USA ex rel Elizabeth Kennedy v. Novo A/S ( 2021 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 12, 2021 Decided July 20, 2021
No. 20-7062
UNITED STATES OF AMERICA,
EX REL. ELIZABETH W. KENNEDY, ET AL.,
PLAINTIFF-APPELLEES
AND
ELIZABETH W. KENNEDY,
PLAINTIFF-APPELLANT
v.
NOVO A/S, ET AL.,
DEFENDANTS
Appeal from the United States District Court
for the District of Columbia
(No. 1:13-cv-01529)
Nicolas F. Mendoza argued the cause for appellant. With
him on the briefs were Ann Lugbill, Michael T. Anderson, Mark
Hanna, Joel M. Androphy, and Sarah Frazier.
Andrea Gold was on the brief for amicus curiae Taxpayers
Against Fraud Education Fund in support of appellant.
2
Karen Schoen, Attorney, U.S. Department of Justice,
argued the cause for appellee. With her on the brief were Brian
M. Boynton, Acting Assistant Attorney General, and Charles
W. Scarborough, Attorney.
Before: MILLETT, KATSAS, and RAO, Circuit Judges.
Opinion for the Court filed by Circuit Judge MILLETT.
MILLETT, Circuit Judge: The False Claims Act authorizes
the federal government to obtain treble damages for false and
fraudulent claims for money or property that are submitted to
it. 31 U.S.C. § 3729(a)(1). The Act also authorizes private
persons to help obtain such recoveries for the government by
filing qui tam lawsuits against those who engaged in such false
or fraudulent behavior. Id. § 3730(b). If successful, those
private plaintiffs receive a share of the damages awarded. Id.
§ 3730(d).
Yet the same misconduct that underlies false and
fraudulent claims may also run afoul of other federal statutes
for different reasons. As a result, the government may
sometimes choose to pursue relief under the False Claims Act.
Other times, on the same set of facts, it might prioritize the
enforcement of a different law. Still other times, it might do
both.
The question in this case is whether a private plaintiff who
has filed a False Claims Act case is also entitled to a share of
the monetary relief that the government obtains in its own
separate enforcement action just because the underlying facts
are similar to those in the earlier-filed qui tam lawsuit. The
answer is No. The plain text of the False Claims Act confines
qui tam plaintiffs to recoveries only for claims seeking relief
based on the type of fraud or falsehoods covered by that statute.
3
The government’s separate enforcement action in this case did
not involve the type of claim cognizable under the False Claims
Act, nor did it allege a false or fraudulent effort to obtain money
or property from the United States. In addition, the qui tam
plaintiff, Elizabeth Kennedy, received an agreed-upon False
Claims Act payment with knowledge of the government’s
separate action. So she is not entitled to any further recovery.
I
A
The False Claims Act, 31 U.S.C. § 3729 et seq., broadly
makes individuals liable for a civil penalty and treble damages
if they submit “[f]alse claims” to the federal government
concerning money or property. More specifically, the False
Claims Act prohibits individuals from (i) knowingly presenting
to the federal government a false or fraudulent claim for
payment, (ii) knowingly making or using a false statement
material to a false or fraudulent claim, (iii) knowingly failing
to deliver money or property that is to be used by the federal
government, (iv) knowingly buying or receiving public
property from an unauthorized government worker in payment
of a debt or obligation, (v) knowingly making or using a false
record or otherwise improperly avoiding or decreasing a debt
or obligation owed to the government, (vi) making or
delivering a document that certifies the receipt of property for
governmental use without knowledge that the information in
the receipt is true and with the intent to defraud the
government, or (vii) conspiring to violate any of the preceding
provisions. 31 U.S.C. § 3729(a)(1).
Under Section 3729, a false “claim” means “any request
or demand * * * for money or property” in which the United
States has a legal interest that is either “presented to an officer,
employee, or agent of the United States” or is “made to a
4
contractor, grantee, or other recipient” who has authority to use
that money or property on the government’s behalf. See 31
U.S.C. § 3729(b)(2).
Section 3730 then authorizes the Attorney General to bring
“[c]ivil actions for false claims” for any violation of those
Section 3729 prohibitions. 31 U.S.C. § 3730(a) (bold omitted).
