Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-09-01202/USCOURTS-ca4-09-01202-0/pdf.json

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

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PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA, STATE 

OF DELAWARE, COMMONWEALTH OF

VIRGINIA, STATE OF CALIFORNIA,

STATE OF HAWAII, STATE OF

NEVADA, STATE OF TENNESSEE,

STATE OF ILLINOIS, STATE OF NEW

HAMPSHIRE, DISTRICT OF COLUMBIA,

STATE OF FLORIDA, STATE OF

MASSACHUSETTS, STATE OF TEXAS,

STATE OF LOUISIANA ex rel. MARK

RADCLIFFE,  No. 09-1202

Plaintiff-Appellant,

v.

PURDUE PHARMA L.P.; PURDUE

PHARMA, INCORPORATED,

Defendants-Appellees.

UNITED STATES OF AMERICA,

Amicus Curiae. 

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UNITED STATES OF AMERICA, STATE 

OF DELAWARE, COMMONWEALTH OF

VIRGINIA, STATE OF CALIFORNIA,

STATE OF HAWAII, STATE OF

NEVADA, STATE OF TENNESSEE,

STATE OF ILLINOIS, STATE OF NEW

HAMPSHIRE, DISTRICT OF COLUMBIA,

STATE OF FLORIDA, STATE OF

MASSACHUSETTS, STATE OF TEXAS,

STATE OF LOUISIANA ex rel. MARK

RADCLIFFE,  No. 09-1244

Plaintiff-Appellee,

v.

PURDUE PHARMA L.P.; PURDUE

PHARMA, INCORPORATED,

Defendants-Appellants.

UNITED STATES OF AMERICA,

Amicus Curiae. 

Appeals from the United States District Court

for the Western District of Virginia, at Abingdon.

James P. Jones, Chief District Judge.

(1:05-cv-00089-jpj-pms)

Argued: January 27, 2010

Decided: March 24, 2010

Before TRAXLER, Chief Judge, AGEE, Circuit Judge,

and Catherine C. BLAKE, United States District Judge

for the District of Maryland, sitting by designation.

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Affirmed by published opinion. Judge Agee wrote the opinion, in which Chief Judge Traxler and Judge Blake joined. 

COUNSEL

ARGUED: Mark Tucker Hurt, Abingdon, Virginia, for

Appellant/Cross-Appellee. Jennifer O’Connor, WILMERHALE, Washington, D.C., for Appellees/Cross-Appellants.

Henry Charles Whitaker, UNITED STATES DEPARTMENT

OF JUSTICE, Washington, D.C., for Amicus Curiae. ON

BRIEF: Paul Wakefield Roop, II, ROOP LAW OFFICE, LC,

Beckley, West Virginia, for Appellant/Cross-Appellee. Howard M. Shapiro, Kimberly A. Parker, Christopher E. Babbitt,

Robert A. Mays, WILMERHALE, Washington, D.C., for

Appellees/Cross-Appellants. Tony West, Assistant Attorney

General, Beth S. Brinkmann, Deputy Assistant Attorney General, Michael S. Raab, Civil Division, UNITED STATES

DEPARTMENT OF JUSTICE, Washington, D.C., for

Amicus Curiae.

OPINION

AGEE, Circuit Judge:

The plaintiff-relator, Mark Radcliffe ("Radcliffe"), filed a

qui tam suit in the United States District Court for the Western District of Virginia alleging that his former employer,

Purdue Pharma, L.P. ("Purdue"), defrauded the government

by marketing its pain-relief drug, OxyContin, as a cheaper

alternative to the drug it replaced, MS Contin, which was also

manufactured by Purdue. Radcliffe alleged that Purdue,

through its sales agents and marketing materials, falsely

claimed to physicians that OxyContin was less expensive than

its predecessor, MS Contin, because the "2:1 equianalgesic

ratio between OxyContin and MS Contin . . . ma[de] OxyUNITED STATES v. PURDUE PHARMA 3

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Contin twice as potent and, as a result, cheaper per dose than

MS Contin." J.A. 438. Radcliffe’s suit alleged violations of

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

("FCA"), as well as violations under various analogous state

statutes.1

While the complaint was under seal pursuant to the procedures outlined in the FCA, Radcliffe filed three separate

amended complaints before serving the Third Amended Complaint on Purdue. Purdue then moved to dismiss on three

grounds: (1) bar and release, (2) the public disclosure bar, and

(3) the failure to satisfy Federal Rule of Civil Procedure 9(b),

which requires that allegations of fraud be pled with particularity. The district court allowed limited discovery on the bar

and release issue but subsequently ruled that a release Radcliffe gave Purdue was ineffective as a ground upon which to

grant Purdue’s motion to dismiss. The district court did, however, grant the motion to dismiss based on Radcliffe’s failure

to satisfy the pleading requirements of Rule 9(b). Radcliffe

was given 30 days to amend his Complaint and he timely filed

1Congress enacted the [FCA] "during the Civil War in response to overcharges and other abuses by defense contractors, . . . [with the expectation

that it] would help the government uncover fraud and abuse by unleashing

a posse of ad hoc deputies to uncover and prosecute frauds against the

government." United States ex rel. Wilson v. Graham County Soil &

Water Conservation Dist., 582 F.3d 292, 298 (4th Cir. 2008) (quoting

Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th

Cir. 1999)). "The FCA imposes civil liability (including treble damages

and a fine of up to $10,000) on persons who knowingly submit false

claims to the government for payment or conspire to use false claims to

obtain payment from the government." Id. at 298-99 (citing 31 U.S.C.A.

