# U nit edSta tes C ou rt o f A pp eal s For t h e Firs t C ircu it

No. 06-2627

UNITED STATES OF AMERICA EX REL. PETER ROST,

Plaintiff, Appellant,

v . PFIZER, INC.; PHARMACIA CORPORATION,

Defendants, Appellees.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS [Hon. Joseph L. Tauro, U.S. District Judge]

Before Torruella, Circuit Judge, Cyr, Senior Circuit Judge, and Lynch, Circuit Judge.

Mark I. Labaton with whom Megan Benett, Hilary B. Taylor, and Kreindler & Kreindler LLP were on brief for appellant. Jamie Ann Yavelberg, Attorney, with whom Peter D. Keisler, Acting Attorney General, Michael J. Sullivan, Uni t e d States Attorney, Douglas N. Letter, Attorney, and Michael D. Granston, Attorney, Civil Division, Department of Justice, were on brief for United States, amicus curiae. Ethan M. Posner with whom Carolyn F. Corwin, Tara M. Steeley, Mark W. Mosier, and Covington & Burlin g L L P w e re on brief for appellees. Mary Ita Snyder, Timothy J. Hatch, James C. Dougherty, Karen L. Mano s , M inodora D. Vancea, and Gibson, Dunn & Crutcher LLP on brief for National Defense Industrial Association, amicus curiae. Jonathan L. Diesenhaus, Catherine E. Stetson, Jessica L. Ellsworth, Jake M. Shields, Hogan & Hartson LLP, Diane E. Bieri,Melinda Reid Hatton, and Maureen D. Mudron were on brief for

Pharmaceutical Research and Manufacturers of America and American Hospital Association, amici curiae.

November 15, 2007-3- LYNCH, Circuit Judge . Dr. Peter Rost f i led this whistlebl o w e r action against Pfizer, Inc. and its subsidiary Pharmacia Corporation under the federal False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq., and analogous state statutes. The suit alleges that Pharmacia's misconduct in marketing a human growth hormone, Genotropin, for uses unapproved by the F o o dand Drug Administration led to claims for reimbursement to the United States for unreimbursable, off-label drug prescriptions.

The district court rejected defendants' argument that the suit be dismissed for lack of j u r i s d iction under 31 U.S.C. § 3730(e)(4), but granted the motion to dismiss on the ground that Rost's complaint failed to meet the pleading requirements for allegations of fraud un d e r F ederal Rule of Civil Procedure 9(b). United States ex rel. Rost v. Pfizer Inc., 44 6 F . S u pp. 2d 6, 28 (D. Mass. 2006).

Rost's appeal urges rev e r s al of that holding. Pfizer, supported by two sets of amici, agrees that Rost's complaint fails th e p l e a d i n g s t a n d a r d o f R u l e 9 ( b )

- - b u t c l a i m s e r r or by the district court in deciding the threshold issue of whether one of the FCA's jurisdictional bars, see 31 U.S.C. § 3730(e)(4), applies to Rost's suit. The United States, appearing as amicus, argues for affirmance on the jurisdictional ground and notes that t h e Rule 9(b ) ruling is consistent with the law of this circuit. TheMedicaid reimbursement is available for certain off-label 1 uses that are medically "essential" o r recognized within one of several medical compendia. See 42 U.S.C. § 139 6 r - 8(a)(3), (g)(1)(B)(i), (k)(6). Such uses are not at issue in this case. -4- jurisdictional bar issue raises questions of statutory interpretation unresolved in this circuit.

We affirm the decision of the district court that § 3730(e)(4) does not bar Rost's suit. We also agree that the complaint fails to meet t h e h e ightened pleading standard for FCA claims, but remand so that the district court may consider Rost's request for leave to amend, which it did not address.
I. Genotropin is a brand of synthetic human growth hormone originally marketed by Pharmacia. The FDA has approved Genotropin only for the treatment of three specific pediatric disorders and of adult growth hormone deficiency. Physicians may prescribe Genotropin for non-FDA-approved indications, but the Food, Drug & Cosmetic Act ("FDCA"), 21 U.S.C. § 321 et se q . , prohibits pharmaceutical companies from marketing drugs for such "off-label"