To strengthen enforcement and to protect taxpayers’
money, the False Claims Act also authorizes private persons to
bring civil qui tam lawsuits in the name of the United States for
violations of Section 3729’s prohibitions. 31 U.S.C.
§ 3730(b)(1). 1 When suing in the name of the United States,
those private plaintiffs are referred to as “relators.” Vermont
Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S.
765, 769 (2000). If a False Claims Act suit is successful, the
relator may receive up to 30% of the damages recovered, as
well as reasonable attorneys’ fees and costs. 31 U.S.C.
§ 3730(d)(1) & (2).
Since Congress amended the False Claims Act in 1986, qui
tam suits under Section 3730 have saved the government over
$45 billion. See DEPARTMENT OF JUSTICE, FRAUD
STATISTICS—OVERVIEW: OCTOBER 1, 1986–SEPTEMBER 30,
2019, at 3 (Jan. 21, 2020), https://www.justice.gov/opa/press-
release/file/1233201/download (last accessed July 19, 2021);
see also False Claims Amendment Act of 1986, Pub. L. No.
99-562, 100 Stat. 3153.
A relator must initially file her False Claims Act lawsuit in
camera and under seal and serve the government with a copy
of the complaint, along with any material information or
1
The False Claims Act imposes a number of limitations on who
may qualify as a qui tam plaintiff, but they are not at issue in this
case. See 31 U.S.C. § 3730(e).
5
evidence in her possession. 31 U.S.C. § 3730(b)(2). The
statute then affords the federal government at least 60 days to
investigate the claims. Id. After the time for its review ends,
the government must either intervene and assume primary
responsibility for prosecuting the action, id. § 3730(c)(1), or
“notify the court that it declines to take over the action,” id.
§ 3730(b)(4)(B). If the government chooses not to intervene,
then the relator litigates the action herself. Id. § 3730(c)(3). 2
Subsection 3730(c)(5) of the statute separately allows the
government to “pursue its claim” through an “alternate
remedy” if it does not wish to press an action under the False
Claims Act. As relevant here, that subsection provides:
Notwithstanding subsection (b), the
Government may elect to pursue its claim
through any alternate remedy available to the
Government, including any administrative
proceeding to determine a civil money penalty.
If any such alternate remedy is pursued in
another proceeding, the person initiating the
action shall have the same rights in such
proceeding as such person would have had if the
action had continued under this section.
31 U.S.C. § 3730(c)(5).
2
The government may choose to intervene in the case later, but
its delay may deprive it of the opportunity to oversee the lawsuit. 31
U.S.C. § 3730(c)(3).
6
B
1
In January 2009, Elizabeth Kennedy began working for
Novo Nordisk, a pharmaceutical company, as a sales
representative. False Claims Act Complaint ¶ 4, United States
ex rel. Kennedy v. Novo Nordisk Inc., No. 13-cv-01529-RBW
(D.D.C. Oct. 15, 2010), ECF No. 1, J.A. 26–27. Kennedy was
tasked with helping to promote Novo Nordisk’s new diabetes
drug, Victoza. Id. Victoza was designed to improve “glycemic
control”—that is, maintain safe levels of blood sugar—in
adults with type-2 diabetes.
The Food and Drug Administration’s approval of Victoza
for sale in 2010 came with specific conditions.
First, the drug had to be labeled with a warning that its use
created an “unknown risk” of contracting a specific type of
thyroid cancer.
Second, Novo Nordisk had to maintain a “Risk Evaluation
and Mitigation Strategy” for Victoza. The point of that strategy
was to warn healthcare providers about the possible risk of
thyroid cancer so that providers could monitor their patients
appropriately. 3
Third, Novo Nordisk was not allowed to promote the drug
for use by adults with type-2 diabetes.
3
The Secretary of Health and Human Services may impose a
Risk Evaluation and Mitigation Strategy when doing so “is necessary
to ensure that the benefits of the drug outweigh the risks of the
drug[.]” 21 U.S.C. § 355–1(a)(1).
7
According to the allegations in Kennedy’s complaint, in
the lead-up to Victoza’s commercial launch, Kennedy’s
supervisors directed her to market the drug in ways that ran
afoul of those FDA limitations. False Claims Act Complaint
¶ 98, Kennedy, No. 13-cv-01529-RBW (D.D.C. Oct. 15, 2010),
ECF No. 1 (“Kennedy was directed at the launch meeting, at
district meetings, and in ride-a-longs with her manager, to
make a number of off-label claims about Victoza.”), J.A. 63.