§ 3729 (West 2003 & Supp. 2007)). 

Private persons, known as "relators", may file FCA suits on the government’s behalf. Id. at 299; see 31 U.S.C. § 3730. Such suits are referred to

as "qui tam" actions. Id.; see Vermont Agency of Natural Res. v. United

States ex rel. Stevens, 529 U.S. 765, 768 n. 1 (2000) ("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.’"). 

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a Fourth Amended Complaint. Purdue again moved to dismiss

and the district court again granted the motion for failure to

satisfy the strict pleading requirements of Rule 9(b). The district court also dismissed the state law claims for failing to

plead fraud with particularity and denied Radcliffe leave to

file a Fifth Amended Complaint. 

Radcliffe now appeals the district court’s grant of the

motion to dismiss and the denial of leave to amend. Purdue

cross-appeals, asserting that the district court erred in refusing

to enforce the "Agreement and General Release" Radcliffe

signed on August 1, 2005 ("the Release"), prior to filing the

qui tam suit. For the reasons that follow, we agree with Purdue that the district court erred in refusing to enforce the

Release.2

I. Background and Proceedings Below

A. Radcliffe’s Communications with Purdue and the 

Government

The district court determined that between 1996 and 2005

Radcliffe, on behalf of Purdue, marketed "OxyContin to individual physicians and became familiar with Purdue’s marketing claims about OxyContin’s relative cost and potency,

including the claim that there is a 2:1 equianalgesic ratio

between OxyContin and MS Contin." United States ex rel.

Radcliffe v. Purdue Pharma L.P., 582 F. Supp. 2d 766, 774

(W.D. Va. 2008). During this period, Radcliffe was employed

by Purdue as a district sales manager, directly marketing Purdue products like OxyContin to physicians. The district court

found that some physicians were skeptical of the claimed 2:1

ratio, but Radcliffe’s supervisor reassured Radcliffe that it

was correct. Id. Despite these assurances, Radcliffe sought

2Because the Release is a complete bar to Radcliffe’s claims, there is no

need to address Radcliffe’s arguments on the Rule 9(b) dismissal nor the

district court’s denial of leave to amend. 

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independent legal advice in 2004 about the OxyContin claims.

Id.

In January 2005, using the alias "John Femaledeer," Radcliffe sent an email to a Purdue director and to Purdue’s General Counsel offering to settle a "‘whistleblower’ suit against

Purdue for fraud based on ‘deceptive pharmacology’". In a

subsequent email "John Femaledeer" (Radcliffe) sought to

"settle" his qui tam claims with Purdue if the company would

invest $40 million in his business startup project. Purdue

rejected the offer.

Around that same time Radcliffe anonymously contacted

an Assistant United States Attorney for the Western District

of Virginia to determine whether there was any interest in a

claim against Purdue, but did not reveal the particulars of his

claims during those discussions. Radcliffe, 582 F. Supp. 2d at

774. The district court determined it was "undisputed that

Radcliffe did not disclose the nature of his qui tam allegations

to the government prior to the filing of his Complaint" on

September 27, 2005. Id. at 775.3

B. The Government’s Investigation of Purdue

The government had been investigating Purdue prior to the

filing of Radcliffe’s suit. According to a declaration executed

by an Assistant United States Attorney, "one area of investigation concern[ed] whether Purdue falsely marketed OxyContin as being twice as potent as morphine and, accordingly, less

3Radcliffe’s theory of liability under the FCA is that Purdue defrauded

the government by misleading physicians about the potency and costsavings of OxyContin. Purdue’s alleged fraudulent marketing, in turn,

caused physicians to prescribe OxyContin to patients when MS Contin

would have sufficed. Because MS Contin was actually cheaper, Radcliffe

asserts that each time Medicare, Medicaid or another government program

(Veterans’ benefits for example) paid for a prescription of the higher

priced OxyContin induced by Purdue’s fraudulent marketing, the government paid a "false claim" subject to the FCA. 

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expensive than MSContin." Id. at 775. In the same declaration, the Assistant United States Attorney stated that "the 2:1

comparison of OxyContin to MSContin [sic] [wa]s one of the

areas under investigation." Id. "Beginning in 2002 and continuing for the next several years, the government sought millions of documents from Purdue and conducted hundreds of

interviews, some of which pertained to the relative potency

and cost of OxyContin and MS Contin." Id.

On June 24, 2005, an attorney representing several Purdue

employees spoke with a lawyer from the Department of Justice regarding topics to be discussed during those employees’

grand jury testimony. Id. The Justice Department attorney

indicated that she intended to (and subsequently did) ask the

employees "about the dispute over the relative potency of

OxyContin and MS Contin, among other topics, explaining

that this related to the marketing and cost implications of the

relative potencies." Id. Around that same time, the government began drafting a subpoena that "included requests for all

documents discussing relative analgesic potency or safety of

OxyContin and MS Contin." Id. Other documents under seal

also reflect that prior to the filing of Radcliffe’s suit, the government had made an additional request for the identity of

"the author and source of different versions of a document . . .

already in the government’s possession" that questioned the

2:1 ratio between MS Contin and OxyContin. Radcliffe, 582

F. Supp. 2d at 775. 

The government’s investigation of Purdue’s marketing

claims continued after Radcliffe’s execution of the Release.

