US Ex Rel. Steven Hartpence v. Kinetic Concepts, Inc. , 792 F.3d 1121 ( 2015 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES EX REL. STEVEN J. No. 12-55396
HARTPENCE,
Plaintiff-Appellant, D.C. No.
2:08-cv-01885-
v. GHK-AGR
KINETIC CONCEPTS, INC.; KCI-USA,
INC.,
Defendants-Appellees.
UNITED STATES EX REL. GERALDINE No. 12-56117
GODECKE,
Plaintiff-Appellant, D.C. No.
2:08-cv-06403-
v. GHK-AGR
KINETIC CONCEPTS, INC.; KCI-USA,
INC., OPINION
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
George H. King, Chief District Judge, Presiding
Argued and Submitted En Banc
March 17, 2015—San Francisco, California
2 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS
Filed July 7, 2015
Before: Sidney R. Thomas, Chief Judge and Stephen
Reinhardt, Alex Kozinski, Kim McLane Wardlaw, William
A. Fletcher, Ronald M. Gould, Marsha S. Berzon,
Consuelo M. Callahan, Carlos T. Bea, Sandra S. Ikuta and
N. Randy Smith, Circuit Judges.
Opinion by Judge Bea
SUMMARY*
False Claims Act
The en banc court reversed the district court’s dismissal
of consolidated civil qui tam suits brought on the
government’s behalf by Steven Hartpence and Geraldine
Godecke under the False Claims Act, alleging that plaintiffs’
former employer fraudulently claimed reimbursements from
Medicare.
The court held that there are two, and only two,
requirements in order for a whistleblower to be an “original
source” who may recover under the False Claims Act: (1)
Before filing the action, the whistleblower must voluntarily
inform the government of the facts which underlie the
allegations of the complaint; and (2) the whistleblower must
have direct and independent knowledge of the allegations
underlying the complaint. Abrogating earlier precedent,
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 3
Wang ex rel. United States v. FMC Corp., 975 F.2d 1412,
1418 (9th Cir. 1992), the court held that it does not matter
whether the whistleblower also played a role in the public
disclosure of the allegations that are part of his suit. The
court remanded for the district court to consider whether
plaintiffs qualified as original sources under the two-part test
announced in the opinion.
The court also held that the district court erred in its
application of the first-to-file bar, which provides that a
whistleblower must be the first to file an action seeking
reimbursement on behalf of the government based on the
fraudulent scheme. The panel concluded that Godecke’s
second and third claims were based on different material facts
than the claims contained in Hartpence’s earlier-filed
complaint. Thus, they were not precluded by the first-to-file
bar.
COUNSEL
Mark Irving Labaton (argued) and Oren Rosenthal, Isaacs
Friedberg & Labaton, Los Angeles, California; Michael A.
Hirst, Hirst Law Group, P.C., Davis, California; Patrick J.
O’Connell, Andrea Dawn Rose, and Jan Soifer, O’Connell &
Soifer LLP, Austin, Texas, for Plaintiffs-Appellants.
Gregory M. Luce (argued), Maya P. Florence, and Colin V.
Ram, Skadden, Arps, Slate, Meagher & Flom LLP,
Washington, D.C.; Matthew E. Sloan, Skadden, Arps, Slate,
Meagher & Flom LLP, Los Angeles, California, for
Defendants-Appellees.
4 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS
OPINION
BEA, Circuit Judge:
If a whistleblower informs the government that it has
been bilked by a provider of goods and services, and that
scheme is unmasked to the public, under what conditions can
that same whistleblower recover part of what the guilty
provider is forced to reimburse the government? We hold
today that there are two, and only two, requirements in order
for a whistleblower to be an “original source” who may
recover under the False Claims Act: (1) Before filing his
action, the whistleblower must voluntarily inform the
government of the facts which underlie the allegations of his
complaint; and (2) he must have direct and independent
knowledge of the allegations underlying his complaint.
Abrogating our earlier precedent, we conclude that it does not
matter whether he also played a role in the public disclosure
of the allegations that are part of his suit. We also hold that
the district court erred in its application of the rule that a
whistleblower must be the first to file an action seeking
reimbursement on behalf of the government based on the
fraudulent scheme.