Kennedy alleged that, among other violations, Novo Nordisk
marketed the drug for use by pre-diabetics, who outnumber
patients with diabetes two to one in the United States
According to Kennedy’s allegations, selling Victoza as a
treatment to pre-diabetics could potentially triple the market for
the drug. Id. ¶ 105. The problem was that the FDA had not
approved Victoza for the treatment of pre-diabetics. J.A. 573
¶ 11.
Kennedy also alleged that Novo Nordisk instructed sales
representatives not to mention the “unknown risk” of thyroid
cancer to doctors. False Claims Act Complaint ¶ 117,
Kennedy, No. 13-cv-01529-RBW (D.D.C. Oct. 15, 2010), ECF
No. 1, J.A. 70. In fact, according to her complaint (and to Novo
Nordisk’s own admissions), “Novo Nordisk trained sales
representatives to downplay these safety issues and side
effects * * * during calls with doctors.” Id. ¶ 119, J.A. 71; see
also J.A. 438 ¶ (D)(1)–(5) (Novo Nordisk admitting that it
“trained its sales representatives that * * * they were permitted
to inform physicians that there were no cases of [thyroid
cancer] in the clinical trials for Victoza[,]” and that certain
Novo Nordisk sales representatives “suggested to or told
prescribers that * * * Victoza[] only posed a risk of [thyroid
cancer] to rats or rodents and posed no risk to humans.”).
8
2
Armed with this information, Kennedy filed a False
Claims Act complaint in the United States District Court for
the Southern District of Texas in October 2010. Kennedy
alleged, among other things, that Novo Nordisk had violated
the False Claims Act by causing people to submit to the federal
government millions of dollars in false claims for payment
under federal health care programs like Medicare and
Medicaid. False Claims Act Complaint ¶¶ 164–165, Kennedy,
No. 13-cv-01529-RBW (D.D.C. Oct. 15, 2010), ECF No. 1
(Kennedy alleged that Novo Nordisk made millions of dollars
by selling Victoza to “Medicaid, Medicare,
CHAMPUS/TRICARE, CHAMPVA, Federal Employees
Health Benefit Plan, and other federal healthcare program
patients[.]”), J.A. 85–86; id. ¶ 171, J.A. 88. Other relators
across the country subsequently filed similar lawsuits. All of
those qui tam cases were then transferred to and consolidated
in the United States District Court for the District of Columbia.
In July 2017, the United States filed a formal notice of
intervention in the district court. In the notice, the government
advised that the United States, Novo Nordisk, and Kennedy
had reached a settlement in the case in which Novo Nordisk
agreed to pay $46.5 million to resolve the matter. J.A. 352, 406
¶ 1.
The United States explained that it was intervening only
“as to the Covered Conduct as that term is defined in Paragraph
K of the Settlement Agreement, to the extent that the
Complaint contains such claims.” J.A. 352. That covered
conduct was (i) Novo Nordisk’s training of its sales
representatives to imply that the “risk message was erroneous,
irrelevant, or unimportant,” J.A. 404, and (ii) Novo Nordisk’s
knowing promotion of Victoza for sale to and use by adults
9
who did not yet have type-2 diabetes, J.A. 405. The district
court subsequently approved the voluntary dismissal of
Kennedy’s remaining False Claims Act claims. See False
Claims Act Complaint ¶¶ 185–190, Kennedy, No. 13-cv-
01529-RBW (D.D.C. Oct. 15, 2010), ECF No. 1 (alleging
conspiracy and retaliation claims under the Act), J.A. 91–92.
Four days later, the government filed in the same court a
separate complaint against Novo Nordisk. This case pressed
claims not under the False Claims Act, but under the Food,
Drug, and Cosmetic Act (“FDCA”), 21 U.S.C. § 301 et seq.
