United States Ex Rel. Ven-A-Care of the Florida Keys, Inc. v. Baxter Healthcare Corp.

United States Court of Appeals
For the First Circuit

No. 13-1732

UNITED STATES, EX REL. VEN-A-CARE OF THE FLORIDA KEYS, INC.,

Plaintiff, Appellee,

v.

BAXTER HEALTHCARE CORPORATION,

Defendant, Appellee,

v.

LINNETTE SUN AND GREG HAMILTON,

Appellants.

No. 13-2083

UNITED STATES, EX REL. LINNETTE SUN;
UNITED STATES, EX REL. GREG HAMILTON,

Plaintiffs, Appellants,

v.

BAXTER HEALTHCARE CORPORATION,

Defendant, Appellee.

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Patti B. Saris, U.S. District Judge]
 Before

Howard, Lipez and Barron,
Circuit Judges.

David J. Chizewer, with whom Courtney R. Baron, Goldberg Kohn
LTD., Lauren John Udden, Frederick M. Morgan, Jr., Jennifer M.
Verkamp, Morgan Verkamp, LLC, and Mark Allen Kleinman were on
brief, for appellants.
Steven J. Roman, with whom Merle M. DeLancey, Jr., Dickstein
Shapiro LLP, Peter E. Gelhaar, and Donnelly, Conroy & Gelhaar, LLP
were on brief, for Baxter Healthcare Corporation, appellee.
James J. Breen, with whom The Breen Law Firm, Rand J. Riklin,
John E. Clark, and Goode Casseb Jones Riklin Choate & Watson were
on brief, for Ven-A-Care of the Florida Keys, Inc., appellee.

December 1, 2014
 BARRON, Circuit Judge. This appeal involves a lawsuit

against a pharmaceutical company for allegedly defrauding the

federal Medicaid and Medicare programs. The suit is based on the

False Claims Act, 31 U.S.C. §§ 3729-3733, an unusual federal

statute that allows private parties, called "relators," to stand in

for the United States and bring what are known as qui tam actions.1

Because qui tam actions let private individuals recover damages for

wrongs done to the United States, a special threshold bar -- the

"first-to-file" rule -- sometimes stands in their way. It is that

bar that is in dispute here.

The first-to-file rule is so named because it blocks qui

tam suits that are filed while similar enough ones are already

pending. In this case, the District Court ruled appellants' qui

tam suit could not go forward because a Florida pharmacy years

before had brought one a lot like it. We agree with the District

Court on that point and thus affirm the dismissal of appellants'

suit. Because that decision takes care of this appeal, we do not

decide the other issues the parties discuss.

1
"Qui tam is short for the Latin phrase qui tam pro domino
rege quam pro se ipso in hac parte sequitur, which means 'who
pursues this action on our Lord the King's behalf as well as his
own.'" Vt. Agency of Natural Res. v. United States ex rel.
Stevens, 529 U.S. 765, 768 n.1 (2000).

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 I.

To understand why we are only now considering the first-

to-file rule in a case that began nine years ago, we need to

describe the two qui tam actions involved, the alleged fraud each

identified, and the complicated procedural path that led the

District Court to decide their similarities required the later

suit's dismissal. To do all of that, though, we first need to go

back nearly two decades, to 1995.

That was when Ven-A-Care of the Florida Keys, Inc., the

pharmacy, filed the first of the two qui tam actions involved here.

Ven-A-Care alleged a number of pharmaceutical companies had

fraudulently inflated the prices of their drugs, thus securing

higher reimbursements through Medicare and Medicaid than they

deserved. Among the many companies named in Ven-A-Care's complaint

was Baxter Healthcare Corporation.

Baxter's status as a defendant was kept from public view

for more than a decade because Ven-A-Care filed its qui tam suit

under seal. See 31 U.S.C. § 3730(b)(2), (3) (False Claims Act

complaints must be filed in camera and may be kept under seal at

the government's behest). But in 2010, the United States decided

not to intervene in Ven-A-Care's case, and that led to the

complaint's unsealing.2 See id. § 3730(b)(4)(B). The Judicial

2
By that point, Ven-A-Care had amended its complaint on four
occasions. The operative Ven-A-Care complaint for purposes of this
appeal is the Fourth Amended Complaint, which was filed on December

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Panel on Multidistrict Litigation then consolidated Ven-A-Care's

suit with nearly one hundred similar actions -- most filed under

laws other than the False Claims Act -- in the United States

District Court for the District of Massachusetts. See In re Pharm.

Indus. Average Wholesale Price Litig., 491 F. Supp. 2d 20 (D. Mass.

2007); In re Pharm. Indus. Average Wholesale Price Litig., 230

F.R.D. 61 (D. Mass. 2005).

