Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca3-14-03377/USCOURTS-ca3-14-03377-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

---

ALD-200 NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

____________

No. 14-3377

____________

UNITED STATES OF AMERICA ex rel. 

GURSHEEL S. DHILLON,

Appellant

v.

ENDO PHARMACEUTICALS; PEGGY RYAN

(E.D. Pa. Civ. No. 2-11-cv-07767)

UNITED STATES OF AMERICA ex rel. MAX H. WEATHERSBY, 

JR.; MK LITIGATION PARTNERSHIP 2011, LLP

v.

ENDO PHARMACEUTICALS, INC.; ENDO PHARMACEUTICALS

HOLDINGS, INC.; JAMES R. HAILEY; PEGGY RYAN

(E.D. Pa. Civ. No. 2-10-cv-02039)

UNITED STATES OF AMERICA ex rel. PEGGY RYAN

v.

ENDO PHARMACEUTICALS, INC.

(E.D. Pa. Civ. No. 2-05-cv-03450)

__________________________________ 

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

District Judge: Robert F. Kelly

Case: 14-3377 Document: 003111987829 Page: 1 Date Filed: 06/11/2015
2

__________________________________

Submitted on a Motion for Summary Affirmance 

Pursuant to Third Circuit LAR 27.4 and I.O.P. 10.6

May 14, 2015

Before: RENDELL, CHAGARES and SCIRICA, Circuit Judges

(Filed: June 11, 2015)

________________

OPINION*

________________

PER CURIAM

Gursheel Dhillon (“Dhillon”) appeals from an order of the District Court holding 

that Peggy Ryan is the sole Relator eligible to receive the settlement award, an order 

which effectively brought an end to his case. For the reasons that follow, we will 

summarily affirm.

In February, 2011, Dhillon filed a False Claims Act (“FCA”) case against Endo 

Pharmaceuticals (“Endo”), alleging that Endo’s sales representatives promoted the offlabel use of Lidoderm, which Dhillon learned about as a physician.1

 Lidoderm is an 

adhesive patch and is approved only for the treatment of pain related to post-herpetic 

neuralgia, a complication of shingles. Thousands of ineligible Lidoderm prescriptions 

were submitted to Medicaid and Medicare for reimbursement. When Dhillon filed his 

 

* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not 

constitute binding precedent.

1 Because the parties are familiar with the background of this case, we only briefly 

summarize it here. 

Case: 14-3377 Document: 003111987829 Page: 2 Date Filed: 06/11/2015
3

case, two other cases involving the off-label marketing of Lidoderm were already 

pending: Peggy Ryan’s case filed in 2005, U.S. ex rel. Ryan v. Endo Pharmaceuticals, 

Inc., D.C. Civ. No. 05-cv-03450, and Max Weathersby’s case filed in 2010, U.S. ex rel. 

Weathersby v. Endo Pharmaceuticals, Inc., D.C. Civ. No. 10-cv-02039. Ryan also filed 

an Amended Complaint -- on March 31, 2009 -- before either Weathersby or Dhillon 

initiated their actions.

On February 21, 2014, the Government elected to intervene on behalf of the 

Relators for settlement purposes. On this same day, the Relators entered into a settlement 

agreement whereby Endo agreed to pay $171.9 million in exchange for being released 

from liability. The settlement expressly resolved the off-label FCA allegations of all 

three Relators. Dhillon was represented by counsel when he signed the settlement 

agreement and waived and forever discharged any claims against Endo for the covered 

conduct. The settlement agreement included a provision expressly reserving the issue of 

entitlement to a Relator’s share, which the District Court would decide. The Government 

took no position on this issue. 

Briefing ensued in the District Court, and Ryan requested that she be awarded the 

sole Relator’s share as the first-to-file. Dhillon argued that he was the first to state a 

plausible claim to relief and thus was entitled to a Relator’s share. He argued that, 

although Ryan’s Amended Complaint filed on March 31, 2009 was filed before his 

complaint, it failed to satisfy Federal Rule of Civil Procedure 9(b)’s particularity 

requirement; thus the first-to file rule was inapplicable. Ryan rebutted this argument, and 

also argued that Dhillon’s claims were precluded by the public disclosure bar. Dhillon 

Case: 14-3377 Document: 003111987829 Page: 3 Date Filed: 06/11/2015
4

countered that the public disclosure bar was inapplicable because he qualified as an 

“original source.” Dhillon made certain additional arguments. 

In an order entered on June 23, 2014, the District Court granted Ryan’s motion, 

holding that she was the sole Relator eligible for the settlement award. The Court began 

with a first-to-file analysis, the threshold issue presented by the case, and determined that 

Ryan’s March 31, 2009 Amended Complaint was adequately pled in accordance with our 

recent decision in Foglia v. Renal Ventures Management, LLC, 754 F.3d 153 (3d Cir. 