J.A. 571 ¶ 1. The government alleged that Novo Nordisk
introduced Victoza into interstate commerce as an unlawfully
“misbranded” drug because it “failed to comply with the
Victoza Risk Evaluation and Mitigation Strategy[.]” J.A. 571
¶ 1 (citing 21 U.S.C. § 331). The government accused Novo
Nordisk of providing its sales force with “certain messages and
tactics” that created the “false or misleading impression” that
the warning about thyroid cancer on Victoza’s label was
“erroneous, irrelevant, or unimportant.” J.A. 571–572 ¶ 1.
The government sought “an equitable disgorgement of
$12,150,000[.]” J.A. 578 ¶ 28(a).
At the same time that it filed the complaint, the
government disclosed that it had already settled the FDCA
claims with Novo Nordisk. As part of the FDCA Settlement,
Novo Nordisk admitted that it had trained its employees to
undermine the Risk Evaluation and Mitigation Strategy.
J.A. 438. Novo Nordisk also agreed to pay the government
$12,150,000. Although the government entered into the FDCA
Settlement only a few days after the False Claims Act
Settlement, Kennedy was not a party to the FDCA litigation or
to its settlement. At the government’s request, the district court
dismissed the FDCA case shortly thereafter.
10
3
Following those settlements, Kennedy filed a motion
claiming that, as a qui tam relator, she was entitled to a fair
share of the False Claims Act settlement. Relator Kennedy’s
Motion for Immediate Award of Relator’s Share, United States
ex rel. Kennedy v. Novo A/S, No. 13-cv-01529-RBW (D.D.C.
Oct. 27, 2017), ECF No. 96. Kennedy also mentioned in a
footnote that, as a relator, she believed that she had a right to a
share of the FDCA Settlement as well. Id. at 5 n.6.
Twenty months later, Kennedy separately moved the
district court to award her a share of the FDCA Settlement.
Relator Kennedy’s Motion for Relator’s Share of Award,
United States ex rel. Kennedy v. Novo A/S, No. 13-cv-01529-
RBW (D.D.C. June 12, 2019), ECF No. 116. Kennedy argued
that the FDCA Settlement was an “alternate remedy” under the
False Claims Act, 31 U.S.C. § 3730(c)(5), and so she was
statutorily entitled to a share of that recovery too. Relator
Kennedy’s Motion for Relator’s Share of Award at 9, United
States ex rel. Kennedy v. Novo A/S, No. 13-cv-01529-RBW
(D.D.C. June 12, 2019), ECF No. 116.
In May 2020, the district court agreed with Kennedy that
she was entitled to a relator’s share of the False Claims Act
settlement. 4 The court awarded her 18% of the recovery, which
4
None of the other relators who had filed qui tam suits in other
courts were awarded any share of the federal recovery because
Kennedy’s suit was the first in time. See United States ex rel.
Ferrara v. Novo Nordisk, Inc., Nos. 11-cv-74, 11-cv-1596, 11-cv-
1662, 13-cv-221, 13-cv-1529, 17-cv-791, 2019 WL 4305503, at *3
(D.D.C. Sept. 11, 2019); see also 31 U.S.C. § 3730(e)(4)(A) (“The
court shall dismiss an action or claim under this section [3730]” if
the allegations are publicly disclosed, “unless the action is brought
11
was roughly $7.8 million plus interest. Kennedy Br. 24 n.4;
Gov’t Br. 27–28. But the court denied her request for a share
of the FDCA Settlement proceeds. United States ex rel.
Kennedy v. Novo A/S, No. 13-cv-01529-RBW, 2020 WL
2552947, at *7 (D.D.C. May 19, 2020). Following similar
decisions of the Third, Sixth, and Ninth Circuits, the district
court ruled that Kennedy could not recover any share of the
government’s FDCA Settlement because the government had
intervened in her False Claims Act lawsuit. Id. (citing United
States ex rel. Bledsoe v. Community Health Sys., Inc., 342 F.3d
634, 649 (6th Cir. 2003); United States ex rel. Barajas v.
United States, 258 F.3d 1004, 1010 (9th Cir. 2001); United
States ex rel. Dunleavy v. County of Delaware, 123 F.3d 734,
739 (3d Cir. 1997)).
Kennedy filed a timely notice of appeal.
II
The district court had federal subject-matter jurisdiction
under 28 U.S.C. § 1331. We have jurisdiction under 28 U.S.C.
§ 1291.