Indeed, on August 2, 2005, the day after Radcliffe signed the

Release, the government subpoenaed Radcliffe to testify

before the grand jury. Id. at 776. In September 2005, the

Department of Justice provided Purdue’s counsel with electronic search terms designed to identify documents pertaining

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to the potency/cost issue. Id. Radcliffe filed his qui tam suit

on September 27, 2005.4

On May 7, 2007, the government filed a notice that it

would not intervene in the qui tam suit filed by Radcliffe.

Two days later, 

the government filed a criminal information against

a related Purdue entity and several Purdue executives, along with executed plea agreements for all the

criminal defendants. Although the criminal charges

did relate to the misbranding of OxyContin, these

charges focused on Purdue’s marketing of OxyContin as "less addictive, less subject to abuse and diversion, and less likely to cause tolerance and

withdrawal than other pain medications." 

Id. (quoting Information ¶ 20, United States v. Purdue Frederick Co., No 1:07-CR-00029 (W.D. Va.)). The misbranding

charges did not pertain to the 2:1 ratio and although the plea

agreements settled certain civil claims by the government,

they did not address the claims made in the qui tam suit. Radcliffe, 582 F. Supp. 2d at 776.

C. Execution of the Release

In late June 2005, as part of a workforce restructuring that

substantially reduced Purdue’s sales force, Radcliffe was

offered the option of transferring to a new position or accepting a severance package. Radcliffe opted to leave Purdue and,

in exchange for his execution of the Release, he was given an

enhanced benefits package to which he would not otherwise

4On December 5, 2005, the government filed a motion to stay Radcliffe’s qui tam suit, arguing, inter alia, that allowing the suit to move forward would reveal, publicly, a portion of the grand jury’s investigation. Id.

The district court granted the stay and the government’s investigation continued. 

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have been entitled, including more than $40,000 in salary

payments. The Release, signed by Radcliffe on August 1,

2005, included the following relevant provisions: 

4. (a) Employee . . . knowingly and voluntarily

releases and forever discharges [Purdue] of and from

any and all liability to Employee for actions or

causes of action, suits, claims, charges, complaints,

contracts (whether oral or written, express or implied

from any source), and promises, whatsoever, in law

or equity, which, Employee . . . ever had, may now

have or hereafter can, shall or may have against

[Purdue] as of the date of the execution of this

Agreement, including all unknown, undisclosed and

unanticipated losses, wrongs, injuries, debts, claim

or damages to [Ratcliffe], for, upon, or by reason of

any matter, cause or thing whatsoever.

5. To the maximum extent permitted by law,

Employee agrees that Employee will not seek and

waives any right to accept any relief or award from

any charge or action against [Purdue] before any federal, state, or local administrative agency or federal,

state or local court whether filed by Employee or on

Employee’s behalf with respect to any claim or right

covered by paragraph 4.

16. THE PARTIES HAVE READ AND FULLY

CONSIDERED THE AGREEMENT AND ARE

MUTUALLY DESIROUS OF ENTERING INTO

SUCH AGREEMENT. THE TERMS OF THIS

AGREEMENT ARE THE PRODUCT OF

MUTUAL NEGOTIATION AND COMPROMISE

BETWEEN EMPLOYEE AND THE COMPANY.

EMPLOYEE ACKNOWLEDGES THAT

EMPLOYEE (i) HAS HAD AT LEAST FORTYFIVE (45) DAYS TO CONSIDER THIS AGREEMENT . . . (ii) HAS CAREFULLY READ THE

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AGREEMENT AND THE DISCLOSURE STATEMENT IN THEIR ENTIRETY; (iii) HAS BEEN

ADVISED IN WRITING TO CONSULT WITH AN

ATTORNEY PRIOR TO EXECUTION OF THIS

AGREEMENT; . . . (v) HAS DISCUSSED IT

WITH INDEPENDENT LEGAL COUNSEL, OR

HAS HAD A REASONABLE OPPORTUNITY TO

DO SO . . . . HAVING ELECTED TO EXECUTE

THIS AGREEMENT, TO FULFILL THE PROMISES SET FORTH HEREIN, EMPLOYEE

FREELY AND KNOWINGLY, AND AFTER DUE

CONSIDERATION, ENTERS INTO THIS

AGREEMENT INTENDING TO WAIVE, SETTLE

AND RELEASE ALL LIABILITY FOR AND

RECOVERY FROM CLAIMS EMPLOYEE EVER

HAD, NOW HAS OR MIGHT HAVE AGAINST

THE COMPANY AS OF THE DATE OF THIS

AGREEMENT.

J.A. 134-35, 140-41.

D. Proceedings in the District Court

In response to Radcliffe’s Third Amended Complaint, Purdue moved to dismiss, arguing in part that the Release was a

complete bar to Radcliffe’s suit. To analyze the enforceability

of the Release, the district court applied "the framework

established by the Ninth Circuit in United States ex rel. Green

v. Northrop Corp., 59 F.3d 953 (9th Cir. 1995), and United

States ex rel. Hall v. Teledyne Wah Chang Albany, 104 F.3d

230 (9th Cir. 1997)." Radcliffe, 582 F. Supp. 2d at 777.