uses. In addition, Medicaid generally does not reimburse patients for off-label prescriptions. See 42 U.S.C. §§ 1396b(i)(10), 1396r8(k)(3), (k)(6). T h e r e is a wide and lucrative market for off- 1 label uses of human growth hormone. One s u c h u s e is to slow the effects of aging in adults. Also, some parents request the drug to boost the growth of s h o r t children, even absent a hormonal-5-

deficiency. Sales to t he domestic market for off-label uses significantly enhance the profitability of synthetic human growth hormone. Rost joined Pharmacia i n 2 001 as Vice President of Marketing in the company's Endocrine Care unit. A m o n g his responsibilities was oversight of global marketing for Genotropin. Rost soon became concerned that subordinates in charge of marketing Genotropin within the United States were utilizing p r o b lematic tactics. Pharmacia sales representatives received incentive payment s f or each new patient prescribed Genotropin, whether for on- or off-label uses.

Rost also susp e cted Pharmacia of using a Genotropin "study program" to fu n n e l improper payments to doctors for prescribing the drug. Every doct o r that prescribed Genotropin became eligible to participate in the program, which collected data about patients with growth disorders who took G e notropin. Participating doctors wou l d receive a cash payment for every patient to whom they prescribed Genotropin and enrolled in the study. Docto r s p a rticipating in the study program also received all-expenses-paid trips to conferences at luxury resort s where,among other Genotropin-related topics, doctors would discuss offlabel uses of the drug.

In addition, Rost discovered that Pharmacia granted financial incentives to distributors targeting the off-label market-6-

f o r h u m a n g r o w t h h o r m o n e . These discount pricing contracts and rebates benefitted "anti-aging" clinics, internet-based vendors, and others unlikely to dispense Genotropin for its FDA-approved

uses. Rost feared these incentives subsidized the off-label market for Genotropin.

The company hired physicians and others as "independent consultants" to promote Genotropin for off-label uses. For instance, Pharmacia ret a i n ed a company in Canada to create marketing materials touting Genotropin's anti-aging uses. Pharmacia also made substantial payments to the director of several anti-aging clinics in Florida.

Rost believed these pra c t i ces ran afoul of the FDCA. See, e.g., 21 U . S.C. §§ 331, 355 (prohibiting interstate distribution of drugs that have n o t undergone FDA approval process); id. § 333 (providing criminal penalties for such distribution). Rost also believed these practices were suspect under the anti-kickback statute, 42 U.S.C. § 1320a-7b(b), which criminalizes the payment of kickbacks, bribes, or other inducements
to doctors in an effort to influence decisions about prescriptions that are reimbursed by a federal health care program.

Rost reported his concerns up the chain of management at Pharmacia. The company initiated an internal investigation and cut back on the problematic marketing activity. Rost, however, remained skeptical of some continuing practices.-7- In July 2002 , P fizer announced it would acquire Pharmacia. In meetings w i t h Pfizer personnel during October and November of 2002, Rost and other Pharmacia em p l o y e es aired their concerns about Genotropin marketing. Rost also wrote to a Pfizer marketing executive in early 2003 regarding Pharmacia's off-label sale and marketing of Genotropin.

Pfizer completed its acquis i t i on of Pharmacia on April 16, 2003. Pfizer immediately initiated an internal investigation into the legacy marketing practices of its new subsidiary. It also moved quickly to inform the relevant federal a u t horities about potential problems.

On May 16, 2003, P f i zer contacted two separate offices within the Department o f Health and Human Services ("HHS") regarding Pharmacia's problematic marketing practices. One was the FDA's Division of Drug Marketing, Advertising, and Communications ("DDMAC"), to which Pfizer wished to disclose information regarding the off-label marketing and distribution of Genotropin. Pfizer followed up on May 19 , 2 003, with a confidential letter to the DDMAC and the FDA's Office of Chief Counsel. The letter summarized Pharmacia's past off-label sales to anti-aging doctors and clinics, referring to the improper discount contracts and to salesrepresentatives who focused their marketing efforts on the offlabel market. The letter also described remedial measures taken by Pharmacia and Pfizer.-8- Pfizer also contacted on May 16, 2003, the HHS Office of Inspector General ("OIG"), which is charged with investigating and preventing fraud in federal health care programs such as Medicare and Medicaid. The OIG administers a voluntary disclosure program to encourage health care providers to inform the o f f i c e of fraudulent conduct, and Pfizer sought to enter the program. Pfizer representatives met with OIG officials on May 21, 2003, to discuss the off-label marketing of Genotropin and various forms of improper payments to prescribing physicians. The OIG officials informed Pfizer that an investigative agent had been assigned to the matter and invited Pfizer to submit a letter requesting admission into the voluntary disclosure program. In another confidential letter sent to the OI G on June 3, 2003, Pfizer identified three areas of potential misconduct related to Pharmacia's promotion of Genotropin: first, payments made to physicians in the form of consulting contracts and "professional or educational" junkets; second, payments for participating in the Genotropin study program, which the letter acknowledged may have been motivated by "sales and marketing concerns"; and third, Pharmacia's engagement of "outside entities to provide product support services" for Genotropin to physicians. Pfizer sent a copy of the letter to the Civil Fraud Section of the Department of Justice.