The meaning of the False Claims Act’s provision
governing alternate remedies is a question of statutory
construction that we review de novo. See Allegheny Defense
Project v. FERC, 964 F.3d 1, 11 (D.C. Cir. 2020).
III
The question in this case is whether the government’s
FDCA lawsuit against and settlement with Novo Nordisk was
an “alternate remedy,” within the meaning of the False Claims
by the Attorney General or the person bringing the action is an
original source of the information.”).
12
Act, 31 U.S.C. § 3730(c)(5), from which Kennedy was entitled
to receive a relator’s share of the settlement, or whether it was
instead an independent action outside of
subsection 3730(c)(5)’s compass. In other words, what types
of governmental enforcement actions count as an “alternate
remedy” and which do not? We hold that, regardless of the
government’s decision to intervene in the False Claims Act
litigation, the FDCA Settlement was not an “alternate remedy”
because it did not involve the type of claim covered by the
False Claims Act.
A
In deciding whether the False Claims Act’s alternate-
remedy provision applies to the government’s FDCA lawsuit
and settlement, we begin and end with the plain text of the False
Claims Act, because its terms confine the qui tam relator to
recoveries arising from the type of fraud claims that could have
been brought in a qui tam action under the False Claims Act.
By way of reminder, the alternate-remedy provision of the
False Claims Act provides in relevant part:
Notwithstanding subsection (b), the
Government may elect to pursue its claim
through any alternate remedy available to the
Government, including any administrative
proceeding to determine a civil money penalty.
If any such alternate remedy is pursued in
another proceeding, the person initiating the
[False Claims Act] action shall have the same
rights in such proceeding as such person would
have had if the action had continued under this
section.
31 U.S.C. § 3730(c)(5).
13
In three ways, that statutory text allows a relator to recover
a share only when the claim pursued in the alternate remedy is
of the type that could have been pressed under the False Claims
Act.
First, while subsection 3730(c)(5) does not define
alternate remedy, the opening clause “[n]otwithstanding
subsection (b)” signifies that the alternate remedy is an
alternative that the government can choose instead of its
intervention, participation, and pursuit of a remedy in a private
qui tam lawsuit—the subject of subsection (b). After all, an
“alternate” remedy must be in place of something else. That is,
there must be a default choice for which the alternate remedy
is a different option.
Here, the “notwithstanding” clause tells us that the default
choice is the remedy the government could have pursued under
the qui tam provision of the False Claims Act.
Section 3730(c)(5), in other words, gives the government
options for resolving the types of false and fraudulent claims
that are the raison d’etre of the False Claims Act, 31 U.S.C.
§ 3729. See S. REP. NO. 345, 99th Cong., 2d Sess. at 1 (1986)
(The purpose of the False Claims Act is to “enhance the
Government’s ability to recover losses sustained as a result of
fraud against the Government.”); United States ex rel. Totten v.
Bombardier Corp., 286 F.3d 542, 546 (D.C. Cir. 2002) (“The
statute’s qui tam provision is a powerful tool that augments the
government’s limited enforcement resources by creating a
strong financial incentive for private citizens to guard against
efforts to defraud the public fisc.”). 5
5
The meaning of an “alternate” remedy as an alternative to an
already identified remedy seems well within the public ken, and in
fact is not disputed by Kennedy. But if dictionary definitions from
14
Second, to understand when subsection 3730(c)(5)
applies, one has to ask: “Alternate remedy for what?”
Again, the statutory text answers that question: The
alternate remedy must be used to pursue the government’s
“claim.” 31 U.S.C. § 3730(c)(5). Within the context of legal
proceedings, which is what Section 3730 addresses, a “claim”
is a “[c]ause of action,” and the “[m]eans by or through which
[a] claimant obtains possession or enjoyment of [a] privilege or
thing.” Claim, BLACK’S LAW DICTIONARY 224 (5th ed. 1979).
But subsection 3730(c)(5) does not refer to just any legal
claim or cause of action that the government has. The statute
does not, for example, say that the relator can recover if the
government pursues any alternate cause of action. Instead, the
remedy is tied to the single referenced “claim.” 31 U.S.C.