Characterizing Hall as "an exception to the general rule

against enforcing pre-filing releases to bar subsequent qui tam

suits," id. at 779, the district court determined that "the critical

issue [was] the completeness of the government’s knowledge

or the fullness of its investigation." Id. According to the district court, "[p]artial knowledge or investigation on the part of

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the government is insufficient to remove a case from the purview of Green into the exception created by Hall." Id. at 780.

Therefore, even though "the government was aware of the

substance of Radcliffe’s allegations and had begun, but not

completed, its investigation of these allegations as of the date

of the Release," id. at 781, Radcliffe’s ability "to supplement

federal enforcement of the FCA by prosecuting these allegations on behalf of the government remains." Id. at 782. 

Accordingly, the district court determined 

[t]he circumstances here fall within the general

rule articulated in Green that pre-filing releases are

unenforceable to bar subsequent qui tam actions,

rather than the Hall exception, because the government had not fully investigated the substance of Radcliffe’s allegations. Further, the public policy

concerns raised by Purdue do not alter the relative

balance of public interests under the Rumery test.

The general release executed by Radcliffe does not

bar this action. 

Id. at 783.

In response to the Fourth Amended Complaint, Purdue

renewed its claim of bar by virtue of the Release. However,

the district court did not address the Release issue because it

again granted Purdue’s motion to dismiss on the grounds that

Radcliffe’s pleading failed under Rule 9(b). Purdue has properly preserved the issue concerning enforcement of the

Release by filing a timely cross-appeal under Rule 4(a)(3) and

we have jurisdiction pursuant to 28 U.S.C. § 1291.

II. Standard of Review

The district court’s order denied Purdue’s motion to dismiss based on the Release. However, Purdue contends, and

Radcliffe apparently agrees, that the district court actually

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granted summary judgment to Radcliffe pursuant to Rule

56(c) on the Release issue.

It is well settled that district courts may convert a

Rule 12(b)(6) motion to dismiss into a Rule 56

motion for summary judgment, allowing them to

assess whether genuine issues of material fact do

indeed exist. While it may be preferable for a district

court to trigger this conversion explicitly, appellate

courts may take the district court’s consideration of

matters outside the pleadings to trigger an implicit

conversion of a Rule 12(b)(6) motion to one under

Rule 56. The ability of appellate courts to perform

this conversion sua sponte serves judicial economy

. . . by sparing the district court an unnecessary

remand. As the Supreme Court has noted: "It would

be wasteful to send a case back to a lower court to

reinstate a decision which it had already made but

which the appellate court concluded should properly

be based on another ground within the power of the

appellate court to formulate."

Bosiger v. U.S. Airways, Inc., 510 F.3d 442, 450 (4th Cir.

2007) (internal citations omitted) (quoting SEC v. Chenery

Corp., 318 U.S. 80, 88 (1943)); see also Herbert v. Saffell,

877 F.2d 267, 270 (4th Cir. 1989) (treating Rule 12(b)(6)

motion as motion for summary judgment); George v. Kay,

632 F.2d 1103, 1106 (4th Cir. 1980) ("If it is necessary for the

court to look beyond the pleadings, the 12(b)(6) motion must

be converted into a motion for summary judgment and all parties must be given the opportunity to present materials pertinent to such a motion."). In this case the parties provided

evidence and thoroughly briefed the Release issue to the district court, which clearly relied on the declarations and other

exhibits presented when determining that the Release did not

bar Radcliffe’s qui tam suit. The parties have also relied on

evidence relevant to the Release issue in their briefs submitted

to this Court. The facts in the record appear to be generally

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undisputed and we therefore find it proper to convert Purdue’s

"Rule 12(b)(6) motion to one under Rule 56" and thus consider the district court’s ruling on that basis. 

III. Analysis

Upon his departure from Purdue, and in exchange for a

considerable sum of money and other benefits to which he

would not otherwise have been entitled, Radcliffe signed the

Release, an exceedingly broad document. In the Release, Radcliffe agreed to "forever discharge[ ] [Purdue] of and from

any and all liability to Employee for actions or causes of

action, suits, [or] claims . . . whatsoever, in law or equity,

which, Employee . . . ever had, may now have or hereafter

can, shall or may have against [Purdue] as of the date of the

execution of this Agreement . . . ." J.A. 134-35 (emphasis

added). Radcliffe "enter[ed] into this agreement intending to

waive, settle and release all liability for and recovery from

claims [he] ever had, now has or might have against the company as of the date of this agreement." J.A. 141. Finally, he

"waive[d] any right to accept any relief or award from any

charge or action against [Purdue] before any . . . federal, state

or local court . . . ." J.A. 136.

The FCA clearly provides that once a qui tam action is

filed, the relator and the defendant may not settle (or at least

may not voluntarily dismiss) the action. 31 U.S.C.

§ 3730(b)(1). The statute does not, however, address whether

the relator’s release of qui tam claims, executed before the filing of a complaint, is enforceable. 