Pfizer continued its internal investigation into Pharmarcia's former marketing practices after its correspondence to-9-

the H H S b u t did not make any public announcement regarding Genotropin at that time. Pfizer first disclosed problems with Genotropin marketing in a publicly available document on March 10, 2004, in materials appended to a Form 10-K filed with the Securities and Exchange Commi s s i on. That document states that Pfizer "recently was notified that the U.S. Department of Justice is conducting investigations relating to the marketing and sale of Genotropin . . . . [Pfizer is] cooperating in these investigations."

In April 200 7 , t he U.S. Attorney's Office for Massachusetts announced that P f i z e r would plead guilty and pay afine in response to a criminal charge for violating the antikickback statute through Genotropin-related payments to doctors. Pfizer simultaneously entered into a Deferred Prosecution Agreement with th e g o v ernment as to a criminal information charging the company with one count of v i o l ating the FDCA for off-label promoti o n and distribution of Genotropin. Pfizer paid the government a total of $34.7 million to resolve Genotropin-related investigations conducted over four years by the HHS, DOJ, and FBI.

Rost had begun considering a False Claims Act lawsuit in la t e 2 0 0 2
. R o s t f i l e d h i s q u i t a m c o m p l a i n t o n J u n e 5 , 2003, in camera and under seal pursuant to 31 U.S.C. § 3730(b)(2). The FCA requires a private plaintiff bringing a claim under the Act to file a complaint under seal and serve the government with "the complaintRost pleads state-law claims under the California False 2 Claims Act, Cal. Gov't Code § 12651(a)(1)-(2), the Delaware False Claims a n dReporting Act, 6 Del. Code Ann. tit. 6, § 1201(a)(1)- (2), the Florida False Claims Act, Fla. Stat. Ann. § 68.082(2), the Hawaii False Claims Act, Haw. Rev. Stat. § 661-21(a), the Illinois Whistleblower Reward and Protection Act, 740 Ill. Comp. Stat. § 175/3(a)(1)-(2), the Massachusetts False Claims Law, Mass. Gen. Laws ch. 12, § 5B(1)-(2), the N e v ada False Claims Act, Nev. Rev. Stat. Ann. § 357.040(1)(a)-(b), the Tennessee Medicaid False Claims Act, Tenn. Code A n n . § 71-5-182(a)(1), the Texas Medicaid Fraud Prevention Law, Tex. Hum. Res. Code Ann. § 36.002, the Virginia Fraud Against Taxpayers Act, Va. Code Ann. § 8.01-216.3(A)(1)-(2), and the District of Columbia Procurement Reform Amendment Act, D.C. Code Ann. § 2-308.14(a)(1)-(2).-10- and written disclosure of substantially all material evidence and informa t i o n " underlying the complaint, a procedure designed to allow the government to decide whether to intervene in the action. 31 U.S.C. § 3730(b)(2); see also United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 225 (1st Cir. 2004).

The United States spent more than two years investigating the allegations in Rost ' s complaint and considering whether to intervene in the action. O n N o vember 8, 2005, the United States notified the district court that it would not intervene. Two days later, t h e c ourt ordered Rost's complaint unsealed and served on the defendants.