OVERVIEW
The False Claims Act (“FCA”), 31 U.S.C. §§ 3729–3733,
prohibits knowingly submitting to the federal government a
false or fraudulent claim for payment.1 As one enforcement
1
The FCA was amended by the Patient Protection and Affordable Care
Act, Pub. L. No. 111-148, 124 Stat. 119 (2010). Although the
amendments altered the language we are called upon to interpret today,
they do not apply retroactively to actions, like these, which were pending
U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 5
mechanism, the FCA authorizes private parties, known as
“relators,” to bring civil qui tam suits on the government’s
behalf against entities who have allegedly defrauded the
government. 31 U.S.C. § 3730(b)(1). In these suits, the
relators seek reimbursement of the defrauded amounts on the
government’s behalf. Where, as here, the government
declines to intervene in the suit, the relator stands to receive
between 25% and 30% of any recovery. Id. § 3730(d)(2).
However, the FCA also includes several provisions that
deprive federal courts of subject-matter jurisdiction over
certain qui tam actions. These cases concern two such
provisions, the “public disclosure” bar and the “first-to-file”
bar. The public disclosure bar precludes qui tam suits where
there has been a public disclosure of the fraud, unless the
relator qualifies as an “original source” of the information.
Id. § 3730(e)(4). The first-to-file bar precludes civil actions
based on complaints which allege the same material facts as
an earlier-filed civil complaint. Id. § 3730(b)(5); United
States ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181,
1188–90 (9th Cir. 2001).
In these consolidated qui tam cases, Steven Hartpence and
Geraldine Godecke (“Relators”) allege their former employer
fraudulently claimed reimbursements from Medicare. After
these allegations of Medicare fraud were publicly disclosed,
Relators each informed the government of the alleged fraud
and then filed separate complaints in district court. Under the
at the time the statute was amended. Graham Cnty. Soil & Water
Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280, 283 n.1
(2010). We analyze these cases under the pre-2010 version of the FCA.
Unless otherwise specified, all references to the FCA are to the pre-2010
version.
6 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS
public disclosure bar, the district court lacked jurisdiction
over these actions unless Relators qualified as “original
sources” under the FCA. 31 U.S.C. § 3730(e)(4). Relying on
our existing precedent, the district court held that neither
Relator qualified as an original source, because neither had a
“hand in the public disclosure” of the fraud, a requirement we
announced in Wang ex rel. United States v. FMC Corp.,
975 F.2d 1412, 1418 (9th Cir. 1992). The district court
further held that Godecke’s complaint was also barred by the
first-to-file bar, because her complaint alleged the same
material elements of fraud as the complaint Hartpence had
filed six months earlier. After a careful review of the
statutory text, we overrule Wang as wrongly decided, and we
remand for the district court to consider whether Relators
qualify as original sources under the two-part test we
announce today. Second, we hold that the district court erred
in finding Godecke’s action barred by the first-to-file bar,
because some of Godecke’s claims are materially distinct
from Hartpence’s claims.
I. The FCA
The FCA authorizes whistleblowing private citizens to
file suit after discovering that the federal government has
been defrauded. Schindler Elevator Corp. v. United States ex
rel. Kirk, 131 S. Ct. 1885, 1889 (2011). As originally
enacted, the FCA allowed a relator to bring a qui tam action
even if he discovered the fraud merely by reading information
already in the public domain. See Wilson, 559 U.S. at
293–94. In 1943, Congress amended the FCA to bar such
“parasitic” lawsuits by precluding actions based on
information already in the government’s possession. Id. at
294.
 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 7
The 1943 amendments had the curious effect of barring
a plaintiff from bringing a qui tam action based on
information already in the government’s possession even
where the plaintiff himself was the source of the
government’s knowledge. See, e.g., United States ex rel. Wis.
Dept. of Health & Soc. Servs. v. Dean, 729 F.2d 1100 (7th
Cir. 1984). In 1986, Congress overhauled the FCA with a
series of key amendments. See Wilson, 559 U.S. at 294.
Among other things, Congress jettisoned the “government
knowledge” bar to suit in favor of a new condition, the
“public disclosure” bar. This was an effort to strike the
proper “balance between encouraging private persons to root
out fraud and stifling parasitic lawsuits.” Id. at 295. The
public disclosure bar deprives district courts of jurisdiction
over any action “based upon the public disclosure of
allegations or transactions” concerning the alleged fraud,
“unless . . . the person bringing the action is an original
source of the information.” 31 U.S.C. § 3730(e)(4)(A). The
FCA provides that, to be an “original source,” a relator must
(1) have “direct and independent knowledge” of information
supporting his claims, and (2) “provide[] the information to
the Government before filing an action.” Id. § 3730(e)(4)(B).