Purdue asserts that prefiling releases are presumptively

enforceable and that enforcing such agreements in FCA cases

is no different than what is done routinely in other cases

involving "civil rights, antitrust, securities fraud, and RICO

claims" where private enforcement deters conduct detrimental

to the public. Br. of Appellee at 38. According to Purdue,

"private qui tam suits are a hallmark of FCA enforcement

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. . . . The government, and other private individuals, remain

free to prosecute released claims." Id. at 40. In Purdue’s view,

enforcing the Release in this case upholds a number of important public policies, such as encouraging settlement, enforcing

the sanctity of contract, supporting the use of general releases

in the employment context, preventing unjust enrichment, and

discouraging duplicity among contracting parties.

Radcliffe opposes enforcement of the Release, arguing that

qui tam claims belong to the government, not the relator. In

Radcliffe’s view, he had no individual legally cognizable

claim to release as of August 1, 2005 (the date he signed the

Release) because he only became a partial assignee of the

government’s claim upon filing the complaint, not before. He

further contends that, to be effective, "any release purporting

to settle . . . qui tam claims and bar a qui tam action . . . must

have the express consent of the Attorney General." Response

and Reply Br. of Appellant at 42. Finally, he argues that

enforcing prefiling releases undermines the purposes of the

FCA. 

The government, as amicus curiae, advances a somewhat

middle-ground position in which it asserts that although prefiling releases should generally be considered unenforceable,

the district court "should have enforced the Release in this

case." Amicus Br. at 3. This is so, the government argues,

"because the relator’s allegations of fraud were disclosed to

the government independent of the filing of the qui tam action

itself." Id. The government proposes adoption of a rule making an "FCA qui tam release[ ] . . . enforceable if the government has knowledge of the relator’s allegations of fraud

independent of the filing of the qui tam action itself." Amicus

Br. at 12. This "government knowledge exception," the government argues, comports with the purposes of the FCA

because it vindicates the public interest and simultaneously

promotes "the orderly and efficient private resolution of FCA

cases." Amicus Br. at 14.

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Radcliffe, Purdue and the government agree that the

enforceability of the Release should be evaluated using the

test applied by the Supreme Court in Town of Newton v. Rumery, 480 U.S. 386 (1987). In Rumery the Supreme Court reiterated the well-established rule that "a promise is

unenforceable if the interest in its enforcement is outweighed

in the circumstances by a public policy harmed by enforcement of the agreement."5

Id. at 392. 

A. Radcliffe’s general release of claims did not require

the government’s consent to be effective.

As an initial matter, we do not accept Radcliffe’s assertion

that the Release was ineffective because the Attorney General

did not "sign off" on it. In United States ex rel. Ritchie v.

Lockheed Martin Corp., 558 F.3d 1161, 1168 (10th Cir.

2009), the United States Court of Appeals for the Tenth Circuit rejected this same argument. We agree with that court’s

analysis. 

The FCA provides that 

[a] person may bring a civil action for a violation of

section 3729 for the person and for the United States

Government. The action shall be brought in the

name of the Government. The action may be dismissed only if the court and the Attorney General

give written consent to the dismissal and their reasons for consenting. 

5As the district court correctly noted, we have not interpreted Rumery

in the context of the FCA, though we have stated that "public policy is

implicated only where ‘it is explicit, well defined and dominant, and

ascertainable by reference to the laws and legal precedents and not from

general considerations of supposed public interests.’" Radcliffe, 582 F.

Supp. 2d at 778 n.9 (quoting L & E Corp. v. Days Inns of Am., Inc., 992

F.2d 55, 58 (4th Cir. 1993)). 

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31 U.S.C.A. § 3730(b)(1) (West 2003); see, e.g., Webster v.

United States, 217 F.3d 843 at *1 (4th Cir. 2000) (Table)

("with the government’s consent" relator "voluntarily dismissed her qui tam action without prejudice"). As the Tenth

Circuit explained:

[t]he statute itself only mentions the "dismissal" of

a qui tam action and further requires the consent of

the court. When there is a release preceding the filing of the qui tam action, as in this case, no action

has been filed, so there is neither an action to dismiss

nor a judge to consent to the agreement. As a consequence, the statute only governs the enforceability of

settlement agreements made after the filing of a qui

tam claim.

Ritchie, 558 F.3d at 1168 (citing Green, 59 F.3d at 960).

Section 3130(b)(1) manifests Congress’ express intent to

prohibit a relator’s unilateral settlement of FCA claims,

absent the government’s consent, once a suit has been filed.

If Congress specifically intended to preclude a relator from

releasing his claims only with the Attorney General’s consent

prior to filing suit, it could have done so, but did not. "We do

not lightly assume that Congress has omitted from its adopted

text requirements that it nonetheless intends to apply . . . ."

Jama v. Immigration and Customs Enforcement, 543 U.S.

335, 341 (2005). Thus, the consent of the government is not

a necessary condition precedent to enforcement of an otherwise valid release where such a release is executed prior to

filing a qui tam action.

B. Radcliffe possessed a legally cognizable claim subject

to the terms of the Release.

Radcliffe next argues that the plain language of the Release

does not encompass his qui tam claims against Purdue. Specifically, in paragraph 4 he released Purdue from "all liability

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to Employee for . . . claims . . . which Employee . . . ever had,

may now have or hereafter can, shall or may have . . . as of

the date of the execution of this Agreement [August 1, 2005]."