The complaint pleads claims for damages under the FCA and the st atutes of ten states and the District of Columbia. Rost 2 bases those claims on marketing practices t h a t he previously brought to the at t e n tion of Pharmacia and Pfizer management: encouraging s a les representatives to promote Genotropin for off--11-

label uses, making pa y m e nts and other inducements to doctors through the Genotropin research program, grant ing discounts and rebates to distributors known to target the off-label market, and hiring physicians as "independen t consultants" to promote and prescribe Genotropin for off-label uses. The complaint alleges that Pharmacia knew a significant portion of its sales were for

o f f -label uses because it maintains a database containing inform a t ion on 30,000 patients prescribed Genotropin. That information includes the identity of the prescrib i n g doctor, the primary a n d secondary diagnosis, and the dosage prescribed. The complaint a l l e g es that the database reveals that approximately sixty percent of all adult and twenty-five percent of all pediatric sales of Genotropin were for off-label uses.

The complaint does not allege Phar m acia itself ever submitted false claims. It alleges that Pharmacia knowingly caused the submission of fraudulent claims by others to the government in the form of claims for reimbursement for off-label prescriptions of
Gen o t r o p i n . T h e c o m p l a i n t d o e s n o t i d e n t i f ya n yf a l s e c l a im presented by others to any government health program or any particular entity or person who act u a l l y submitted such a claim. Instead, the complaint pleads that "[t]he false claims were presented b y thousands of separate entities, across the United States, and over many years. [ R o s t ] has no control over orThe Act states, in relevant part, 3 Any person who --

(1) knowingly presents, or causes to be pre sented, to an officer or employee of the United States Government . . . a false or fraudulent claim for payment or approval; [or] (2) knowingly makes, uses, or causes to be made or used , a false record or statement -12- dealings with such entities and [has] no access to the records in their possession."

Pfizer moved to dismiss the complaint for lack of subject matter jurisdiction and for failure to meet the Rule 9(b) pleading requirements for allegations of fraud. On the first point, Pfizer argued that its communications with government officials constituted "public disclosures" triggering the jurisdictional bar of 31 U.S.C. § 3730(e)(4)(A), and that Rost did not qualify as an "original source" for the information in his complaint so as to exempt him from the bar, see id. § 3730(e)(4)(B).

The district court held that Pfizer's confidential disclosures to the HHS and DOJ were not "public disclosures" that would trigger the FCA's jurisdictional bar but granted dismissal on the Rule 9(b) grounds. Rost, 446 F. Supp. 2d at 18, 28.
II. The False Claims Act prohibits the knowing submission of false or fraudulent claims for payment, or causing the submission of such claims, to the federal government and prescribes fines and treble damages to penalize offenders. 31 U.S.C. § 3729(a). 3to get a false or fraudulent claim p a i d or approved by the Government;

. . . is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person . . . . 31 U.S.C. § 3729(a).

"Qui tam" comes from the phrase "qui tam pro domino rege 4 quam pro se ipso in hac parte sequitur," which translates as "who pursues this action on our Lord the King's behalf as well as his own." Rockwell Int'l Corp. v. United States, 127 S. Ct. 1397, 1403 n.2 (2007). -13- Violations of the Act may be enforced by civil actions initiated by either the Attorney General, id. § 3730(a), or a private person, id. § 3730(b). In the latter category of qui tam actions, the Act 4 affords the government an opportunity to evaluate the relator's complaint and decide whether to assume primary responsibility for prosecuting the action. Id. § 3730(b)(2), (b)(4), (c)(1). A private relator is entitled to a portion of any proceeds from the suit, whether the United States intervenes as an active participant in the action or not. If the government intervenes, the Act grants between 15 and 25% of the governmen t ' s d amages (or settlement amount) to the relator. Id. § 3730(d)(1). If the government does not intervene, as here, the relator is entitled to between 25 and 30% of th e r e c o v ery. Id. § 3730(d)(2). In either case, the Act requires defendants to pay attorneys' fees for a successful qui tam plaintiff. Id. § 3730(d)(1)-(2).-14- The qui tam provisions of the FCA supplement federal law enforcement resources b y e ncouraging private citizens to uncover fraud on the government. Karvelas, 360 F.3d at 224 & n.5. The qui tam mechanism has historically been susceptible to abuse, however, by " p a r asitic" relators who bring FCA damages claims based on information within the public domain or that the relator did not otherwise discover. See United States ex rel. S. Prawer & Co. v. Fleet Bank of Me., 24 F.3d 320, 324-26 (1st Cir. 1994) (summarizing history of FCA litigation and legislative amendme n t s ). Congress has tailored the FCA to "walk a fine line between encouraging whistle-blowing and discouraging opportunistic behavior." Id. at 326 (quoting United States ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 6 4 5 , 6 51 (D.C. Cir. 1994)). The current Act contains a series of jurisdictional bars de s i gned in part to mediate that fine line. See 31 U.S.C. § 3730(e).