In Wang, persuaded by the Second Circuit’s interpretation
and our own review of the legislative history of the 1986
amendments, we held that a relator must meet a third
requirement to qualify as an original source: he must have
“had a hand in the public disclosure of allegations that are a
part of [his] suit.” 975 F.2d at 1418.
The 1986 amendments implemented another jurisdictional
bar, the first-to-file bar, which prohibits anyone other than the
government from intervening or bringing “a related action
based on the facts underlying [a] pending action.” 31 U.S.C.
§ 3730(b)(5). The first-to-file bar prohibits later-filed actions
8 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS
“‘based on’ the same material facts” as an earlier action.
Lujan, 243 F.3d at 1190. Unlike the public disclosure bar, the
first-to-file bar is “exception-free.” Id. at 1187.
II. The Complaints
Kinetic Concepts, Inc. and KCI USA, Inc. (collectively,
“Defendants” or “KCI”) manufacture medical devices to
speed the healing of wounds, using various technological
innovations. One such innovation is Vacuum Assisted
Closure (“V.A.C.”) Therapy. V.A.C. devices perform
negative-pressure wound therapy (“NPWT”), which promotes
healing by applying sub-atmospheric pressure to the site of a
wound. Since 2000, the Medicare program has covered
NPWT devices as “durable medical equipment.” As the
district court explained:
The coverage criteria for NPWT devices
are found in Local Coverage Determinations
(“LCDs”), which are issued by private claims
processing contractors known as Durable
Medical Equipment Medicare Administrative
Contractors (“DME MACs”). There are four
separate DME MACs that serve the United
States. Because the DME MACs are
organized regionally, each DME MAC issues
its own LCD for its respective region of the
country. In the case of NPWT, the four
regional DME MACs have issued separate,
but nearly identical, LCDs.
When a supplier of NPWT therapy, such
as KCI, submits a claim for reimbursement to
Medicare, the claim is initially reviewed by
U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 9
one of the DME MACs in a process known as
“initial determination.” If the DME MAC
concludes that a particular claim satisfies its
payment criteria, the DME MAC may
reimburse the claim. If the DME MAC denies
reimbursement of a claim the supplier may
appeal that denial through a statutorily
authorized administrative appeals process
administered by the Secretary of the U.S.
Department of Health and Human Services.
United States ex rel. Hartpence v. Kinetic Concepts, Inc., No.
CV 08-1885-GHK, 2012 WL 11977661, at *1 (C.D. Cal. Jan.
30, 2012) (citations omitted).
During the course of their employment by Defendants,
Hartpence and Godecke allegedly discovered that KCI
engaged in fraudulent conduct by submitting claims to
Medicare that did not comply with the DME MACs’ local
coverage determinations. The substance of the fraud they
claim KCI perpetrated was laid out in their respective district
court complaints. Hartpence, who served as KCI’s Senior
Vice President of Business Systems until July 2007, filed his
initial complaint in district court on March 20, 2008. As
relevant here, his operative complaint2 alleges that KCI
violated the FCA by knowingly misusing what is known as
the “KX modifier.” This is a billing code that certified
(allegedly falsely) to Medicare’s automated processing
system that KCI had “records to show that [the] V.A.C. claim
2
Relators each amended their original complaints. For purposes of
determining jurisdiction, we look to the allegations in the amended
complaints. Rockwell Int’l Corp. v. United States, 549 U.S. 457, 473–74
(2007).
10 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS
billed for met all . . . criteria, and that Medicare did not need
to look for additional data.” Hartpence alleges that KCI
improperly submitted claims with the KX modifier: (1) when
there was no wound improvement in the previous month;
(2) for the treatment of wounds for which V.A.C. therapy was
neither reasonable nor necessary; (3) when the required
wound measurement documentation was absent; (4) for
wounds that had been improving even without V.A.C.
therapy; (5) falsely claiming that there had been wound
improvement when in fact there was none; and (6) for
treatment of wounds that were too small to require V.A.C.
therapy. Moreover, Hartpence claims that KCI committed a
separate FCA violation by retaining overpayments it obtained
as a result of these schemes.
