also emphasized that “[a] guiding query is whether ‘one could have produced the substance of the complaint merely by synthesizing the public disclosures’ description’ of a scheme.” Little v. Shell Expl. & Prod. Co., 690 F.3d 282, 293 (5th Cir. 2012) (quoting Jamison, 649 F.3d at 331). When considering whether a relator’s action is “based upon” publicly disclosed allegations or transactions, this court applies a two-part burden- shifting approach. First, the “defendants must first point to documents plausibly containing allegations or transactions on which [relator's] complaint is based.” Jamison, 649 F.3d. at 327. Second, “to survive summary judgment, [the relator] must produce evidence sufficient to show that there is a genuine issue of material fact as to whether [her] action was based on those public disclosures.” Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)).[10] Before the district court, Canon pointed to documents from the Océ litigation, including the operative Océ complaint, the district court’s 2013 order approving the Océ settlement, and news articles reporting on the litigation. Schweizer does not challenge that these documents constitute “public disclosures” under the statute, which include disclosures made in either “a Federal . . . civil . . . hearing in which the Government or its agent is a party” or “the news media.” 31 U.S.C. § 3730(e)(4)(A)(i), (iii). We agree with both the magistrate and district judges below that Canon satisfied its burden of showing that Schweizer’s allegations against Canon are “based upon” the allegations and transactions asserted in the Océ litigation. Schweizer asserts that Canon committed the same fraudulent scheme she alleged against Océ. At least one of the contracts asserted (and settled) against Océ—the “60M” contract—is the identical contract asserted in her suit against Canon. Moreover, her complaint against Canon draws largely, if not exclusively, from her complaint against Océ. At oral argument, Schweizer’s counsel conceded that her FCA claims against Canon involve the “same contracts” and the “same scheme” asserted in the Océ litigation.[11] Thus, the allegations against Canon are more than “even partly based upon” the Océ allegations or transactions, Fried, 527 F.3d at 442 (internal quotation marks and citation omitted), and “one could have produced the substance of the [Canon] complaint merely by synthesizing the public disclosures’ description of the [Océ] scheme,” Jamison, 649 F.3d at 331. We next consider whether, to survive summary judgment, Schweizer “produce[d] evidence sufficient to show that there is a genuine issue of material fact as to whether [her] action was based on those public disclosures.” Id. at 327. She has not. Schweizer primarily argues that her FCA claims against Canon are not barred because Canon is a different entity from Océ, and that it perpetuated the fraud over a later time period and with additional contracts. In support, she points to the Océ settlement agreement, which agreed only to settle claims against Océ between April 2001 to December 2008; a 5-pargraph declaration describing her role as the relator in the Océ litigation; and the allegations in her operative complaint against Canon describing Canon’s novation of Océ’s contracts and subsequent entry into additional contracts. But none of this creates a genuine issue of material fact that Schweizer’s complaint against Canon was “based upon,” or is “substantially the same” as, the Océ litigation. Nor do allegations that Canon violated additional GSA contracts establish otherwise. See United States ex rel. Colquitt v. Abbott Lab’ys, 858 F.3d 365, 374 (5th Cir. 2017) (“[C]ontributing more of the same does not change the public character of a relator’s allegations: [Relator] ‘cannot avoid the [public disclosure] bar simply by adding other claims that are substantively identical to those previously disclosed.’” (quoting Fed. Recovery Servs., Inc. v. United States, 72 F.3d 447, 451 (5th Cir. 1995))); see also Jamison, 649 F.3d at 329 (noting that public disclosures may be “sufficient” if they “‘set the government on the trail of the fraud’ and ensure that the government will not ‘need to comb through myriad transactions performed by various types of entities in search of potential fraud’” (quoting In re Nat. Gas Royalties, 562 F.3d 1032, 1042–43 (10th Cir. 2009))).[12] Schweizer alternatively argues that because Canon allegedly “restarted” the fraudulent scheme, her second FCA suit “exposes a different wrongful scheme that does not implicate the Public Disclosure Bar.” For this point, Schweizer relies primarily on the Sixth Circuit’s decision in United States ex rel. Ibanez v. Bristol-Myers Squibb Co., 874 F.3d 905 (6th Cir. 2017). In Ibanez, the relator-plaintiffs filed suit against two pharmaceutical companies asserting FCA claims arising from their off-label promotion, and related kickback scheme, of the antipsychotic drug Abilify. Ibanez, 874 F.3d at 911–12. Several years earlier, the pharmaceutical companies had settled “nearly identical allegations” and, as part of their settlements, entered into five-year Corporate Integrity Agreements requiring them to “ensure compliance with the FCA, the Anti-Kickback Statute, and cease off-label promotion of Abilify.” Id. at 912. The relators—both former sales representatives employed from 2005 to 2010—asserted that despite these agreements in 2007 and 2008, the defendants “continued to promote Abilify off-label and offer kickbacks to physicians who prescribed it.” Id. The district court dismissed the allegations under, inter alia, the public disclosure bar because the “relators’ alleged scheme ‘closely track[s]‘ the pre- agreement promotion scheme.” Id. at 919 (alteration in original). The Sixth Circuit reversed, noting that “it was error for the court to hold that this resemblance alone called for dismissal under the public disclosure bar.” Id. The court emphasized that “allegations that the scheme either continued despite the agreements or was restarted after the agreements are different.” Id. Thus, the court concluded, “to the extent that relators are able to describe with particularity post-agreement, improper promotion of Abilify, the mere resemblance of those allegations to a scheme resolved years earlier is not by itself enough to trigger the public disclosure bar.” Id. However, the court cautioned that its reasoning was applicable “only to the extent that the new allegations are temporally distant from the previously resolved conduct.” Id. at 919 n.4. As both the magistrate judge and district judge concluded, Ibanez is readily distinguishable. To start, Schweizer’s claims are not “temporally distant”: the government settled with Océ in 2009 for claims spanning 2001 through 2008, and Schweizer’s claims against Canon begin the following year in 2010. Moreover, Schweizer fails to describe with “particularity” any post- settlement fraud other than Canon’s novation of Océ’s prior contracts or generalized allegations that Canon violated the same terms of similar, and in at least one case, identical, contracts. See id. at 919. As the district court emphasized, Schweizer “failed to bring forward summary judgment evidence detailing Canon’s alleged fraudulent scheme and its scope to even permit the [c]ourt to draw an inference of a new or continued fraud.”[13] * * * For the foregoing reasons, the district court’s summary judgment order is AFFIRMED. [14]

 
Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.

More From ALM

With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now
Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now
Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now
October 15, 2024
Dallas, TX

The Texas Lawyer honors attorneys and judges who have made a remarkable difference in the legal profession in Texas.


Learn More
April 08, 2025 - April 09, 2025
Chicago, IL

Join General Counsel and Senior Legal Leaders at the Premier Forum Designed For and by General Counsel from Fortune 1000 Companies


Learn More
October 15, 2024
Los Angeles, CA

Join the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR!


Learn More

The University of Kentucky (UK) seeks a strategic and collaborative leader with a distinguished scholarly profile to serve as the next Dean ...


Apply Now ›

parkingticket.com is the world-leader in local, municipal compliance. Whether it be a food delivery, or a fine bottle of wine being delive...


Apply Now ›

The Partners Group is currently recruiting a VP of Legal for our burgeoning client, a real estate investment firm in Atlanta, GA. The firm h...


Apply Now ›