The Act does not create a cause of action against all fraudulent conduct affecting the government. Karvelas, 360 F.3d at 225. Rather, FCA liability attaches to a "false or fraudulent claim for payment" or to a "false record or statement [made] to get a f a l s e o r f r a u d u l e n t c l a i m p a i d " b y t h e g o v e r n m e n t . 31 U.S.C. § 3729(a)(1)-(2); see also Karvelas, 360 F.3d at 225 ("Evidence of an actual false c l a i m is 'the sine qua non of a False Claims Act violation.'") (quoting United States ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301, 1311 (11th Cir. 2002)). FCA liability-15-

does not attach to violations of federal law or regulations, such as marketing of drugs in violation of the FDCA, that are independent of any false claim.
A. Jurisdictional Bar

The threshold question in a False Claims Act case is whether the statute b a rs jurisdiction. Rockwell Int'l Corp. v. United States, 127 S. Ct. 1397, 1405-07 (2007). The relevant bar, contained in 31 U.S.C. § 3730(e)(4)(A) and (B), provides:

(4)(A) No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the actio n is an original source of the information. (B) For purposes of this paragraph, "original source" means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information. Our case turns on the "public disclosure" language of § 3730(e)(4)(A). Pfizer asserts th a t i t s self-disclosure to HHS and DOJ, the appropriate investigative bodies, constitutes "public disclosure of allegations" in an appropriate government investigation setting under § 3730(e)(4)(A) and thus bars the action.It could be that disclosure in the form of a filing to a 5 government body such as a court (not under seal) where all records are public could be public disclosure. See Springfield Terminal, 14 F.3d at 652; United States ex rel. Stinson, Lyons, G e r l in & Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d 1149, 1155-56 (3d Cir. 1991). It could also be that when the government itself makes available to the public information which has been disclosed to it, say in response to a FOIA request, the later disc l o s ure by the government constitutes a public disclosure. See United States ex rel. Schumer v. Hughes Aircraft Co., 63 F.3d 1512, 1519-20 (9th Cir. 1995), vacated on other grounds, 520 U.S. 939 (1997). These are not our case. -16-

Analysis of § 3730(e)(4)(A) requires several inquiries: (1) whether there has been public disclosure of the allegations or
transact i o ns in the relator's complaint; (2) if so, whether the public disclosure occurred in the manner specified in the statute; (3) if so, whether the relator's suit is "based upon" those publicly disclosed allegations or transactions; and (4) i f t he answers to these questions are in the affirmative, whether the relator falls within the "original source" exception as defined in § 3730(e)(4)(B). We reach only the first question. Our case law has not previously defined the term "public disclosure."

The question here i s w hether self-disclosure made by a private party only to government agencies, without further disclosure, is "public disclosure." In our view, a "public 5 disclosure" requires that there be some act of disclosure to the public outside of the government. The mere fact that the disclosures a r e contained in government files someplace, or even that the government is conducting an investigation behind theThe United States also argues that the district court 6 went too far in defining "public disclosure" as requiring that disclosure be to "all members of the community or, in other words, the general public." Rost, 446 F. Sup p . 2 dat 17. We agree.

-17- scene s , does not itself constitute public disclosure. Our construction of the term "public disclosure" does not turn on the fact that Pfizer requested or assumed that its disclosures to the i n v e stigating agencies would be held confidential. The United States has taken the litigation posit i o n in this action that "public disclosure" does not include the disclosure from Pfizer to the government that occurred here. 6

Pfizer's reading is inconsistent with our understanding of the language, s t r ucture, and history of the Act. The plain language of the statute cuts against Pfizer's interpretation of the public disclosure bar for several reasons. This court has already held that "the logical reading is that the [public disclosure] subsection serves to prohibit courts from hearing qui tam actions based on information made available to the public during the course of a government hearing, investigation or audit or from the news media." Un i t e dStates ex rel. LeBlanc v. Raytheon Co., 913 F.2d 17, 20 (1st Cir. 1990). What Pfizer did was to make confidential disclosures to the government, which triggered an inves t i g ation. But the statute does not bar jurisdiction over qui tam actions based on di s c l osures of allegations or transactions to the government; it does so only for actions based on qualifying-18-

disclosures made to the public. If providing information to the government were enough to trigg e r t h e bar, the phrase "public disclosure" would be superfluous.