Godecke, who served as KCI’s Director of Medicare Cash
and Collections until October 2007, filed her initial complaint
on September 29, 2008, six months after Hartpence’s filing.
Her operative complaint alleges first that KCI violated the
FCA by knowingly misusing the KX modifier in submitting
claims for a full month of V.A.C. therapy, even when the
therapy that had been stopped and restarted within the same
month.3 As a separate violation, Godecke alleges that KCI
ignored the requirement to receive correct and completed
Detailed Written Orders (“DWOs”) before delivering supplies
and beginning therapy.4 Third, Godecke alleges that KCI
3
Under this practice, “KCI would bill for patients who started V.A.C.
therapy on day 1, stopped on day 3 and started again on day 28. KCI
would bill for an entire month of service and then would continue to bill
for subsequent months.”
4
Suppliers of durable medical equipment must obtain DWOs from a
patient/beneficiary’s treating physician before dispensing supplies for
which they seek reimbursement from Medicare. See CMS Manual
U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 11
improperly retained overpayments it received as a result of
these two schemes. In addition to her qui tam claims,
Godecke added a retaliation claim that is not at issue on this
appeal.
III. Procedural History
Both complaints were initially filed under seal to allow
the government time to review the complaints and decide
whether to intervene. See 31 U.S.C. § 3730(b)(2). The
complaints were unsealed after the government declined to
intervene in each case. Defendants then filed a motion to
dismiss the complaints for lack of jurisdiction under Federal
Rule of Civil Procedure 12(b)(1), asserting that (1) the
allegations of Medicare fraud had been publicly disclosed,
implicating the public disclosure jurisdictional bar, and
(2) Relators did not qualify as original sources. The district
court granted the Rule 12(b)(1) motions in each case.5 The
district court held that (1) there had been public disclosures
of KCI’s alleged V.A.C.-related Medicare fraud in the form
of a 2007 federal audit report and at least one decision by an
Administrative Law Judge (“ALJ”), and (2) Relators failed to
System, Pub. 100-08, Medicare Program Integrity Manual, Ch. 5,
§ 5.2.3.1.
5
Defendants also filed motions to dismiss the complaints for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6) in each case.
Because it granted the Rule 12(b)(1) motions, the court denied the Rule
12(b)(6) motions as moot, except as to Godecke’s retaliation claim, which
was beyond the scope of the Rule 12(b)(1) motion. United States ex rel.
Godecke v. Kinetic Concepts, Inc., No. CV 08-6403-GHK, 2012 WL
11979268, at *10–15 (C.D. Cal. Jan. 30, 2012). The district court denied
Defendants’ Rule 12(b)(6) motion on the merits as to Godecke’s
retaliation claim, and that ruling is not at issue on appeal.
12 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS
qualify as “original sources” because they had not shown that
they had a hand in those public disclosures. Hartpence, 2012
WL 11977661, at *3–8; Godecke, 2012 WL 11979268, at
*3–8. The district court further held that, even if Godecke’s
qui tam claims were not barred by the public disclosure bar,
her claims would be barred by the first-to-file bar, because
they were no more than a “slight[] . . . variation[]” on
Hartpence’s earlier-filed claims. Godecke, 2012 WL
11979268, at *9. The district court did not address the other
two elements of the original source exception (whether proper
pre-filing disclosure had been made by Hartpence and
Godecke to the federal government and whether Hartpence
and Godecke had direct and independent knowledge of KCI’s
fraud).
On appeal, Relators do not challenge the district court’s
determination that the 2007 federal audit report and at least
one ALJ decision constitute “public disclosures” under the
FCA. Rather, they contend that the district court erred when
it determined that neither Relator qualified under the original
source exception because neither had a “hand in the public
disclosure,” Wang, 975 F.2d at 1418. They argue that the
hand-in-the-public-disclosure rule is “found nowhere in the
statutory language.” Godecke further argues that her claims
are not precluded by the first-to-file bar, because they are
sufficiently distinct from the claims asserted by Hartpence.
The original three-judge panel sua sponte called for this case
to be heard en banc to review Wang’s continued validity.
U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 13
DISCUSSION
I. Jurisdiction and Standard of Review
We have jurisdiction under 28 U.S.C. § 1291. We review
de novo the district court’s interpretation of the FCA and its
decision to dismiss for lack of subject-matter jurisdiction.
Lujan, 243 F.3d at 1186. Where the district court relied on
findings of fact to draw its conclusions about subject-matter
jurisdiction, we review those factual findings for clear error.