About a year later, in October of 2011, Baxter and

Ven-A-Care reached a settlement agreement. Baxter agreed to pay

tens of millions of dollars to be shared between Ven-A-Care and the

United States. In return, the Settlement Agreement and Release

purported to "fully and finally release[], acquit[], and forever

discharge[]" Baxter from "any and all civil, regulatory, and/or

administrative claim, action, suit, demand, right, cause of action,

liability, judgment, damage, or proceeding . . . which has been

asserted, could have been asserted, or could be asserted in the

future . . . for or arising from any of the Covered Conduct." The

agreement defined "Covered Conduct" as Baxter's submission of

inflated price and cost figures, and its subsequent receipt of

higher-than-deserved reimbursements, for "any and all drugs

manufactured, marketed and/or sold by or on [its] behalf."

11, 2002 -- more than two years before the other relators in this
case brought their suit against Baxter in 2005.

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 Despite that agreement, the False Claims Act prevented

Ven-A-Care from voluntarily dismissing its action against Baxter

without the federal government's consent. See 31 U.S.C.

§ 3730(b)(1). But Ven-A-Care soon did get that consent, and the

District Court then entered judgment dismissing Ven-A-Care's action

against Baxter, thus seemingly ending Baxter's role in the case.

Baxter's involvement in False Claims Act litigation, however, was

not over. Instead, a new front of litigation had opened.

Years before the dismissal of Ven-A-Care's suit, Linnette

Sun, one of Baxter's former employees, and Greg Hamilton, an

employee of one of its longtime customers,3 had teamed up to file

a qui tam action of their own against Baxter, and that action was

still pending when Baxter settled with Ven-A-Care.4 Ven-A-Care and

Baxter were aware of Sun and Hamilton's suit when they concluded

their settlement talks, but they did not directly alert Sun and

3
Sun was a research director for Baxter, and in that capacity
was responsible for pricing one of the drugs listed in her and
Hamilton's complaint. Hamilton worked for a pharmacy that
purchased Baxter's products and used one of the commercial
reporting compendia allegedly crucial to the fraud Baxter carried
out.
4
Partly as a result of the fact that Sun and Hamilton filed
their action before Ven-A-Care's was publicly disclosed, this case
does not implicate the False Claims Act's "public disclosure" bar,
31 U.S.C. § 3730(e)(4). See generally United States ex rel.
Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13, 20-28 (1st Cir.
2009) (analyzing text, history, and structure relevant to "public
disclosure" bar). The parties do not argue otherwise.

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Hamilton to their impending agreement.5 Instead, after the United

States signed off on Baxter's settlement with Ven-A-Care and that

suit had been dismissed, Baxter moved for partial6 summary judgment

in Sun and Hamilton's case.

In doing so, Baxter argued the Ven-A-Care settlement

released not only the pharmacy's claims against it, but also Sun

and Hamilton's claims as well. Sun and Hamilton countered they

were not parties to the Ven-A-Care action and the United States's

consent to the settlement was, as the government put it, "to the

dismissal with prejudice only of claims pled in relator

Ven-A-Care's complaint against [Baxter]." Statement of the United

States Regarding the Consent of the United States to the Dismissal

with Prejudice of Claims Pursuant to 31 U.S.C. § 3730(b)(1) in a

Related Matter, In re Pharm. Indus. Average Wholesale Price Litig.,

No. 1:01-cv-12257-PBS (D. Mass. Nov. 14, 2011), ECF No. 7897

(emphasis added). Sun and Hamilton thus argued the Ven-A-Care

settlement agreement should not be read to release their claims.

5
Ven-A-Care did file the Settlement Agreement and Release on
the docket that applied for the entire multidistrict litigation
against all the pharmaceutical-company-defendants, but Ven-A-Care
did not provide Sun and Hamilton with any further notice of the
agreement.
6
Sun and Hamilton had previously amended their complaint to
add retaliation and employment discrimination claims not now before
us, but Baxter's summary judgment motion was brought with respect
to the False Claims Act claims only.

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The District Court disagreed, however, and granted summary

judgment.

But Baxter was still not free and clear. Sun and

Hamilton argued in a motion for reconsideration that even if the

Ven-A-Care settlement did cover their claims, the agreement could

not release those claims until Sun and Hamilton got a hearing on

whether "the proposed settlement is fair, adequate, and reasonable

under all the circumstances." 31 U.S.C. § 3730(c)(2)(B). Their

argument depended on their characterization of the settlement as an

"alternate remedy" the United States had chosen to pursue for

Baxter's fraud. See id. § 3730(c)(5).

The District Court agreed with Sun and Hamilton that the

settlement was an "alternate remedy" under the Act, but that

presented a procedural puzzle about how Sun and Hamilton could get

the fairness hearing. After all, the Ven-A-Care suit had already

been dismissed, and thus that case was over. The District Court

suggested a possible solution might be available through an

arguably novel construction of Federal Rule of Civil Procedure

60(b), which allows parties to move to reopen judgments in certain

limited circumstances. In response, Sun and Hamilton filed a

motion in Ven-A-Care's case against Baxter -- to which Sun and

Hamilton were not parties -- that argued they had a right to a

fairness hearing under the False Claims Act that required reopening

the Ven-A-Care judgment.

