United States District Court, D. Delaware
UNITED STATES OF AMERICA, STATE OF CALIFORNIA, STATE OF FLORIDA, and STATE OF NEW JERSEY, ex rel., PAUL DENIS, Plaintiffs,
MEDCO HEALTH SOLUTIONS, INC., and EXPRESS SCRIPTS HOLDING COMPANY, Defendants.
Jeffrey S. Goddess, Esquire and P. Bradford deLeeuw, Esquire
of Rosenthal, Monhait & Goddess, P.A., Wilmington, Delaware.
Counsel for Plaintiffs. Of Counsel: David S. Stone, Esquire
of Stone & Magnanini LLP, Berkeley Heights, New Jersey.
B. Blumenfeld, Esquire and Rodger D. Smith II, Esquire of
Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware.
Counsel for Defendants. Of Counsel: Enu Mainigi, Esquire,
Craig D. Singer, Esquire, Holly Conley, Esquire, and D. Keith
Clouser, Esquire of Williams & Connolly LLP, Washington D.C.
ANDREWS, UNITED STATES DISTRICT JUDGE
Paul Denis brings this qui tarn action against Medco
Health Solutions, Inc. and its parent Express Scripts Holding
Company (collectively, "Medco") alleging violations
of the False Claims Act, 31 U.S.C. § 3729
etseq., and analogous state statutes. Denis'
allegations mirror what many plaintiffs before him have
charged: that Medco defrauded the government by favoring
certain drugs in exchange for kickbacks from AstraZefteca
disguised as discounts, and Medco failed to share these
discounts with its clients as required. (D.I. 111
¶¶ 1, 5). The court previously dismissed Denis'
Third Amended Complaint under two separate provisions of the
False Claims Act: the first-to-file rule and the public
disclosure bar. U.S. ex rel Denis v. Medco Health
Solutions, Inc., 2017 WL 63006, at *13 (D. Del. Jan. 5,
2017). Now pending before the court is Medco's motion to
dismiss Denis' Fourth Amended Complaint. (D.I. 114).
Medco raises several arguments, including the first-to-file
rule, 31 U.S.C. § 3730(b)(5), the public disclosure bar,
31 U.S.C. § 3730(e)(4), and Federal Rules of Civil
Procedure 12(b)(6) and 9(b). (D.I. 115). Because the court
finds that dismissal is warranted under the public disclosure
bar, it does not reach Medco's other arguments.
essential facts of the Fourth Amended Complaint are identical
to those of the Third Amended Complaint. (See D.I.
111-3). The new content is essentially (i) speculation that
the same conduct continued after Denis left his employment
with Medco in 2008, (ii) ancillary details about events
already alleged, or (iii) legal argument. Accordingly, the
court refers the reader to its previous memorandum opinion
for a general factual background and will discuss any new
allegations where relevant below. Denis, 2017 WL
63006, at *2-4.
STANDARD OF REVIEW
Fed.R.Civ.P. 12(b)(1), the court must dismiss a complaint if
it lacks subject matter jurisdiction. Challenges to subject
matter jurisdiction may be facial or factual. Lincoln
Ben. Life Co. v. AEILife, LLC, 800 F.3d 99, 105 (3d Cir.
2015). A facial attack contests the sufficiency of the
pleadings, whereas a factual attack contests the sufficiency
of jurisdictional facts. Id. The pre-2010 public
disclosure bar is a factual attack on subject matter
jurisdiction. Denis, 2017 WL 63006, at *4. In a
factual attack, the court may weigh and consider evidence
outside the pleadings, and no presumption of truthfulness
attaches to plaintiffs allegations. Gould Elecs. Inc. v.
United States, 220 F.3d 169, 176 (3d Cir. 2000);
Mortensen v. First Fed. Sav. & Loan Ass'n, 549
F.2d 884, 891 (3d Cir. 1977).
Rule 12(b)(6) & Rule 9(b)
post-2010 public disclosure bar, if applicable, requires
dismissal under Fed.R.Civ.P. 12(b)(6). U.S. ex rel. Moore
& Co., P.A. v. Majestic Blue Fisheries, LLC, 812 F.3d
294, 300 (3d Cir. 2016). To survive a motion to dismiss under
Fed.R.Civ.P. 12(b)(6), a plaintiff must plead facts
sufficient to "state a claim to relief that is plausible
on its face." Ashcroft v. Iqbal, 556 U.S. 662,
677-78 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). Courts must accept all
well-pleaded factual allegations in the complaint as true and
draw all reasonable inferences in favor of the plaintiff.
In re Rockefeller Ctr. Prop., Inc. Sec. Litig., 311
F.3d 198, 215 (3d Cir. 2002). The court's review is
limited to the allegations in the complaint, exhibits
attached to the complaint, documents incorporated by
reference, and items subject to judicial notice. Siwulec
v. J.M. Adjustment Serv., LLC, 465 Fed.Appx. 200, 202
(3d Cir. 2012).
claims under the False Claims Act allege fraud, they are also
subject to the heightened pleading requirements of
Fed.R.Civ.P. 9(b). U.S. ex rel. Whatley v. Eastwick
Coll., 657 Fed.Appx. 89, 93 (3d. Cir. 2016). Under
Fed.R.Civ.P. 9(b), plaintiffs must "state with
particularity the circumstances constituting fraud or
mistake." In other words, the complaint must provide
"all of the essential factual background that would
accompany 'the first paragraph of any newspaper
story'-that is, the 'who, what, when, where and
how' of the events at issue." Whatley, 657
Fed.Appx. at 93 (quoting In re Rockefeller, 311 F.3d
alleges that Medco engaged in the same fraudulent scheme from
2005 to the present. (See, e.g., D.I. 111
¶¶ 111-13). Congress, however, amended the public
disclosure bar in 2010, and those changes do not apply
retroactively. U.S. ex rel. Zizic v. Q2Administrators,
LLC,728 F.3d 228, 232 n. 3 (3d Cir. 2013). When a
relator alleges a continuing fraud that spans the time before
and after the amendments, several courts in the Third Circuit
have applied the pre-2010 version of the statute to pre-2010
conduct and the post-2010 statute to post-2010 conduct.
See, e.g., U.S. ex rel. Juddv. Quest Diagnostics
Inc., 2014 WL 2435659 (D.N.J. May 30, 2014). For reasons
explained below, the court questions this approach, but will
nevertheless follow it. Accordingly, the court will first