2014) (setting forth requisite pleading standard under Rule 9(b) for FCA claims). The 

Court remarked that the issue was not even close. Ryan not only set forth particular 

details of the scheme, but also supported them with solid evidence. The Court further 

determined that Dhillon failed to raise any off-label marketing claims that were unique 

from the claims raised by Ryan. Accordingly, Ryan was entitled to be awarded the sole 

Relator’s share as the first-to-file. 

The District Court then further held, in the alternative, that Ryan had correctly 

argued that Dhillon’s claims were precluded by the public disclosure bar. The Court 

noted that the Government produced a number of news articles, which originated prior to 

the filing of complaints by either Weathersby or Dhillon, and that these articles qualified 

as public disclosures from news media under the plain language of 31 U.S.C. § 

3730(e)(4). The Court held that Weathersby’s and Dhillon’s qui tam actions were based 

upon the allegations set forth in the aforementioned public disclosures, and that they thus 

would have to be dismissed for lack of jurisdiction, id. at § 3730(e)(4)(B), unless each 

Relator could show that he was an “original source.” The Court held that Dhillon had 

Case: 14-3377 Document: 003111987829 Page: 4 Date Filed: 06/11/2015
5

failed utterly to show that he was an “original source” because he had no direct or 

independent knowledge of the fraud.2 The Court also rejected as meritless Dhillon’s 

other arguments based on the law of contracts, the statute of limitations, and the doctrine 

of laches. 

Dhillon filed a notice of appeal from the District Court’s June 23 Order, and then 

filed a timely motion for reconsideration. Ryan moved for an appellate bond of $25,000 

pursuant to Federal Rule of Appellate Procedure 7, arguing that it was necessary to 

ensure payment of costs on appeal. See Docket Entry No. 46, D.C. Civ. No. 05-cv03450. The District Court, in an order entered on August 26, 2014, denied Dhillon’s 

motion for reconsideration. In a separate order entered on the same day, the Court 

ordered Dhillon to prepay an appellate bond in the amount of $10,000.

We have jurisdiction under 28 U.S.C. § 1291 and Federal Rule of Appellate 

Procedure 4(a)(4)(B)(i) to review the order entered on June 23, 2014 as to Dhillon,3 now 

that the District Court has denied his timely motion for reconsideration.4 Relator Ryan 

 

2 By way of comparison, the District Court determined that Weathersby was an “original 

source.”

3 The District Court consolidated the three cases solely with regard to the issue of the 

Relators’ share of the settlement of federal claims relating to Endo’s off-label marketing 

conduct. Apparently, certain of Weathersby’s claims under analogous state laws remain 

pending in his case.

4 Dhillon did not file a new or amended notice of appeal within the time required once his 

motion for reconsideration was denied. The order denying the motion for reconsideration 

is the final order, but because Dhillon did not file a new or amended notice of appeal 

from it, we lack jurisdiction to review it to the extent that it decides new issues not 

decided by the District Court’s June 23 Order. Fed. R. App. Pro. 4(a)(4)(B)(ii); 

Carrascosa v. McGuire, 520 F.3d 249, 253-54 (3d Cir. 2008). We note also that Dhillon 

Case: 14-3377 Document: 003111987829 Page: 5 Date Filed: 06/11/2015
6

has moved for summary affirmance under Third Cir. LAR 27.4 and I.O.P. 10.6, and, in a 

separate motion, has moved to dismiss or quash the appeal because Dhillon failed to pay 

the appellate bond. Dhillon has submitted written opposition to these motions and filed a 

pro se opening brief, which we will consider. In addition, Dhillon has moved to strike 

Ryan’s motions for summary affirmance and to dismiss or quash the appeal. Ryan has 

filed a motion to expedite disposition of her motions for summary affirmance and to 

dismiss or quash. The briefing schedule has been stayed and these motions are ripe for 

disposition. After the District Court denied his motion for reconsideration, Dhillon filed 

a Rule 60(b) motion in the District Court, alleging newly discovered evidence. See

Docket Entry No. 60. The motion was stayed by the District Court pending the outcome 

of this appeal, see Venen v. Sweet, 758 F.2d 117, 120 (3d Cir. 1985). Dhillon has filed 

two motions in this Court, asking that we summarily remand the matter to the District 

Court for disposition of that Rule 60(b) motion. These motions also are ripe for 

disposition.

We grant Ryan’s motion for summary affirmance and will summarily affirm the 

order of the District Court because no substantial question is presented by this appeal, 

Third Circuit LAR 27.4 and I.O.P. 10.6. Our review of matters of statutory interpretation 

is plenary. See U.S. ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149 

F.3d 227, 232 (3d Cir. 1998). The False Claims Act (“FCA”) enables individuals, known 

 

filed a second motion for reconsideration, which the District Court denied. This second 

motion was untimely filed and did not toll the time for taking an appeal, Fed. R. App. 