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 That motion, in turn, led to the first-to-file ruling we

now focus on in this appeal. In responding to Sun and Hamilton's

Rule 60(b) motion, Baxter for the first time argued that, wholly

apart from the settlement agreement with Ven-A-Care, Sun and

Hamilton could not proceed with their suit. The reason, Baxter

argued, was that Ven-A-Care's qui tam action -- which was pending

when Sun and Hamilton filed theirs -- stated all the essential

facts of the fraud alleged by Sun and Hamilton. As a result,

Baxter contended, the Ven-A-Care complaint had triggered the False

Claims Act's first-to-file bar -- and thus, Sun and Hamilton's suit

could not go forward.

The District Court agreed, and denied the Rule 60(b)

motion solely for that reason, entering identical orders in both

Sun and Hamilton's own lawsuit and the Ven-A-Care case in which

they sought to intervene. The Court thus left unaddressed the

issues about the statutory right to a fairness hearing Sun and

Hamilton might enjoy and its potential bearing on reopening the

Ven-A-Care case. The District Court then dismissed Sun and

Hamilton's suit.

Sun and Hamilton now appeal that judgment of dismissal.

They challenge not only the District Court's first-to-file ruling

but also its earlier summary judgment decision finding that Ven-A-

Care's settlement with Baxter also released Sun and Hamilton's

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claims against Baxter. Baxter and Ven-A-Care defend both rulings

as appellees.

II.

The "first-to-file" rule is, at least in this Circuit,

jurisdictional. United States ex rel. Wilson v. Bristol-Myers

Squibb, Inc., 750 F.3d 111, 117 (1st Cir. 2014) ("The FCA

first-to-file rule is jurisdictional . . . ."). But cf. United

States ex rel. Shea v. Cellco P'ship, 748 F.3d 338, 345-46 (D.C.

Cir. 2014) (Srinivasan, J., concurring in part and dissenting in

part) (noting that D.C. Circuit has not definitively ruled on

first-to-file bar's jurisdictional character). If we affirm on

that ground, therefore, we would not reach whether Baxter's

settlement agreement with Ven-A-Care independently released Sun and

Hamilton's claims, as the District Court initially held. Nor would

we reach whether the government, by consenting to the Ven-A-Care

settlement, secured an "alternate remedy" for Baxter's alleged

fraud, such that Sun and Hamilton were entitled to a fairness

hearing before that settlement agreement could take effect, as the

District Court later determined. Nor, further, would we reach

whether Sun and Hamilton, as non-parties, could move to reopen the

Ven-A-Care judgment, as the District Court also ruled. And so we

skip over these various issues -- the District Court acknowledged

they presented a "procedural pretzel" -- so we may focus on an

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issue that precedes them all: whether the District Court was right

to accept Baxter's first-to-file defense.

We begin with the portion of the False Claims Act that

gives rise to the first-to-file rule: 31 U.S.C. § 3730(b)(5). It

states that, when a private party files a qui tam action under the

False Claims Act, "no person other than the Government may

intervene or bring a related action based on the facts underlying

the pending action."7

Of course, lawsuits, like anything else, may be "related"

along many dimensions. And the ways in which a subsequent filing

might be "based on the facts" of an earlier one are many as well.

But this Circuit has explained that what matters, given this

statutory language and the Act's underlying purposes, are two

things: (1) the relationship between the fraud alleged in the two

qui tam actions, and (2) the extent to which the facts alleged in

the first-filed qui tam action suffice to provide the government

with notice of the fraud that has been alleged by the second. See

Wilson, 750 F.3d at 117-19; United States ex rel. Heineman-Guta v.

7
Because Sun and Hamilton filed this action against Baxter
while Ven-A-Care's was still under seal -- and thus was still
"pending" -- the first-to-file rule applies to this action even
though the earlier-filed action has now been dismissed. See United
States ex rel. Heineman-Guta v. Guidant Corp., 718 F.3d 28, 34 n.7
(1st Cir. 2013); cf. United States ex rel. Carter v. Halliburton
Co., 710 F.3d 171, 182-84 (4th Cir. 2013) (allowing a related
action to be filed after the original action was dismissed), cert.
granted sub nom. Kellogg Brown & Root Servs., Inc. v. United States
ex rel. Carter, 134 S. Ct. 2899 (2014).

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Guidant Corp., 718 F.3d 28, 35-36 (1st Cir. 2013); United States ex

rel. Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13, 32-33 (1st

Cir. 2009).