Id.
II. Analysis
A. Original Source Exception
The public disclosure bar and original source exception
that govern these lawsuits read, in full:
(A) No court shall have jurisdiction over an
action under this section based upon the
public disclosure of allegations or transactions
in a criminal, civil, or administrative hearing,
in a congressional, administrative, or
Government Accounting Office 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.
(B) For purposes of this paragraph, “original
source” means an individual who has direct
and independent knowledge of the
14 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS
information on which the allegations are
based and has voluntarily provided the
information to the Government before filing
an action under this section which is based on
the information.
31 U.S.C. § 3730(e)(4)(A)–(B).
We previously interpreted the requirements of the original
source exception in Wang, 975 F.2d 1412. There, we
affirmed the dismissal of a suit brought by an engineer
against his former employer under the FCA. Because the
relator’s suit was based on allegations already in the public
domain, which triggered the public disclosure bar in
31 U.S.C. § 3730(e)(4)(A), jurisdiction turned on whether the
relator was an “original source.” In Wang, we adopted a
three-part test to determine whether a plaintiff is an original
source: (1) he must have direct and independent knowledge
of the information on which his allegations are based; (2) he
must have voluntarily provided that information to the
government before filing his lawsuit; and (3) he must have
“had a hand in the public disclosure of allegations that are a
part of [his] suit.” 975 F.2d at 1417–18. Although the first
two requirements parallel the statutory language, we inferred
the third requirement from the FCA’s legislative history,
which suggested to us that the “information” referenced in the
phrase “original source of the information,” 31 U.S.C.
§ 3730(e)(4)(A), meant the information underlying the
publicly disclosed allegations that triggered the public
disclosure bar, rather than the information which underlay the
plaintiff’s complaint. Id. at 1418–20. We were also
persuaded by the Second Circuit’s similar interpretation of
the original source exception in United States ex rel. Dick v.
Long Island Lighting Co., 912 F.2d 13 (2d Cir. 1990). In
U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 15
Dick, the Second Circuit concluded that, to qualify as an
original source, a relator “must have directly or indirectly
been a source to the entity that publicly disclosed the
allegations on which a suit is based.” Id. at 16. We then
found that Wang did not qualify as an original source,
because he did not have “a hand in the public disclosure of
[the] allegations” of fraud. Wang, 975 F.2d at 1418.
Wang has been the law of this circuit for 23 years. As an
en banc court, however, we have the authority—and, indeed,
the obligation—to review whether Wang was correctly
decided. See Hart v. Massanari, 266 F.3d 1155, 1171 (9th
Cir. 2001) (“Once a panel resolves an issue in a precedential
opinion, the matter is deemed resolved, unless overruled by
the court itself sitting en banc, or by the Supreme Court.”).
We note that many of our sister circuits have declined to
adopt Wang’s third prong—the hand-in-the-public-disclosure
requirement—finding that it impermissibly grafts onto the
statute a requirement nowhere to be found in the statute’s
text. See, e.g., Minn. Ass’n of Nurse Anesthetists v. Allina
Health Sys. Corp., 276 F.3d 1032, 1048 n.11 (8th Cir. 2002)
(finding that the rule we announced in Wang “has no basis in
the statutory language and we therefore decline to adopt it”);
United States ex rel. Siller v. Becton Dickinson & Co.,
21 F.3d 1339, 1355 (4th Cir. 1994) (“Accordingly, we hold
that a qui tam plaintiff need not be a source to the entity that
publicly disclosed the allegations on which the qui tam action
is based in order to be an original source[. . . .]”). Today, we
join our sister circuits; after reviewing the statutory text, we
conclude that Wang’s hand-in-the-public-disclosure
requirement has no textual basis, and we give it a respectful
burial.
16 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS
In construing the provisions of a statute, we begin by
looking at the language of the statute to determine whether it
has a plain meaning. BedRoc Ltd. v. United States, 541 U.S.
176, 183 (2004). “The preeminent canon of statutory
interpretation requires us to presume that the legislature says
in a statute what it means and means in a statute what it says
there. Thus, our inquiry begins with the statutory text, and
ends there as well if the [statute’s] text is unambiguous.” Id.
Where the statute’s language is plain, we do not consider “the
legislative history or any other extrinsic material.” Kwai Fun
Wong v. Beebe, 732 F.3d 1030, 1042 (9th Cir. 2013) (en
banc) (internal quotation marks omitted).