Response and Reply Br. of Appellant at 54. Radcliffe asserts

that as of the date the Release was executed, he had no FCA

claim against Purdue. As support for this proposition, he

relies on the Supreme Court’s statement in Vermont Agency

of Natural Resources v. United States ex rel. Stevens, 529

U.S. 765, 773 (2000), that "[t]he FCA can reasonably be

regarded as effecting a partial assignment of the Government’s damages claim." In Radcliffe’s view, no such assignment occurred until he filed his complaint under seal with the

district court, which occurred after he signed the Release. We

disagree.

In Vermont Agency, the Supreme Court explained the three

elements necessary to establish Article III standing. First, a

plaintiff must establish that he suffered an "‘injury in fact’ . . .

that is both ‘concrete’ and ‘actual or imminent, not conjectural or hypothetical.’" 529 U.S. at 771 (quoting Whitmore v.

Arkansas, 495 U.S. 149, 155 (1990)). "Second, he must establish causation—a ‘fairly . . . trace[able]’ connection between

the alleged injury in fact and the alleged conduct of the defendant." Vermont Agency, 529 U.S. at 771 (quoting Simon v.

Eastern Ky. Welfare Rights Org., 426 U.S. 26, 41 (1976)).

Finally, "he must demonstrate redressability — a ‘substantial

likelihood’ that the requested relief will remedy the alleged

injury in fact." Vermont Agency, 529 U.S. at 771 (quoting

Simon, 426 U.S. at 45). Noting that in qui tam cases it is the

government and not the relator that has sustained the injuryin-fact, the Vermont Agency Court held that a relator nonetheless possesses Article III standing to bring an FCA claim "because the [FCA] ‘effect[s] a partial assignment of the

Government’s damages claim’ and that assignment of the

‘United States’ injury in fact suffices to confer standing on

[the relator].’" Sprint Commc’ns Co. v. APCC Servs., Inc.,

___ U.S. ___, 128 S. Ct. 2531, 2542 (2008) (quoting Vermont

Agency, 529 U.S. at 773, 774). Thus, an "adequate basis for

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the relator’s suit for his bounty is to be found in the doctrine

that the assignee of a claim has standing to assert the injury

in fact suffered by the assignor." Vermont Agency, 529 U.S.

at 773 (emphasis added). 

In the course of its analysis the Supreme Court further

explained 

that the statute gives the relator himself an interest in

the lawsuit, and not merely the right to retain a fee

out of the recovery. Thus, [the statute] provides that

"[a] person may bring a civil action for a violation

of section 3729 for the person and for the United

States Government," § 3730(b).

Id. at 772. 

According to Radcliffe’s own allegations, the government

suffered an "injury-in-fact" caused by Purdue’s deceptive

marketing of OxyContin’s 2:1 equianalgesic ratio from 1995

to 2005. Thus, once the government suffered an injury (and

Radcliffe became aware of the fraud causing the injury), Radcliffe had a statutory claim, and the necessary legal standing

as partial assignee, to file a qui tam lawsuit.6,7

In short, he had "an interest in the lawsuit" regardless of

when he opted to vindicate it.8 The fact that Radcliffe chose

6

Indeed, Radcliffe’s attempts to settle his claims with Purdue in early

2005, via anonymous emails, indicates that even he understood that he had

an FCA claim well before he signed the Release. 

7We note that the elements of causation and redressability are not, in the

context of Racliffe’s allegations, at issue. Clearly, Radcliffe has alleged

that the "cause" of the fraud was Purdue’s marketing practices prior to his

execution of the Release. There is also no doubt that, if violations of the

FCA were eventually proven, monetary damages would be the appropriate

remedy. 

8This is not to say that Radcliffe possessed an indefinite, indefeasible

claim. For example, another relator alleging the same fraudulent conduct

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not to file suit until after signing the Release does not negate

the fact that he had the right to file suit beforehand – a right

he waived under the terms of the Release. See 6A C. Wright,

A. Miller, & M. Kane, Federal Practice and Procedure § 1545,

pp. 351-353 (2d ed. 1990) ("[W]hen there has been . . . a partial assignment the assignor and the assignee each retain an

interest in the claim and are both real parties in interest.").

Because Radcliffe possessed a presently enforceable claim at

the time he signed the Release, the plain terms of the Release

encompassed his FCA claims. 

C. The Government’s Knowledge

Having determined that Radcliffe’s FCA claims were

encompassed by the terms of the Release and that the Attorney General’s consent to the Release was unnecessary, we

next address, in a Rumery context, whether overriding public

policy considerations nonetheless prevent enforcement of the

Release. We hold that they do not under the facts of this case.

Most courts considering the enforceability of releases executed prior to filing an FCA suit, including the district court

in this case, apply the analytical framework established by the

Ninth Circuit in Green and Hall. See, e.g., Ritchie, 558 F.3d

at 1169; United States ex rel. McLean v. County of Santa

Clara, No. C05-01962, 2008 WL 1947015 (N.D. Cal. Apr.

30, 2008); U.S. ex rel. El-Amin v. George Washington Univ.,

No. 95-2000, 2007 WL 1302597 (D.D.C. May 2, 2007);

United States ex rel. Longhi v. Lithium Power Techs., Inc.,

481 F. Supp. 2d 815 (S.D. Tex. 2007); United States ex rel.

Bahrani v. ConAgra, Inc., 183 F. Supp. 2d 1272 (D. Colo.