This focus makes good sense. By limiting when follow-on

qui tam suits may be brought, the Act in section 3730(b)(5) does

not guarantee that anyone with useful information about fraudulent

conduct against the United States may recover damages by bringing

a suit based on such knowledge. Rather, the Act seeks to ensure

the federal government receives the information it needs to launch

a meaningful investigation into fraudulent conduct. Wilson, 750

F.3d at 117. That "purpose of the qui tam action under § 3730(b)

is satisfied" when the government receives a complaint that

contains "'genuinely valuable information'" of sufficiently notice-

supplying quality. Heineman-Guta, 718 F.3d at 35-36 (quoting

United States ex rel. LaCorte v. SmithKline Beecham Clinical Labs.,

Inc., 149 F.3d 227, 234 (3d Cir. 1998)). And treating such a

first-filed complaint as precluding a similar enough later-filed

one furthers the Act's purposes in another way. Such treatment

"provide[s] incentives to relators to promptly alert the

government" of any fraud. Wilson, 750 F.3d at 117 (citation and

internal quotation marks omitted). There is thus no reason to read

section 3730(b)(5) to let later-filing relators sue merely because

they offer additional information that might also help the

government carry out its investigation.

-12-
 Against this background, the first-to-file rule requires

that we check to see whether the complaint in the first qui tam

suit provided enough detail to ensure that "the government knows

the essential facts of a fraudulent scheme" -- for once the

government knows that much, "it has enough information to discover

related frauds." Id. at 118 (quoting United States ex rel. Branch

Consultants v. Allstate Ins. Co., 560 F.3d 371, 378 (5th Cir.

2009)). Or, as we have put the point elsewhere, "to provide

sufficient notice to the government of the alleged fraud and bar a

later-filed complaint under § 3730(b)(5)[,] earlier-filed

complaints must provide only the essential facts to give the

government sufficient notice to initiate an investigation into

allegedly fraudulent practices" also alleged in the later-filed

action. Heineman-Guta, 718 F.3d at 36-37.

In this way, the statement in Heineman-Guta that a

first-filed complaint need provide only "sufficient notice to

initiate an investigation into allegedly fraudulent practices," id.

at 36-37, informs the "essential facts" test, it does not supplant

it. Before barring a second complaint, we must ask not merely

whether the first-filed complaint provides some evidence from which

an astute government official could arguably have been put "on

notice," id. at 35, 38, but also whether the first complaint

contained "all the essential facts" of the fraud it alleges, id. at

34 (citation omitted).

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 Under this "essential facts" standard, a later-filed

claim cannot go ahead if it "'states all the essential facts of a

previously-filed claim' or 'the same elements of a fraud described

in an earlier suit.'" Wilson, 750 F.3d at 117 (quoting Duxbury,

579 F.3d at 32). It follows that there need not be identity

between the two complaints to trigger the first-to-file rule.

"[T]he first-to-file rule 'still bar[s] a later claim even if that

claim incorporates somewhat different details.'" Id. at 118

(alteration in original) (quoting Duxbury, 579 F.3d at 32).

With this legal framework in mind, we compare the Ven-A-

Care complaint to the Sun and Hamilton complaint. See In re

Natural Gas Royalties Qui Tam Litig. (CO2 Appeals), 566 F.3d 956,

964 (10th Cir. 2009) ("The first-to-file bar is designed to be

quickly and easily determinable, simply requiring a side-by-side

comparison of the complaints."); United States ex rel. Poteet v.

Medtronic, Inc., 552 F.3d 503, 516 (6th Cir. 2009) ("In order to

determine whether a relator's complaint runs afoul of . . .

§ 3730(b)(5)'s first-to-file bar, a court must compare the

relator's complaint with the allegedly first-filed complaint.").

In doing so, we review de novo whether the first complaint meets

the "essential facts" test, as that test presents a question of law

about the statutorily required threshold for notifying the

government of the fraud alleged in the later-filed suit. Wilson,

750 F.3d at 117.

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 A.

In many qui tam suits involving the first-to-file rule,

a central question is whether the two actions concern the same

fraud or distinct ones. But Sun and Hamilton lead with a different

contention. They claim the Ven-A-Care complaint was so vague and

conclusory when it came to Baxter's conduct that it was as if the

complaint alleged no fraud at all. Thus, they argue that only they

"provided the type of information necessary to give the Government

a meaningful head start on its investigation" into Baxter's fraud.

They stress they identified "names, meetings, statements, and

documents" specific to Baxter's fraudulent scheme, while, they

argue, Ven-A-Care set forth none.

But Sun and Hamilton are not fair to the Ven-A-Care

complaint. The Ven-A-Care complaint did lack the detail Sun and

Hamilton's sets forth, but it was not bereft of facts specific to

Baxter's allegedly fraudulent conduct. The Ven-A-Care complaint

did at numerous points attribute the fraud to the defendants

through the use of plural indefinite pronouns, such as "each" or

"all." But that way of identifying the defendants does not make

the Ven-A-Care complaint any less useful to the federal government.