On its face, the original source exception has two, and
only two, requirements. An original source is “an individual
who [1] has direct and independent knowledge of the
information on which the allegations are based and [2] has
voluntarily provided the information to the Government
before filing an action . . . based on the information.”
31 U.S.C. § 3730(e)(4)(B). As Appellee’s counsel
forthrightly admitted at oral argument, this text contains no
requirement that the relator have had a hand in the public
disclosure of the fraud. Nor do we detect any ambiguity
about the existence of such a requirement that might prompt
us to examine extrinsic material. See Kwai Fun Wong,
732 F.3d at 1042. Thus, we hold that where an FCA claim
has been publicly disclosed before a relator filed his
complaint, the relator may bring a qui tam suit if he can show
that (1) he has direct and independent knowledge of the
information on which the allegations in his court-filed
complaint are based and (2) he has voluntarily provided the
information to the Government before filing his civil action.
31 U.S.C. § 3730(e)(4)(B). He need not have played any role
in making the disclosure public.
U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 17
The Supreme Court’s decision in Rockwell International
Corp. v. United States lends further support to our
interpretation.6 In Rockwell, the Court asked: “[D]oes the
phrase ‘information on which the allegations are based’ [in
31 U.S.C. § 3730(e)(4)(B)] refer to the information on which
the relator’s allegations are based or the information on
which the publicly disclosed allegations that triggered the
public-disclosure bar are based?” Rockwell, 549 U.S. at 470.
The Court concluded that “the ‘information’ to which
subparagraph (B) speaks is the information upon which the
relators’ allegations are based. . . . Surely the information one
would expect a relator to ‘provide to the Government before
filing an action . . . based on the information’ is the
information underlying the relator’s claims.” Id. at 470–71.
This excerpt from Rockwell stands in serious tension with
the hand-in-the-public disclosure requirement this court
adopted in Wang. In Wang, we surmised that the term
“information” in 31 U.S.C. § 3730(e)(4)(A) refers to the
information underlying the publicly disclosed allegations, not
the information underlying the relator’s complaint. 975 F.2d
at 1418–20. Given the Supreme Court’s teaching in Rockwell
that “information” in 31 U.S.C. § 3730(e)(4)(B) refers to the
6
Relators argue at length that Rockwell abrogated Wang. Other courts
have concluded that Rockwell demands relators to meet two, and only two,
requirements to qualify as original sources. See, e.g., United States ex rel.
Davis v. District of Columbia, 679 F.3d 832 (D.C. Cir. 2012); United
States v. Huron Consulting Grp., 843 F. Supp. 2d 464 (S.D.N.Y. 2012),
aff’d, 567 F. App’x 44 (2d Cir. 2014) (unpublished). We continued to
treat Wang as the law of this circuit even after Rockwell. See United
States ex rel. Meyer v. Horizon Health Corp., 565 F.3d 1195, 1202 (9th
Cir. 2009). We need not decide today whether Rockwell abrogated Wang,
because we overrule Wang as wrongly decided. We also overrule Meyer
to the extent that it reaffirmed the test we announced in Wang.
18 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS
information underlying the relator’s complaint, Wang’s
premise is viable only if the same word, “information,”
means something different in the two subsections. We
decline to countenance an interpretation of a single word so
divorced from its statutory surroundings. See
Montero-Martinez v. Ashcroft, 277 F.3d 1137, 1142 (9th Cir.
2002) (noting that, where Congress uses the same word
multiple times in the same statute, we presume it has “the
same meaning each time Congress uses it”). We also note
that Rockwell strongly favors an interpretation that imports
the same meaning to the word “information” in both
subsections. See Rockwell, 549 U.S. at 472 (suggesting that
the word “information” in 31 U.S.C. § 3730(e)(4)(A) and
31 U.S.C. § 3730(e)(4)(B) are “one and the same, viz.,
information underlying the allegations of the relator’s
action”). And, Rockwell makes clear that Congress did not
intend “to link original-source status to information
underlying the public disclosure.” Id.