Pro. 4(a)(4)(B)(i). Moreover, Dhillon did not separately appeal the order denying this 

second motion.

Case: 14-3377 Document: 003111987829 Page: 6 Date Filed: 06/11/2015
7

as Relators, to bring enforcement actions, known as qui tam actions, on behalf of the 

United States to recover funds which were fraudulently obtained, and to share in any 

resulting damages award. 31 U.S.C. § 3729, et seq. See also U.S. ex rel. Wilkins v. 

United Health Group, Inc., 659 F.3d 295, 304-05 (3d Cir. 2011). There are limitations to 

recovery, however. The first-to-file bar, for example, prohibits a Relator from bringing a 

case based on the same “essential facts” as an earlier-filed complaint, such that only the 

first-filed case may proceed to a damages award. 31 U.S.C. § 3730(b)(5); LaCorte, 149 

F.3d at 232-33 (if later filed allegation states all essential facts of previously-filed claim, 

section 3730(b)(5) bars later claim even if it incorporates somewhat different details). 

Only the first-filed Relator is entitled to a Relator’s share award from a settlement. Id. 

Cf. U.S. ex rel. Ortega v. Columbia Healthcare, Inc., 240 F.Supp.2d 8, 12 (D.D.C. 2003) 

(dividing the “bounty” has practical effect of reducing incentive to come forward with 

information on wrongdoing). The District Court held that the first-to-file rule applied to 

bar Dhillon’s claim for a share of the settlement.

In his opening brief, Dhillon argues that once the Government intervenes, it cannot 

deny a Relator his statutory share of at least 15% under 31 U.S.C. §§ 3730(d)(1) and 

3730(c)(5). Appellant’s Informal Brief, at 11. In Rille v. PricewaterhouseCoopers LLP, 

748 F.3d 818 (8th Cir. 2014), upon which Dhillon relies, the District Court awarded the 

Relators over $8 million. The Government, which had intervened and had adopted the 

Relators’ complaint, appealed and contended that the Relators were not entitled to any 

share of the recovery because their complaint did not state a plausible claim for relief. 

The Government contended that the claims it actually settled were unrelated to the 

Case: 14-3377 Document: 003111987829 Page: 7 Date Filed: 06/11/2015
8

Relators’ action and therefore the settlement funds did not constitute “proceeds of the 

action or settlement of the claim” under § 3730(d)(1). The Court of Appeals for the 

Eighth Circuit sided with the Relators, holding that they were entitled to a 15% finder’s 

fee, so long as they were an “original source.” Rille, 748 F.3d at 825. 

In Dhillon’s case, the District Court decided -- adversely to him -- the threshold 

question whether his action was barred by the first-to-file rule. Accordingly, Rille, which 

does not concern the first-to-file issue, has no bearing on his case.5 Dhillon also argues 

that he must necessarily be an “original source” because, after he filed his “home run” 

complaint, Endo finally agreed to settle. Appellant’s Informal Brief, at 15. This 

argument is meritless; it again ignores the fact that the District Court decided the 

threshold first-to-file question adversely to Dhillon. Only the first-filed Relator is 

entitled to a Relator’s share award from a settlement, LaCorte, 149 F.3d at 232-33, and 

Dhillon is not a first-filed Relator. Although the first-to file issue is dispositive here, we 

note further that Dhillon’s complaint was indeed the last one filed before the claims were 

settled, but he provides no support for his argument that the temporal relationship 

between a qui tam complaint and a settlement has any bearing at all on the “original 

source” determination. He thus gives us no reason to overturn the District Court’s 

determination that he is not an “original source.”

Dhillon next argues that Ryan’s March 31, 2009 Amended Complaint is itself 

subject to the first-to file and public disclosure rules because her original complaint 

 

5 We further note that this opinion was vacated by the court and that rehearing en banc 

was granted. See Rille v. PricewaterhouseCoopers LLP, 2014 WL 5835459 (8th Cir. 

August 27, 2014). 

Case: 14-3377 Document: 003111987829 Page: 8 Date Filed: 06/11/2015
9

contained all of the required “essential facts.” Id. at 23. In U.S., ex rel. Shea v. Cellco 

Partnership, 748 F.3d 338 (D.C. Cir. 2014), petition for cert. filed, upon which Dhillon 

relies, the Court of Appeals for the District of Columbia held that a Relator’s second 

action under the FCA was barred by the first-to-file rule because the second action 

incorporated the same material elements of fraud as his earlier-filed action, id. at 342-42. 