Baxter was covered by those same words, and the False Claims Act

surely should not be read to discourage a relator from alleging a

fraud perpetrated by many defendants.

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 In any event, Ven-A-Care's complaint contained a separate

section devoted solely to Baxter. In that section, Ven-A-Care

alleged Baxter knowingly made false representations about the price

and cost of its drugs in order to receive fraudulently inflated

reimbursements from Medicare and Medicaid and "further made or used

false records or statements regarding its prices and costs of the

drugs . . . and submitted same to [Medicare and Medicaid]." Ven-A-

Care also alleged Baxter got reimbursed for a number of drugs --

including the anti-hemophilia drug Recombinate, which Baxter

manufactured -– above their true costs and prices. Indeed, even

Sun and Hamilton acknowledge Ven-A-Care "disclosed a pricing spread

for Recombinate." The contention that Ven-A-Care's complaint

entirely lacked Baxter-specific allegations, therefore, is simply

wrong.

Sun and Hamilton are on stronger ground in saying their

complaint showed greater familiarity with how Baxter pulled off the

supposed fraud. By drawing on their inside knowledge as a former

employee of Baxter and a former employee of a longstanding customer

of Baxter, respectively, Sun and Hamilton did offer far more detail

than Ven-A-Care about particular actors within Baxter and the role

those actors played. Whether that matters, however, is a different

issue.

We have made clear the first-to-file rule does not

necessarily protect more detailed, later-filed complaints from less

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detailed, earlier-filed ones. See Wilson, 750 F.3d at 118-19. So

long as the first complaint sets forth the "essential facts" of the

fraud alleged in the second complaint, it does all it needs to do

under the first-to-file rule. Id. at 117. Thus, Sun and Hamilton

must show not only that they provided more detail than Ven-A-Care,

but also that Ven-A-Care did not provide enough detail -- even if

it provided some.

Exactly how specific a complaint must be to provide the

"essential facts" is not something we have previously described

with precision. And precision may be too much to ask, given the

context-specific nature of the inquiry. Still, important guidance

may be found in our decision in Heineman-Guta.

There, we explained that, for purposes of 31 U.S.C.

§ 3730(b)(5), a complaint need not contain the kind of detailed and

particularized allegations of fraudulent conduct -- such as the

names of the particular persons responsible for carrying out

certain aspects of an alleged fraud -- required to fulfill the

heightened pleading standard for fraud cases set forth in Federal

Rule of Civil Procedure 9(b).8 See Heineman-Guta, 718 F.3d at 36-

8
Rule 9(b) -- which commands that "a party must state with
particularity the circumstances constituting fraud or mistake" --
requires a complaint making such an allegation to "specify the
time, place, and content of an alleged false representation."
Heineman-Guta, 718 F.3d at 34 (quoting United States ex rel. Rost
v. Pfizer, Inc., 507 F.3d 720, 731 (1st Cir. 2007)). The
specificity needed to make out a claim of liability against a
particular defendant, however, may be greater than the amount of
detail needed to ensure the government has what it needs to launch

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37. We also addressed an argument much like the one Sun and

Hamilton now press -- that an earlier-filed qui tam complaint was

too unspecific to bar a later-filed qui tam suit, even if Rule 9(b)

did not establish the minimum amount of detail a qui tam complaint

must provide to trigger the False Claims Act's first-to-file bar.

Heineman-Guta involved a relator who brought a qui tam

action that claimed her employer and one of its affiliates had

engaged in a kickback scheme to promote the sale and use of cardiac

devices they manufactured. Id. at 29. Thirteen months before that

relator sued, however, another former employee had filed a qui tam

complaint against the same company. Id. at 30, 32. The second

relator argued the complaint filed by the first, which the parties

agreed "disclosed a fraudulent scheme nearly identical to the one

alleged in [the second relator's] complaint," id. at 34 n.8,

"fail[ed] the essential facts test because it lack[ed] allegations

that the scheme actually caused physicians to implant [the

employer's] devices or that those devices were covered by

Medicare," id. at 38 n.12. We rejected that argument because a

complaint "need not contain a detailed play-by-play narration of

how the scheme led to the submission of false claims" to trigger

the first-to-file rule. Id. Instead, we found "sufficient" for

a meaningful investigation into the alleged fraud. See id. at 35
("[T]he allegations of a preclusive first-filed complaint under
§ 3730(b)(5) need not comport with Rule 9(b)'s pleading
requirements to provide the government with sufficient notice of
potential fraud.").

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purposes of section 3730(b)(5) the first complaint's allegations

that the company "caused false statements and claims to be made to

the government for reimbursement under Medicare" "through multiple

forms of kickbacks designed to induce physicians and hospitals to

use [their] devices." Id.