We pause to address Appellee’s argument that our
interpretation is inconsistent with an overarching goal of the
False Claims Act—to encourage private citizens to uncover
fraud, not simply to report it. See, e.g., Wilson, 559 U.S. at
295. But the FCA also aims to incentivize persons with first-
hand knowledge of fraud to report it to the government and to
prosecute cases against the offending entities, in a sense
acting as private Attorneys General. We think it entirely
reasonable that Congress sought to reward those who assume
responsibility for prosecuting, on the government’s behalf,
fraud claims about which they have direct and independent
knowledge, even if they were not in the chain that caused the
public disclosure of the fraud. Yet even if we thought that
Congress struck the wrong balance, whom to reward and
what actions to incentivize are considerations for Congress,
U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 19
when enacting the Act, not for the judiciary. Indeed, if
Congress’s plain words like those contained in 31 U.S.C.
§ 3730(e)(4) are to have any effect at all, they surely cannot
give way to whatever broad goals we, as the judiciary, might
prefer.
We conclude that Wang impermissibly drew on language
from 31 U.S.C. § 3730(e)(4)(A) to read a nonexistent, extra-
textual third requirement into § 3730(e)(4)(B). We overrule
it as wrongly decided. In this case, the district court
concluded that neither Relator qualified as an “original
source” on the sole basis of the hand-in-the-public-disclosure
requirement that we now repudiate. The district court did not
consider whether Relators met the first (and now the only)
two requirements of the original source test: that they have
direct and independent knowledge of the information on
which their allegations are based and that they voluntarily
provide that information to the Government before filing suit.
We remand so that the district court may make this
determination in the first instance.
B. First-to-File Bar
The district court concluded that, even if Relators
qualified as original sources, Godecke’s claims would be
precluded by the first-to-file bar. Godecke, 2012 WL
11979268, at *9. Because this is a legal determination that
did not rest on factual findings, we review de novo. See
Campbell v. Redding Med. Ctr., 421 F.3d 817, 820 (9th Cir.
2005).
On appeal, Godecke does not contest the district court’s
conclusion that her first qui tam claim is precluded by the
first-to-file bar; it overlaps with Hartpence’s claims, which all
20 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS
relate to misuse of the KX modifier. Godecke points out,
however, that her second and third claims relate to violations
of a different Medicare program requirement—the
requirement that a supplier receive Detailed Written Orders
before delivering a V.A.C. pressure wound pump. Godecke
argues that she is the first to file on the claims addressing the
lack of DWOs and the resulting receipt of improper
overpayments. We agree.
The first-to-file bar provides: “When a person brings an
action under this subsection, no person other than the
Government may intervene or bring a related action based on
the facts underlying the pending action.” 31 U.S.C.
§ 3730(b)(5). We treat the first-to-file bar as jurisdictional.
Lujan, 243 F.3d at 1186–87. We have clarified that the facts
underlying the later-filed complaint need not be “identical” to
those underlying the earlier-filed complaint for the later
complaint to be barred. Id. at 1183. We reasoned:
Limiting § 3730(b)(5) to only bar actions with
identical facts would be contrary to the plain
language and legislative intent: (1) using a
narrow jurisdictional bar, such as an identical
facts test, would decrease incentives to
promptly bring qui tam actions; (2) multiple
relators would expect a recovery for the same
conduct, thereby decreasing the total amount
each relator would potentially receive and
incentives to bring the suit; and (3) a narrow
identical facts bar would encourage piggyback
claims, which would have no additional
benefit for the government . . .
U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 21
Id. at 1189. We reiterated that the first-to-file bar, enacted as
part of the 1986 amendments, has two purposes: “to promote
incentives for whistle-blowing insiders and prevent
opportunistic successive plaintiffs.” Id. at 1187.
Lujan has been our principal opportunity to explore the
contours of the first-to-file bar. In Lujan, relators William
Schumer and Linda Lujan filed separate qui tam actions
against Hughes Aircraft alleging fraudulent use of
“commonality agreements.” Id. at 1183.7 Hughes used these
agreements to allocate costs among four defense contracts.
Id. at 1185–86. The contracts included the “B2 contract,”
which involved the development of an airplane radar system.
Id. at 1185. Schumer’s complaint alleged that Hughes used
the commonality agreements “to misbid, misallocate, and
mischarge costs among the four contracts.” Id. at 1886.
Schumer claimed, for example, “that Hughes charged the
development of a radar signal processor to the F15 contract
but then also charged these development costs to the F14,
F18, and B2 contracts.” Id. Lujan alleged that “Hughes
routinely mischarged costs associated with the design and
development of various B2 radar system contracts.” Id.