§ 3730(c)(5). That claim is only the one that otherwise could
be prosecuted through a qui tam suit under subsection 3730(b)
of the False Claims Act. It is for those specified claims of
falsity or fraud that Congress felt a need to give express
permission for the government to pursue alternative recourse
“notwithstanding” a relator’s initiation of a qui tam lawsuit
under “subsection (b).” Id.the time of enactment are desired, see Alternate, RANDOM HOUSE
UNABRIDGED DICTIONARY 61 (defs. 11 & 12) (2d ed. 1993)
(defining “alternate” as “constituting an alternative” and “alternative
(defs. 4, 6)”); Alternative, id. (defs. 4 & 6) (defining “alternative” as
“affording a choice of two or more things, propositions, or courses
of action” and “employing or following nontraditional or
unconventional ideas, methods, etc.”); see also WEBSTER’S NEW
INT’L DICTIONARY 63 (def. 1-5) (3d ed. 1981) (defining “alternate”
as an “alternative” or “substitute”).
15
More specifically, the legal claims that the False Claims
Act vests in the government are for “violation[s] under
section 3729.” 31 U.S.C. § 3730(a). Section 3729, in turn,
spells out seven grounds of liability based on the use of falsity
or fraud to obtain money or property in which the United States
has a legal interest. Id. § 3729(a)(1)(A), (B), (C), (D), (E), (F)
& (G). The statute is all about those species of false and
fraudulent claims. Id. § 3729 (entitled “False claims”); id.
§ 3730 (entitled “Civil actions for false claims”); False Claims
Amendments Act of 1986, Pub. L. No. 99-562, § 2, 100 Stat.
3153, 3153 (1986). And those claims are the only type for
which the statute authorizes a qui tam lawsuit. 31 U.S.C.
§ 3730(b)(1) (qui tam plaintiff “may bring a civil action for a
violation of section 3729”) (emphasis added).
All of that is a long way of saying that Section 3730’s
alternate-remedy provision authorizes the government, when
confronted with a qui tam complaint, to choose to vindicate its
legal claim arising from the fraud and falsity that Section 3729
proscribes through either (i) the qui tam action, or (ii) an
alternate remedy for that same type of false or fraudulent claim.
31 U.S.C. § 3730(a), (b) & (c)(5).
Reading “claim” in subsection 3730(c)(5) as referring to
the types of falsity and fraud that the False Claims Act
identifies is not just textually compelled; it is commonsensical.
Why would Congress need to expressly authorize the use of
alternative legal remedies for a claim unless it is the same type
of claim that the statute otherwise addresses and remediates?
Third, subsection 3730(c)(5) provides that, if the
government pursues an alternate remedy, the relator “shall
have the same rights in such proceeding as” she “would have
had if the action had continued under this section.” 31 U.S.C.
§ 3730(c)(5). That means that the type of claim the
16
government pursues through the alternate remedy must be the
same type of claim that a relator could have initiated and
“continued” through a qui tam False Claims Act suit. Id. After
all, those are the only types of claims that give rise to “rights”
for qui tam relators and the only claims that relators can pursue
through “action[s] * * * under this section”—that is, the False
Claims Act cause of action. Id. (indicating that the action must
have been able to “continue[] under [Section 3730],” which
prescribes the rules for civil actions for false claims).
In short, from every angle, the text of the alternate-remedy
provision establishes that the alternative remedial proceedings
from which a relator can recover a share must redress the same
type of falsity and fraud claims that otherwise could be pursued
by a private relator’s qui tam lawsuit under the False Claims
Act. That could include, for example, an administrative
proceeding for the remediation of false or fraudulent money
claims. See 31 U.S.C. § 3730(c)(5).
By the same token, if the alternate proceeding seeks
recompense for some other type of claim that the relator could
not have brought, then the proceeding is not covered by
subsection 3730(c)(5) because it is not “alternate” to the False
Claims Act qui tam remedy. It is a different legal claim
altogether, arising beyond the False Claims Act’s borders. 6
6
Given the statutory text and structure, we doubt that the district
court was correct in holding that the permissibility of an alternate
remedy recovery turns on the government’s intervention decision.
See United States v. L-3 Communications EOTech, Inc., 921 F.3d 1,
26–27 (2d Cir. 2019). So we exercise our prerogative to affirm on
another ground. See United States ex rel. Heath v. AT&T, Inc., 719
F.3d 112, 123 (D.C. Cir. 2015).