Ven-A-Care's complaint, too, did not offer a "play-by-

play" of events or a detailed narration of how the alleged fraud

played out. But the complaint did identify the key highlights

about how Baxter conducted the supposed fraud. The complaint

detailed the particular pricing mechanism Baxter used for carrying

out the alleged fraud (leveraging the knowledge that Medicare and

Medicaid based their reimbursement payments on cost and price

estimates that were reported by various commercially available drug

pricing compendia, and thus entering into special "charge-back"

arrangements with select wholesalers in order to artificially

inflate the estimates that were supplied to the compendia and then

reported by them). The complaint specified the drugs involved

(including, among many others, the anti-hemophilic Recombinate).

The complaint described the time period during which the scheme

occurred ("the period starting from on or before December 31, 1993

and continuing through" the date on which it was filed, December

11, 2002). And the complaint set forth what Ven-A-Care contended

was corroborating evidence of Baxter's fraud (namely, a chart

listing various reported costs and prices).

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 Ven-A-Care's complaint thus hardly resembles the example

Sun and Hamilton cite in their brief of a complaint they contend

could not possibly trigger the first-to-file bar: "a one-sentence

complaint stating nothing more than: 'Baxter is committing pricing

fraud against the Government.'" Nor is the Ven-A-Care complaint

the kind of "overly broad and speculative complaint" we have

indicated cannot suffice "to notify the government of a fraudulent

scheme." Id. at 38. Instead, Ven-A-Care's complaint contained

"the essential facts" of Baxter's alleged fraud, and thus gave "the

government sufficient notice to initiate an investigation into

allegedly fraudulent practices." Id. at 36-37.

This conclusion is consistent with our other first-to-

file precedents, even though Sun and Hamilton say otherwise. Sun

and Hamilton rely in particular on our decision in Duxbury. There,

we held an earlier-filed qui tam complaint about an allegedly

fraudulent scheme involving drug pricing did not bar a second

relator's later-filed suit alleging the same defendant had engaged

in an off-label promotion scheme.9 579 F.3d at 32-33. Standing on

9
In Duxbury, the original complaint filed by the first
relator contained two counts, one alleging "substantive" False
Claims Act violations, and the other alleging conspiracy. 579 F.3d
at 17. In support of the "substantive" violations, the complaint
alleged (1) that the defendant had published a fraudulently
inflated average wholesale price for Procrit, an anemia drug; (2)
that it had marketed the "spread" between the inflated price and
the true price as a way of inducing healthcare providers to
purchase the drug; and (3) that it had undertaken "phony drug
studies" in encouraging healthcare providers to prescribe Procrit
for non-approved uses. Id.

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its own, Duxbury might be read to support Sun and Hamilton's

position. Duxbury did say the later-filed complaint "contained a

number of allegations that discuss, in significant detail," the

alleged off-label promotion scheme, and Duxbury did allow that

second, more detailed complaint to survive the first-to-file bar.

Id. at 33 (emphasis added).

But our decision to allow the second suit to go forward

in Duxbury did not rest on the greater detail in the later

complaint. Instead, as we later explained in Wilson, the key

difference was that the later-filed complaint "alleged a complex

off-label promotion and direct marketing scheme," while the

original complaint focused on kickbacks and in fact "'nowhere

The later-filed complaint -- which, like the first one, was
filed by a former sales representative of the defendant company --
also alleged the company had paid kickbacks to healthcare providers
in order to induce them to write prescriptions for Procrit that
would otherwise not have been written. Id. at 18. But the new
complaint additionally alleged that the company had engaged in a
comprehensive scheme to promote "a dosing regimen of 40,000 units
once per week even though it had not received approval from the FDA
for such a high dosage," and that the company's widespread
"promotion of this off-label use caused the filing of false claims
for reimbursement with Medicare and Medicaid, insofar as the
providers sought reimbursement for nonreimburseable uses." Id.
(internal quotation marks omitted).
In support of this latter allegation, the second complaint
enumerated a number of promotion efforts the defendant allegedly
had undertaken, detailing the many ways in which the company
carried out the off-label promotion scheme. See id. at 33. By
contrast, the first complaint referenced only a single drug study
"in which [the defendant] allegedly paid physicians to dose Procrit
at 40,000[ units] in a once per week dose instead of the FDA
approved dosage of 10,000[ units] three times per week dosage in
cancer-chemotherapy patients." Id. at 17.

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refer[red] to an off-label promotion scheme.'" Wilson, 750 F.3d at

119 (alteration in original) (quoting Duxbury, 579 F.3d at 33).

Thus, even if the initial complaint in Duxbury provided some

evidence relevant to the "complex off-label promotion and direct

marketing scheme," it still did not provide the "essential facts"

about the complex fraud because that fraud was described and

identified only in the later-filed complaint and "nowhere" in the

earlier one. Id.