2002).

could have preempted Radcliffe’s suit or Radcliffe could have let the statute of limitations expire. See 31 U.S.C. § 3730(b)(5) (barring a relator

from bringing "a related action based on the facts underlying [a] pending

action"). The Release, of course, did not prohibit the government or

another relator from pursuing similar claims against Purdue. 

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Green involved an employee who, during his tenure with

a defense contractor, alleged that the company "had ‘double

charged’ the U.S. Air Force for equipment procured for the B2 bomber program" and that he had been discharged for raising the overcharges with company officials. Green, 59 F.3d

at 956. Green filed suit against his former employer, asserting

various state-law claims arising out of his termination. Id. The

parties eventually reached a settlement and Green signed a

general release resolving "all of the matters which [had]

arisen between them including but not limited to disputes

relating to or arising out of the [lawsuit] and Green’s employment with and separation from" the company. Id. Green subsequently filed a qui tam suit against his former employer

alleging fraudulent conduct subject to the FCA.

The Ninth Circuit concluded "that enforcing the release . . .

would impair a substantial public interest" and declined to

enforce Green’s release. Id. at 963. The court deemed it "critical" to its analysis, however, "that the government only

learned of the allegations of fraud and conducted its investigation because of the filing of the qui tam complaint." Green, id.

at 966. After considering additional interests favoring

enforcement, the Green Court determined "that application of

the Rumery[ ] test compels the conclusion that prefiling

releases of qui tam claims, when entered into without the

United States’ knowledge or consent, cannot be enforced to

bar a subsequent qui tam claim." Id. at 969.

A few years after its decision in Green, the en banc Ninth

Circuit upheld a prefiling release in Hall because, contrary to

the facts in Green, "the government had full knowledge of the

. . . charges and had investigated them before" the relator and

the defendant settled. Hall, 104 F.3d at 231. In Hall, the court

specifically stated that its "refusal to enforce the release in

Green turned on the public interest in learning about claims

of government contractor fraud, and upon the fact that in that

case, the government had not been aware of [the relator’s]

allegations at the time of the settlement release." Id. at 233.

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But because the government was aware of and had investigated the claims raised by the relator in Hall, "the public

interest in having information brought forward that the government could not otherwise obtain [was] not implicated." Id.

In Green and Hall, the Ninth Circuit focused

heavily upon the federal interest in the disclosure of

fraud. In Green, the government had no knowledge

of the fraud prior to the filing of the qui tam suit,

while in Hall the government had already been

apprised of the allegations due to prior disclosures

[by the defendant] to a federal agency.

Ritchie, 558 F.3d at 1170.

Purdue asserts that independent of any contribution from

Radcliffe, the government’s long-standing investigation of

Purdue’s marketing of OxyContin had specifically come to

include the precise focus of Radcliffe’s suit: "‘whether Purdue

falsely marketed OxyContin as being twice as potent . . . and,

accordingly, less expensive than MSContin [sic] and the accuracy of ‘the 2:1 comparison of OxyContin to MSContin

[sic].’" Radcliffe, 582 F. Supp. 2d at 781. Purdue points out

that not only did the government already have access to the

documents Radcliffe would subsequently attach to his complaint, it also had high-level documents to which Radcliffe

would not have had access as an employee. This is not, therefore, a suit based on information that was otherwise unavailable to the government. As such, Purdue argues, this is not a

case where public policy precludes enforcement of the

Release.

Radcliffe argues that for the Hall exception to apply, and

thus for the Release to be enforceable, the government must

(1) have known the substance of the relator’s allegations, and

(2) have fully investigated them by the time a release was

signed. Radcliffe asserts that in refusing to enforce the

Release, the district court correctly focused on the fact that

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the government "had begun, but not completed, its investigation of these allegations as of the date of the release." Id. at

781.

The government, as amicus, contends the Release should be

enforced in this case because the government’s knowledge of

a relator’s allegations of fraud vindicates the public interest

goals of the FCA. The government asserts that such a "government knowledge" rule combats any attempt by defendants

to buy relators’ silence and encourages defendants’ disclosure

of fraud and cooperation with investigations. The government

contends that by relying on the fact that it "had not fully

investigated the substance of Radcliffe’s allegations," id. at

783 (emphasis added), the district court erroneously applied

the Green/Hall analysis. This is so, the government argues,

because the district court’s reasoning overlooks the primary

purpose of requiring disclosure of fraud allegations, "which is

not to ensure that the government exhaustively investigates

and prosecutes every allegation of fraud, but rather that it has

an adequate opportunity to do so." Amicus Br. at 16. According to the government, giving conclusive weight to the completeness of its investigation as a condition of enforcing an

FCA release could lead to an inappropriate, time-consuming,

and amorphous inquiry into the government’s internal investigative deliberations and processes. Moreover, such a "completed investigation rule" contradicts 31 U.S.C. § 3730(b)(2),

which grants the government discretion under the FCA to initiate or participate in an FCA action without precondition.