Shea does not apply here because Mr. Shea’s first qui tam action came to an end when 

the parties settled without admission of liability. Here, unlike Mr. Shea who filed a 

second qui tam action after his first action settled and came to an end, id. at 340, Ryan 

initiated only one qui tam action. Although an amended complaint supersedes an original 

complaint, as Dhillon argues, the filing of an amended complaint does not begin a new 

action; it is a continuation of the original action.

Last, Dhillon argues that Ryan’s Amended Complaint did not comply with Rule 

9(b)’s heightened pleading requirements under the standard that applies in the Sixth 

Circuit Court of Appeals, see U.S. ex rel. Bledsoe v. Community Health Systems, Inc., 

501 F.3d 493, 510 (6th Cir. 2007); that Sixth Circuit law should apply because he 

initiated his case in federal court in the Middle District of Tennessee; and that the District 

Court incorrectly applied Foglia. Appellant’s Informal Brief, at 27-28. We note that in 

Foglia we sided with those circuits that had used a “more nuanced” reading of the 

heightened pleading requirements of Rule 9(b) in deciding FCA cases, and that the Sixth 

Circuit Court of Appeals was not among those circuits. 

Dhillon’s case was originally filed in the Middle District of Tennessee but was 

transferred to the Eastern District of Pennsylvania where Ryan’s and Weathersby’s qui 

Case: 14-3377 Document: 003111987829 Page: 9 Date Filed: 06/11/2015
10

tam actions already were pending. When a matter is not within the exclusive jurisdiction 

of a court, the law of the circuit in which the district court sits applies. See Pharmacia & 

Upjohn Co. v. Mylan Pharmaceuticals, Inc., 170 F.3d 1373, 1381 (Fed. Cir. 1999). The 

issue of Rule 9(b)’s particularity requirement is not a matter within the exclusive 

jurisdiction of any federal court, and, accordingly, Foglia applies to FCA cases decided in 

the Eastern District of Pennsylvania. The District Court properly reviewed Ryan’s March 

31, 2009 Amended Complaint under the test we adopted in Foglia, and correctly 

determined that Ryan amply complied with Rule 9(b). In Foglia, we held that a 

plaintiff’s claim must be accompanied by “particular details of a scheme to submit false 

claims paired with reliable indicia that lead to a strong inference that claims were actually 

submitted.” Id. at 157-58 (internal quotation marks removed). “Sufficient facts to 

establish ‘a plausible ground for relief’ must be alleged.” Id. at 158 (quoting Fowler v. 

UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009)). 

Ryan worked as a sales representative for Endo and assisted in the Government’s 

investigation, which began in 2005. In her Amended Complaint, she described a scheme 

undertaken by Endo to promote the off-label use of Lidoderm through the creation of 

fraudulent studies, by directing the sales force to advocate such applications, and by 

targeting and encouraging physicians through a system of kickbacks to prescribe the drug 

for such uses. She asserted that Endo touted the effectiveness of Lidoderm for off-label 

uses through supposedly independent studies, but these studies actually were financed 

and directed by Endo. She alleged that Endo directed company sales representatives to 

inform physicians of Lidoderm’s ability to treat carpal tunnel syndrome, osteoarthritis, 

Case: 14-3377 Document: 003111987829 Page: 10 Date Filed: 06/11/2015
11

low back pain and other off-label conditions, and provided the representatives with 

literature and publications promoting Lidoderm’s off-label uses. She asserted that Endo 

used a system of kickbacks in order to encourage physicians to prescribe Lidoderm for 

unapproved uses. “High prescribers” were given honorariums to present at medical 

conferences and round table dinners. Finally, she used statistical sales data to further 

support her claim that Endo promoted the off-label use of Lidoderm. For instance, 

although the number of patients suffering from post-herpetic neuralgia has remained 

relatively constant, net sales of Lidoderm increased by 73% to $309.2 million in 2004. 

Since 2004, net sales of Lidoderm have more than doubled, and in 2007 reached $705.6 

million. 

Accordingly, Ryan’s Amended Complaint amply set forth “particular details of a 

scheme to submit false claims” and additionally supported them with evidence that would 

allow for a “strong inference” that false claims actually were submitted, Foglia, 754 F.3d 

at 156, thus satisfying Rule 9(b). Dhillon’s argument that Ryan’s Amended Complaint 

does not satisfy Rule 9(b)’s particularity requirement under the governing law is 

meritless.

For the foregoing reasons, we grant Ryan’s motion and will summarily affirm the 

District Court’s June 23, 2014 Order. Ryan’s motion to expedite is granted. Ryan’s 

motion to dismiss or quash the appeal is denied as unnecessary. Dhillon’s motion to 

strike is denied. Dhillon’s two motions to summarily remand are denied as moot. 

Case: 14-3377 Document: 003111987829 Page: 11 Date Filed: 06/11/2015