17
B
1
Given subsection 3730(c)(5)’s text, the alternate-remedy
provision forecloses Kennedy’s argument that she is also
entitled to a share of the FDCA Settlement.
In the FDCA lawsuit, the government charged Novo
Nordisk with misbranding its drug in violation of the Food,
Drug, and Cosmetic Act, 21 U.S.C. § 352(y), and shipping that
misbranded drug in interstate commerce in violation of 21
U.S.C. § 331. See FDCA Complaint ¶ 1, United States v. Novo
Nordisk Inc., No. 17-cv-01820-RBW (D.D.C. Sept. 5, 2017),
ECF No. 1 (alleging that the defendant received “ill-gotten
gains” because it “introduced Victoza into interstate commerce
while such drug was misbranded”), J.A. 571. But misbranding
bears little resemblance to the types of fraudulent behavior that
the False Claims Act identifies and proscribes. See 31 U.S.C.
§ 3729(a)(1).
Most critically, a misbranding claim seeks to protect the
public from being misled by the drug company’s marketing
tactics. And it does so by pursuing equitable relief and
penalties or fines. See 21 U.S.C. § 333 (defining civil and
criminal penalties for violations of Section 331); id. § 355a
(allowing debarment as a punishment for individuals convicted
of federal felonies related to abbreviated new drug
applications); cf. United States v. Rx Depot, Inc., 438 F.3d
1052, 1062 (10th Cir. 2006) (restitution under the FDCA is
different from traditional damages because it is “directly
traceable to * * * illegal conduct and the harm it caused
consumers” rather than the United States itself) (emphasis
added).
18
So a misbranding claim does not seek to recover damages
for any use of falsity or fraud to deprive the government of its
money or property, which is the hallmark of a claim litigable
under the False Claims Act. 21 U.S.C. § 333; see FDCA
Complaint, Novo Nordisk, No. 17-cv-01820 (D.D.C. Sept. 5,
2017), ECF No. 1 (no allegation that Novo Nordisk used falsity
or fraud in submitting claims to the government or otherwise
to obtain money or property in which the government held a
legal interest), J.A. 571–579.
That means that the FDCA Settlement did not resolve the
type of claim that could have been litigated under the False
Claims Act. Kennedy agrees. She admits that she would never
have been able to bring a qui tam lawsuit against Novo Nordisk
for misbranding. Oral Argument Tr. at 9:23–10:1, United
States ex rel. Kennedy v. Novo A/S, No. 20-7062 (D.C. Cir.
May 24, 2021), ECF No. 1899779. Nor is the misbranding
lawsuit the type of action that could have been initiated by a
qui tam relator, let alone “continued[,]” under subsection
3730(b) of the False Claims Act. Yet that is a prerequisite for
obtaining a relator’s share under the alternate-remedy
provision. 31 U.S.C. § 3730(c)(5).
2
Kennedy argues that she nevertheless is entitled to recover
under subsection 3730(c)(5) because the FDCA claim arose
from the same underlying facts identified in her qui tam
lawsuit.
The problem is that Congress wrote a different statute than
the one that Kennedy envisions. Congress provided for the
relator to share in the recovery if and when the government
pursues an “alternate remedy” specifically for a false or
fraudulent taking of governmental money or property. 31
U.S.C. § 3730(c)(5). The statute does not reward relators any
19
time the government pursues any “alternate claim or cause of
action” arising from the same facts and circumstances. In other
words, it is the nature of the legal claim—the fraudulent or false
deprivation of a monetary or property interest—and not the
commonality of facts that determines a relator’s right to share
in an alternative recovery.
To that same point, if Congress had wanted the relator’s
recovery for an alternate remedy to turn on whether the
government’s action arose out of the same facts, it would have
used the language that it employed in the immediately
preceding subsection. Subsection 3730(c)(4) addresses
discovery matters when the government prosecutes “a criminal
or civil matter arising out of the same facts[.]” 31 U.S.C.