The district court identified several interests to be considered when enforcing a release of qui tam claims, including

"the public interest in having relators disclose inside information of alleged fraud to the government, in having relators

supplement federal enforcement of the FCA by assisting the

government in its investigation and prosecution or prosecuting the claim itself, and in deterring future fraud against the

government." Radcliffe, 582 F. Supp. 2d at 782. The district

court acknowledged that "the government [learned] of the

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substance of Radcliffe’s allegations independently and was

interested enough in them to request documents pertaining to

and question various Purdue employees about the relative cost

and potency issue." Id. Noting that the government’s investigation eventually went "in a different direction" and the final

settlement did not refer to the issue raised by Radcliffe, the

district court ultimately concluded that Radcliffe’s continued

"ability to supplement federal enforcement of the FCA by

prosecuting these allegations" best served the public interest.

Id. The district court "believe[d] that enforcing the release

under these circumstances would substantially impact important public interests associated with the FCA," id., and that

"the fullness of [the government’s] investigation" was a necessary condition precedent to the enforceability of a release.

Id. at 779-80. We disagree.

The Tenth Circuit recently addressed analogous issues and

determined that "[b]ecause the federal interests served by

enforcing releases signed after disclosure to the federal government outweigh the interests served by not enforcing them,

. . . the releases [were] enforceable." Ritchie, 558 F.3d at

1163. In Ritchie, the defendant self-reported fraud to the government, which conducted its own audit and investigation. Id.

The relator assisted the government in its investigation but

subsequently settled claims that the company retaliated

against her "because of her whistleblowing activities." Id. at

1165. As a result of the settlement, in which she agreed to

leave the company, the relator signed two releases purporting

to waive "any and all claims [she] might have under federal,

state or local law." Id. Ten days after signing the second

release she filed a qui tam action against her former employer.

Id.

Despite the relator’s contentions that "the government

lacked full knowledge of the scope of the fraud at the time she

signed the release," id. at 1170, the Tenth Circuit affirmed the

district court’s enforcement of the release. In doing so, the

court of appeals determined that "[t]he disclosures to the govUNITED STATES v. PURDUE PHARMA 23

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ernment in this case were sufficient to satisfy the public interest in uncovering fraud." Id. According to the court of

appeals, "[e]nforcing releases of qui tam claims only when the

allegations of fraud have been disclosed to the government

before the release . . . has the benefit of encouraging voluntary

disclosure by government contractors." Id.

In Ritchie, "the federal government had not issued its final

audit report when the settlement was reached or the qui tam

suit was filed." Id. at 1171. Accordingly, the circuit court recognized, as did the district court in this case, that under such

circumstances an interest in having private citizens supplement federal enforcement remains, but "[o]n balance . . . that

interest does not outweigh the federal interests served by

enforcement of settlements following disclosure of fraud allegations to the government, namely the interest in disclosure

of fraud allegations and the interest in encouraging settlement." Id.

This is so, in part, because

[c]ontractors . . . have an interest in settling qui tam

claims prior to the filing of a lawsuit. If they can settle qui tam claims only after fraud allegations have

been disclosed to the government, then contractors

effectively have an incentive to disclose. On policy

grounds, then, conditioning the enforceability of

releases of qui tam claims upon the prior disclosure

of the fraud allegations to the government promotes

the federal interest in uncovering fraud against the

government.

Id. at 1170. Enforcing prefiling releases also encourages the

settlement of disputes.9See Crandell v. United States, 703

9The government also points out that if it has knowledge of the alleged

fraud, "[s]uch . . . knowledge . . . reduces the perverse incentive a qui tam

defendant would otherwise have to buy the silence of relators, because that

defendant faces the real threat of an independent government action."

Amicus Br. at 13. 

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F.2d 74, 75 (4th Cir. 1983) ("Public policy, of course, favors

private settlement of disputes.").

When the government is unaware of potential FCA claims

the public interest favoring the use of qui tam suits to supplement federal enforcement weighs against enforcing prefiling

releases. But when the government is aware of the claims,

prior to suit having been filed, public policies supporting the

private settlement of suits heavily favor enforcement of a prefiling release. We therefore agree with the government that

"[t]he proper focus of the inquiry is whether the allegations of

fraud were sufficiently disclosed to the government, not on

whether the government’s investigation was complete."

Amicus Br. at 17. We find that application of this "government knowledge" rule meets the balancing analysis required

under Rumery. Thus, we concur with the Tenth Circuit that

when, as in this case, the government was aware, prior to the

filing of the qui tam action, of the fraudulent conduct represented by the relator’s allegations, the public interest has been

served and the Release should be enforced. 

Accordingly, because the "allegations of fraud were sufficiently disclosed to the government" prior to Radcliffe’s filing

of the qui tam suit, the district court erred in failing to enforce

the Release as a bar to Radcliffe’s claims. 

IV. Conclusion

Although we conclude that the district court erred in its

decision not to enforce the Release, we nonetheless affirm the

judgment dismissing Radcliffe’s suit with prejudice. See SEC

v. Chenery Corp., 318 U.S. 80, 88 (1943) ("[T]he decision of

a lower court . . . must be affirmed if the result is correct

although the lower court relied upon a wrong ground or gave

a wrong reason . . . . It would be wasteful to send a case back

to a lower court to reinstate a decision which it had already

made but which the appellate court concluded should properly

be based on another ground . . . ." (internal quotation marks

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omitted)); Eisenberg v. Wachovia Bank, N.A., 301 F.3d 220,

222 (4th Cir. 2002) (observing that we "can affirm on any

basis fairly supported by the record").

Accordingly, the judgment of the district court will be

affirmed.

AFFIRMED

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