Pfizer's readin g also equates the government with the public; this is inconsistent with the rest of the s t a t ute. Government may be of the people, by the people, and for the people, but that does not mean the government and the public are the same. As the United States, in opposing Pfizer's reading, notes, the ordinary understanding of the term "public" means "something apart from the government itself." Br. for United States as Amicus Curiae Supp. Appell a n t 12; see also Black's Law Dictionary 1264 (8th ed. 2004) (defining "public" as "1. Relating or belonging to

an entire community, state, or nation.

. . . 2. Open or available for all to use, share, or enjoy."). The statute itself uses the
term "G o v e r n ment" numerous times and does not once equate the government with the public. See, e.g., 31 U.S.C. § 3730(e)(4)(B) ("'[O]riginal source' means an individual who . . . has voluntarily provided the information to the Government . . . ." (emphasis added)). See generally id. § 3 7 3 0 (delineating rights and responsibilities of "the Government" under the FCA). If Congress had wished to equate self-disclosure to the government with disclosure to the public, it easily could have done so.

To the extent there is any material ambiguity in the term "public disclosure" on these facts, we find that Pfizer's reading-19-

is contrary to the structure of the statut e a s a whole, the legislative history, and the policy objectives Congress articulated at the time it enacted the language. Cf. Pra w e r , 2 4 F.3d at 327 ( i n t erpreting ambiguous provision of the FCA with reference to legislative history and congressional intent). The legisl ative history of the statute, particularly the 1986 amendments, see False Claims Amendments Act of 1986, Pub. L. No. 99-562, 100 Stat. 3153, shows that Pfizer's reading is contrary to the legislative intent in several respects.

The 1986 amendments s o u g h t to achieve the two goals of discouraging "parasitic" or "free-loading" qui tam suits while also encouraging productive private enforcement suits. Springfield Terminal, 1 4 F.3d at 651. Pfizer's reading furthers neither
purpose. With the 1986 amendments, Congress deliberately removed a previous provision that barred jurisdiction whenever the government had knowledge of the allegations or transactions in the relator's complaint. The pre-1986 version of 31 U.S.C. § 3730(d) provided t h a t courts had no jurisdiction over qui tam actions "based on evidence or information the Go v e r n m ent had when the action was brought." See LeBlanc, 913 F.2d at 19 n.1. In practice, the "government knowledge" bar proved too restrictive of qui tam actions, resulting in under-enforcement of the FCA. See Prawer, 24 F.3d at 325-26. T h u s , i n 1 986, Congress shifted the-20-

examination away from the i n f o rmation in the government's possession and instead looked to whether there was public disclosure of information given to the government. "Congress thus changed the focus of the jurisdictional bar from evidence of fraud inside the government's overcrowded file cabinets to fraud already exposed in the public domain." United States e x r e l. Findley v. FPC-Boron Employees' Club, 105 F.3d 675, 684 (D.C. Cir. 1997).

The effect of Pfizer's argument would be to reinstate exactly what Congress eliminated -- the "government knowledge" bar. It is an insufficient response to argue, as Pfizer does, that the government knowledge bar created by its reading is a very limited one and applies only where the government official r e c e i ving the disclosure is the appropriate investigatory official. Only one court has adopted such a reading. See Unit e dStates ex rel. Mathews v. Bank of Farmington, 166 F.3d 853, 861 (7th Cir. 1999). We find no support in either the language or the history of the statute for such a reading. Indeed, Pfizer's argument runs directly contrary to our reasoning in Prawer, where we held that "Congress has explicitly deemed a 'notice' regime insufficient to protect the g o vernment against false claims (indeed it was precisely such a regime that Congress sought to abandon in enacting the 1986 amendments) . . . ." 24 F.3d at 329.