So understood, Duxbury is a very different case from this

one. With one possible caveat we address below, Sun and Hamilton

and Ven-A-Care do not dispute that their respective complaints each

focused on the same fraudulent scheme. And, as we have explained,

each described that scheme in significant detail. The only

divergence in their complaints, therefore, is the same one we

thought too slight in Wilson. As there, the later relators here

(Sun and Hamilton) included many details about the underlying

scheme the first relator (Ven-A-Care) did not supply. But the use

of comparatively greater detail in describing the same underlying

fraud is not what matters for the first-to-file rule. Otherwise,

the "essential facts" test would be reduced to an "identical facts"

test. See Wilson, 750 F.3d at 118-19. And, as we explained in

Wilson, such an understanding of the "essential facts" test cannot

be right because "once the government knows the essential facts of

a fraudulent scheme, it has enough information to discover related

-22-
frauds."10 750 F.3d at 118 (quoting Branch Consultants, 560 F.3d

at 378).

Simply put, once the government gets sufficiently

valuable information from a qui tam complaint about the same fraud

alleged by a follow-on complaint, the purposes of the first-to-file

rule have been fully served.11 And here, both complaints focused

on the very same fraud Baxter allegedly committed, and the first of

the complaints, Ven-A-Care's, provided enough specific information

about the alleged fraud to satisfy the first-to-file rule.

B.

Sun and Hamilton do make one final argument. This one

does not focus on the comparatively greater detail they supplied

about the fraud in question, or on the supposedly insufficient

detail Ven-A-Care offered. Instead, Sun and Hamilton argue their

complaint -- and theirs alone -- sketched out the inner workings of

Baxter's fraudulent scheme after the year 2000, and that Baxter's

post-2000 conduct resulted in a fraudulent scheme separate from the

fraud Ven-A-Care identified. Thus, at least as to Baxter's post-

2000 conduct, Sun and Hamilton portray themselves to be like the

10
All other Circuits to have addressed the issue have thus
rejected an "identical facts" test. See United States ex rel.
Chovanec v. Apria Healthcare Grp. Inc., 606 F.3d 361, 363 (7th Cir.
2010) (collecting cases).
11
At least, this is true so long as the first relator's suit
remains pending. See generally Carter, 710 F.3d at 182-84, cert.
granted sub nom. Kellogg Brown & Root Servs., Inc. v. United States
ex rel. Carter, 134 S. Ct. 2899 (2014).

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second relator in Duxbury -- the only one who sufficiently alleged

the complex off-label promotion scheme.12

This argument would have some force if true. But Sun and

Hamilton's complaint suggests Baxter's fraud did not change much

after 2000 -- or, at least, not enough to distinguish it from the

fraud described in the Ven-A-Care complaint.

According to Sun and Hamilton, in 2000 the New York

Medicaid Fraud Control Unit apprised various pharmacy directors of

a pattern of misrepresentations by drug manufacturers of the

average wholesale prices and acquisition costs of their drugs. As

a result, Sun and Hamilton alleged, some of the industry reporting

compendia agreed to stop reporting average wholesale price values

published by drug manufacturers and to instead report figures on

the basis of true market prices.

Sun and Hamilton alleged Baxter got around this new

practice by providing the compendia with what Baxter called "list

sales prices." Although they went by a different name, these "list

sales prices" -- like the manufacturer-provided average wholesale

prices the compendia now refused to accept -- also reflected

artificially inflated amounts paid by only a few select wholesalers

12
At oral argument, Sun and Hamilton expressly disclaimed that
their complaint alleged a new scheme by virtue of the fact that
only they made allegations with respect to Baxter's pricing of
Advate, a drug Baxter released only after Ven-A-Care filed its
operative complaint but that both parties agree is, as the District
Court found, very closely related to the other Baxter drug at issue
in Sun and Hamilton's complaint, Recombinate.

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with whom Baxter had entered into special "charge-back" deals.13

Sun and Hamilton further claimed that, by supplying as "list sales

prices" only what the few "charge-back" wholesalers paid, Baxter

provided the compendia values that "bore no relationship to the

price charged in the marketplace." And because the compendia

ultimately accepted these "list sales prices" and then reported

them, Sun and Hamilton alleged Baxter was able to obtain "a

substantial spread" between the prices it charged the overwhelming

majority of its buyers and the amounts it received in

reimbursements from the government.

According to Sun and Hamilton, they alone described this

post-2000 fraud. And, to bolster that contention, Sun and Hamilton

argue Ven-A-Care's complaint could not possibly have provided the

"essential facts" about Baxter's post-2000 fraud because that

earlier-filed complaint "contain[ed] no allegations relating to

[Baxter's] post-1999 conduct." But the section of Ven-A-Care's

complaint specific to Baxter began by alleging that, "[t]hroughout

the period starting from on or before December 31, 1993 and

continuing through the present date," Baxter "knowingly caused

13
Although Sun and Hamilton referred to these deals frequently
in their complaint, they did not explain the nature of the "charge-
back" deals. By contrast, Ven-A-Care did. Its complaint stated
the "charge-back" deals involved select wholesalers purchasing
drugs from manufacturers at far-above-market prices, knowing the
manufacturers would repay them (and pay them a service fee for
their troubles) after they sold the products to retailers at market
value.