§ 3730(c)(4). But Congress did not draw that same line in
subsection 3730(c)(5). Instead, Congress changed course and
tied the relator’s recovery of an alternate remedy to the nature
of the claim pursued by the government, not to the facts from
which the claim arose. That is a textual distinction that makes
a difference. Salinas v. United States R.R. Retirement Board,
141 S. Ct. 691, 698 (2021) (“Where Congress includes
particular language in one section of a statute but omits it in
another section of the same Act, it is generally presumed that
Congress acts intentionally and purposely in the disparate
inclusion or exclusion.”) (quoting Russello v. United States,
464 U.S. 16, 23 (1983)).
Kennedy’s proposed reading of the statute also overlooks
that the “claim” pursued through an alternate remedy must be
one that could have continued instead under the False Claims
Act. 31 U.S.C. § 3730(c)(5). The misbranding claim plainly
could not have. So Kennedy’s atextual focus on just the
underlying facts would vastly expand a relator’s right to
recover beyond the type of injury that the False Claims Act
addresses.
20
Neither of the cases on which Kennedy relies for her
“factual overlap” theory works. See Kennedy Br. 19 (citing
Rille v. PricewaterhouseCoopers LLP, 803 F.3d 368, 373–374
(8th Cir. 2015) (en banc); Bledsoe, 342 F.3d at 650–651). Both
cases state only that factual overlap is necessary for an
alternative proceeding to be an “alternate remedy” within the
meaning of subsection 3730(c)(5). See Rille, 803 F.3d at 373;
Bledsoe, 342 F.3d at 649. But neither case holds that factual
overlap alone is sufficient to allow a relator to share in the
recovery.
To be sure, factual similarity can be important. It can, for
example, ensure that the claim for which recovery is sought is
one that the relator herself actually brought to the government’s
attention. 31 U.S.C. § 3730(e)(4)(A). And common facts may,
for claim preclusion reasons, sometimes make it difficult for
the government to pursue an alternate remedy after intervening
in the qui tam lawsuit. But for present purposes, that is neither
here nor there. The issue in this case is not what the
government can do, but whether and when a relator may share
in the proceeds after the government has successfully obtained
a recovery through an alternative proceeding. Factual
symmetry alone is not enough to seal that deal.
3
Kennedy also worries that resting a relator’s right to
recover under the alternate-remedy provision on the character
of the claim rather than the similarity of the underlying facts
will allow the government to reap all the benefit of the relator’s
work and yet avoid compensating her as the False Claims Act
contemplates.
But the False Claims Act has built-in mechanisms to
protect against such abuse. Most relevantly, a relator can
object to the government’s settlement of its False Claims Act
21
qui tam suit. 31 U.S.C. § 3730(c)(2)(B). If the relator raises
an objection to the settlement, the district court must determine,
after first holding a hearing, whether “the proposed settlement
is fair, adequate, and reasonable under all the circumstances[.]”
Id.In any event, this case does not implicate Kennedy’s
concern. Kennedy received an 18% share (approximately $7.8
million) of the False Claims Act settlement. And importantly,
Kennedy never objected to the fairness of her settlement even
though the government gave her advance notice of its separate
settlement under the Food, Drug, and Cosmetic Act. See
J.A. 447–448 ¶¶ 9, 12–14; see also Oral Argument Tr. at
34:21–22, Kennedy, No. 20-7062 (D.C. Cir. May 24, 2021),
ECF No. 1899779. If Kennedy had feared that she would be
short-changed, she could have raised that concern in a motion
prior to the district court’s dismissal of her qui tam action.
Given all of that, we have no occasion to decide in this
case what the consequences (if any) would be were the
government to use a relator’s information in a separate
proceeding without fairly compensating the relator in the qui
tam litigation, or what would happen if the government failed
to disclose the existence of such a separate proceeding to the
relator and the district court before the district court approves
settlement of the action as fair, adequate, and reasonable. For
purposes of the case before us, it suffices to say that the claim
pursued by the government through an alternate remedy here
was not of the type that Kennedy could ever have pursued in a
False Claims Act qui tam action and that no claim of
governmental manipulation has been raised.
IV
Subsection 3730(c)(5) limits a relator’s recovery from an
alternate remedy pursued by the government to those types of
22
false or fraudulent claims that the False Claims Act recognizes
and for which a qui tam action could have been litigated. For
that reason, we affirm the judgment of the district court
declining to disburse to Kennedy a share of the FDCA
settlement.
So ordered.