Thus, Lujan’s claims related to misconduct within the B2
radar contracts, rather than across all four defense contracts.
Id. We held that the district court did not err when it
determined that Lujan’s and Schumer’s claims were based on
the same material facts. Id. at 1190; see also Hughes
Aircraft, 162 F.3d at 1033 (“The Schumer and Lujan
allegations both involve cost-sharing transactions among and
7
These are contracts that “permit each program using a common
component to share in some portion of its development and production
costs.” United States ex rel. Lujan v. Hughes Aircraft Co., 162 F.3d 1027,
1032 (9th Cir. 1998).
22 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS
within the radar system programs on four aircraft. The two
claims involve the same . . . agreements and the same radar
program contracts.”).
Relying on Lujan, the district court concluded that
Godecke’s and Hartpence’s complaints involved the same
“material elements.” Godecke, 2012 WL 11979268, at *8.
It noted that the complaints named the same defendants, arose
out of the same time period, involved KCI’s billing practices
for the same therapy device, alleged incorrect use of the same
billing codes (the KX modifier), shared “100 nearly identical
paragraphs,” and were drafted by the same counsel. Id. The
district court reasoned that “the two qui tam actions alleged
. . . slightly different variations of false billing for claims
submitted for VAC Therapy devices.” Id. at *9. Thus, it
concluded, “Godecke’s later-filed action provided the
Government no additional benefit.” Id.
We disagree with both the premise and the conclusion.
First, we think that Godecke’s complaint is more than a slight
variation on Hartpence’s complaint. Godecke’s second claim
involves different underlying facts. Whereas Hartpence’s
claims all allege knowing misuse of the KX modifier,
Godecke’s second claim is based on facts which show KCI’s
violation of a different Medicare program requirement—the
requirement that a provider receive Detailed Written Orders
for the V.A.C. device before beginning to treat patients with
the device. While Lujan declined to distinguish between
claims that a defense contractor had improperly allocated
funds among four government contracts, on the one hand, and
within one of those contracts on the other—noting that both
claims centered on the same commonality agreements—here
the claims are based on different material facts. The rules
governing use of KX modifiers and DWOs were disseminated
U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 23
at different times, in different publications, and are plainly
treated as separate regulations under the program.
We further disagree that Godecke’s action provided no
additional benefit to the government. Unaided by Godecke’s
complaint, the government may have never discovered that
KCI, in addition allegedly to misusing the KX coding system,
was allegedly submitting V.A.C. claims before receiving
DWOs. The two alleged frauds are materially different: the
KX fraud allegations are based on government payment for
devices which were used, but unnecessary for treatment,
while the DWOs fraud allegations are based on the
government paying for devices that were never used at all.
The alleged frauds, in short, exist completely independent of
one another. Nor can we agree that dismissal of Godecke’s
claims would, as the district court found, necessarily serve the
dual purposes of the first-to-file bar: “to promote incentives
for whistle-blowing insiders and prevent opportunistic
successive plaintiffs.” Lujan, 243 F.3d at 1187. First,
although it is true that increasing the class of potential qui
tam claimants reduces the potential incentive for any
individual plaintiff to bring suit, see id. at 1189, allowing
claims for related but distinct fraud claims encourages
broader investigation and increases the total potential for
recovery. Second, dismissal of Godecke’s claim does not
serve to discourage opportunistic “piggyback claims, which
would have no additional benefit for the government.” Id.
Godecke provided information about a different form of
fraud, and without that information the government might not
have investigated beyond KCI’s fraudulent coding practices.
We conclude that Godecke’s second and third claims are
based on different material facts than the claims contained in
Hartpence’s earlier-filed complaint. Thus, they are not
24 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS
precluded by the first-to-file bar. The district court erred in
holding otherwise.8
CONCLUSION
For the foregoing reasons, we overrule Wang’s addition
of a hand-in-the-public-disclosure requirement to the original
source exception, because the requirement has no basis in the
statutory text. We also find that the district court erred in
holding that the second and third counts in Godecke’s
complaint were barred by the first-to-file bar. We
REVERSE the decision of the district court and REMAND
for further proceedings consistent with this opinion.
8
Nor are we persuaded that the degree of consistency between the two
complaints compels the conclusion that they allege the same material
facts. For example, that the complaints name the same defendants and
were drafted by the same counsel says little about whether the facts
underlying their fraud claims overlap.