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Medicare/Medicaid to pay false or fraudulent claims for

prescription drugs and biologicals." Since Ven-A-Care's

last-amended complaint was filed on December 11, 2002, Ven-A-Care's

allegations covered nearly three years' worth of "post-1999

conduct" specific to Baxter. So, on the timing point, Sun and

Hamilton are simply wrong.14

Sun and Hamilton also argue Ven-A-Care's complaint,

regardless of the time-span it addresses, said too little about

what Baxter did to adjust to the compendia's change in practice

after 2000. But this argument, too, is not right. Ven-A-Care's

complaint stated the named defendants (Baxter included) frequently

provided cost and price figures to the reporting compendia in terms

of "List Price" instead of true market prices. And the complaint

alleged each or all of the named defendants provided the compendia

with cost and price figures from the "charge-back" wholesalers,

thereby obtaining the problematic gains. These are the very same

mechanisms Sun and Hamilton identify in their complaint. In fact,

Ven-A-Care's complaint offered more details about the "charge-back"

mechanism than did Sun and Hamilton's complaint.

14
The Seventh Circuit has explained that the fact that an
earlier-filed complaint covers a time period prior to the period
covered in a later-filed complaint does not in and of itself render
the two complaints unrelated for first-to-file purposes, see
Chovanec, 606 F.3d at 363, but we need not resolve that question
since the Ven-A-Care complaint does describe a fraud that extended
well past 2000.

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 Thus, while Sun and Hamilton in most respects provided

more detail about exactly what Baxter did after the compendia

shifted their reporting practices, any meaningful differences

between Baxter's pre-2000 and post-2000 fraud were ones about which

Ven-A-Care's complaint provided the "essential facts." This

conclusion follows because a review of Ven-A-Care's complaint shows

that, whatever it may have left out, it did give the federal

government sufficient notice to launch a meaningful investigation

of Baxter's alleged misconduct both before and after the reporting

practices changed in 2000. See Heineman-Guta, 718 F.3d at 36-37

(explaining that "to provide sufficient notice to the government of

the alleged fraud and bar a later-filed complaint under

§ 3730(b)(5)[,] earlier-filed complaints must provide only the

essential facts to give the government sufficient notice to

initiate an investigation into allegedly fraudulent practices").

III.

In asking us to reverse the District Court, Sun and

Hamilton make an intuitively appealing contention. The Supreme

Court has explained that "[s]eeking the golden mean between

adequate incentives for whistle-blowing insiders with genuinely

valuable information and discouragement of opportunistic plaintiffs

who have no significant information to contribute of their own" is

one central purpose of the False Claims Act's qui tam provisions.

Graham Cnty. Soil & Water Conservation Dist. v. United States ex

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rel. Wilson, 559 U.S. 280, 294 (2010) (quoting United States ex

rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 649 (D.C.

Cir. 1994)). And here, Sun and Hamilton -- a former high-ranking

employee of Baxter and an employee of one of Baxter's longtime

customers, respectively -- are "whistle-blowing insiders," not

"opportunistic plaintiffs who have no significant information to

contribute of their own." Furthermore, Sun and Hamilton warn that,

if we apply the first-to-file rule to bar their suit, insiders like

them will be discouraged from coming forward with valuable

information about potential fraud for fear a less knowledgeable

relator already beat them to the door.

But considered more fully, Sun and Hamilton's contention

is not so powerful. Although achieving that "golden mean" is

certainly one key purpose of the False Claims Act's first-to-file

rule, we have previously explained that another is "to provide

incentives to relators to promptly alert[] the government to the

essential facts of a fraudulent scheme." Wilson, 750 F.3d at 117

(alteration in original) (quoting Duxbury, 579 F.3d at 24). Sun

and Hamilton's preferred approach might well frustrate that goal.

If adopted, insiders who knew more about a fraud might have less

reason to come forward quickly. They would face less risk that

diligent relators who did not know as much, but still knew enough

to permit the government to launch a meaningful investigation into

that same fraud, would beat them to court. It is not clear why the

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provision of the Act that establishes the first-to-file rule should

be read to discourage insiders from acting promptly on their

knowledge.

But however one might choose to make the tradeoff between

speed and quality in the abstract, our precedents make clear how we

must make it here. Section 3730(b)(5) of the False Claims Act

prevents Sun and Hamilton's suit from going forward. Their

complaint merely provides "additional facts and details about the

same scheme" pled in Ven-A-Care's earlier-filed complaint,

Heineman-Guta, 718 F.3d at 36, which already provided the

"essential facts" about that same scheme. The decision dismissing

Sun and Hamilton's suit is therefore AFFIRMED.

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