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United States ex rel. Ambrosecchia v. Paddock Laboratories, LLC
United States Court of Appeals, Eighth Circuit
May 5, 2017
United States of America ex rel. Shara Ambrosecchia, States of CA, CO, CT, DE, District of Columbia, FL, GA, HI, IL, IN, LA, MD, MS, MI, MN, MO, MT, NV, NH, NJ, NM, NY, OK, RI, TN, TX, VA and WI Plaintiff- Appellant
Paddock Laboratories, LLC, a wholly-owned subsidiary of Perrigo Co.; Perrigo Company, PLC Defendants-Appellees State of California; State of Colorado; State of Connecticut; State of Delaware; District of Columbia; State of Georgia; State of Hawaii; State of Illinois; State of Indiana; State of Louisiana; State of Massachusetts; State of Michigan; State of Montana; State of Nevada; State of New Jersey; State of New Mexico; State of New York; State of North Carolina; State of Oklahoma; State of Rhode Island; State of Tennessee; State of Texas; State of Virginia; State of Wisconsin Plaintiffs
Submitted: March 7, 2017
from United States District Court for the Eastern District of
Missouri - St. Louis
RILEY, Chief Judge,  GRUENDER, Circuit Judge, and GRITZNER,
District Judge. 
GRUENDER, Circuit Judge.
Shara Ambrosecchia appeals the district
court's dismissal of claims she brought against
two pharmaceutical manufacturers under the False Claims Act
("FCA"). For the following reasons, we affirm.
November 2012, Ambrosecchia filed suit on behalf of the
United States of America, twenty-seven states, and the
District of Columbia against Paddock Laboratories and Perrigo
Company ("Defendants") for violations of the FCA
and analogous state statutes. In 1962, amendments to the
Food, Drug, and Cosmetic Act required drugs previously
approved by the Food and Drug Administration
("FDA") to undergo a review for effectiveness under
the Drug Efficacy Study Implementation Program
("DESI"). Drugs determined to be "less than
effective" and for which a notice of opportunity for a
hearing was published ("DESI-LTE") are not eligible
for Medicare and Medicaid reimbursement unless re-approved.
Ambrosecchia, a former employee of both Defendants, alleged
that the Defendants reported reimbursement- eligible
classification codes to the Center for Medicare and Medicaid
Services ("CMS") for certain DESI-LTE drugs,
thereby causing the United States and relevant state
governments to provide reimbursement for ineligible drugs.
filed a motion to dismiss the second amended complaint under
Federal Rule of Civil Procedure 12(b)(6), arguing that the
public disclosure bar, 31 U.S.C. § 3730(e)(4), requires
dismissal. The public disclosure bar requires an FCA claim to
be dismissed where the allegations are based on information
that has been publicly disclosed, unless the person making
the claim "is an original source of the
information." Id. § 3730(e)(4)(A). The
district court granted the motion and dismissed the FCA
claims, finding that the public disclosure bar applies and
that Ambrosecchia does not fit within the original source
exception. Additionally, the district court declined
to exercise supplemental jurisdiction over the state law
claims and dismissed them without prejudice. Ambrosecchia
appeals, arguing that the public disclosure bar cannot be
determined on a motion to dismiss and, in the alternative,
that the public disclosure bar does not apply. Ambrosecchia
also contends that the district court should have granted her
leave to amend her complaint and that the court erred in
permitting Perrigo Company, PLC to join Paddock's motion
to dismiss rather than entering default judgment against it.
Ambrosecchia does not challenge dismissal of her state law
claims. Defendants raise as an alternative basis for
affirmance the argument that Ambrosecchia's complaint
does not satisfy Federal Rule of Civil Procedure 9(b).
Motion to Dismiss
Ambrosecchia contends that it is not appropriate to resolve
whether the public disclosure bar applies on a motion to
dismiss because the public disclosure bar, as amended in
2010, is no longer jurisdictional. Prior to 2010, 31 U.S.C.
§ 3730(e)(4) removed a court's subject matter
jurisdiction where the allegations and transactions of an FCA
action previously had been publicly disclosed. U.S. ex
rel. Newell v. City of St. Paul, Minn., 728 F.3d 791,
794-95 (8th Cir. 2013) ("No court shall have
jurisdiction over an action under this section based upon the
public disclosure of [the] allegations or transactions . . .
." (citation omitted)). Accordingly, courts determined
at the outset of a suit whether the public disclosure bar
applied under Federal Rule of Civil Procedure 12(b)(1).
See id. at 795. In 2010, Congress amended §
3730(e)(4) as part of the Patient Protection and Affordable
Care Act. U.S. ex rel. Moore & Co. v. Majestic Blue
Fisheries, LLC, 812 F.3d 294, 298-300 (3d Cir. 2016).
The amended section 3730(e)(4) provides:
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-
(i) in a Federal criminal, civil, or administrative hearing
in which the Government or its agent is a party;
(ii) in a congressional, Government Accountability Office, or
other Federal report, hearing, ...