The 1986 amendments "broadened the universe of potential [qu i t am] plaintiffs, with only four exclusions" enumerated in-21-

§ 3730(e). LeBlanc, 913 F.2d at 19. Congress amended the statute to "encourage more private enforcement suits." Id. (quoting S. Rep. No. 93-345, at 23-24 (1986), reprinted i n 1 9 8 6 U.S.C.C.A.N. 526 6 , 5288-89) (internal quotation marks omitted). Yet Pfizer's reading would create a new exclusion not articulated in the text. That is inconsistent with the second goal of encouraging productive private enforcement.

Pfizer's interpretation is also contrary to another legislative purpose reflected in the 1986 amendments: it was the Congressional intent, through the requirement of public disclosure,
t o help keep the government honest in its investigations and settlements with industry. Once allegations are made public, the government can be forced to act by public pressure. See Findley, 105 F.3d at 684 n.4.

Not only would Pfizer's argument recreate problems Congress sought to eliminate in 1986, but it fails to further Congress's purpose of discouraging "parasit ic" qui tam actions. Prawer, 24 F.3d at 327. If information that could form the basis of a qui tam action is kept confidential and confined to a limited circle of government officials, there is no real danger that a private citizen who does not have "direct and independent knowledge" of that information, see 31 U.S.C. § 3730(e)(4)(B), willExcept as noted in footnote 6, we do not reach the issue 7 of how many members of the public must receive or have access to the disclosure. Cf. Kennard v. Comstock Res., Inc., 363 F.3d 1039, 1043 (10th Cir. 2004) ("There is no requirement that a certain number of people read or receive the information."). -22- bring an opportunistic qui tam suit based upon the information in the government's possession. 7

Our conclusion is also consistent with the majority view among the circuits. The Tenth Circuit has held the public disclosure requirement "clearly contemplates that the information be in the public domain in some capacity and the Government is not the equivalent of the public domain." Kennard v. Comstock Res., Inc., 363 F.3d 1039, 1043 (10th Cir. 2004); accord United States ex rel. Schumer v. Hughes Aircraft Co., 63 F.3d 1512, 1518 (9th Cir. 1995) ("[I]nformation that was 'disclosed in p r i v ate' [between government a n d defendant company] has not been publicly disclosed."); United States ex rel. Williams v. NEC Corp., 931 F.2d 1493, 1496 n.7 (11th Cir. 1991) ("Even if a government investigation was pending at the time [the relator] filed his qui tam complaint, such fact would not jurisdictionally b a r [ t he FCA claim]."); see also Springfield Terminal, 14 F.3d at 653 (requiring information to be "in the public eye" for bar to apply).

Only one circuit has held that mere disclos u r e to the government is a public disclosure, though cabining its holding to disclosures made to appropriate investig a tive officials. See Mathews, 166 F.3d at 861. We simply disagree with Mathews for the-23-

reasons already stated and as lucidly set forth in the district court's opinion. See Rost, 446 F. Supp. 2d at 16-18.

Two amici, in dustry groups for the pharmaceutical and hos p i t al industries, argue that unless Pfizer's participation in HHS's self-disclosure program and cooperation with the government are fully protected from qui tam suits by adopting Pfizer's reading of "public disclosure," the FCA's objective -- to reduce fraud on the government -- will be undercut. The argument is misplaced and should be addressed to Congress. HHS's administrative efforts at encouraging corporate disclosure and cooperation are a more recent development, see Publication of the OIG's Provider Self-Disclosure Protocol, 63 Fed. Reg. 58399 (Oct. 30, 1 9 9 8), and were not the object of Congress's concerns in adopting the 1986 amendments.
B. Rule 9(b) Requirement

The distric t c ourt ultimately held that Rost failed to plead his f r a u d claims with sufficient specificity under Federal Rule of Civil Procedure 9(b). We affirm.

Rule 9(b) requires that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." The pa r t i cularity requirement means that a complaint must specify "the time, place, and content of an alleged false representation." Doyle v. H a s bro, Inc., 103 F.3d 186, 194 (1st Cir. 1996) (quoting McGinty v. Beranger Volkswagen, Inc., 633 F.2d 226, 228 (1st Cir. 1980), superseded by statute onR o s t also argues that the court should have separately 8 analyzed his state law claims. The heightened pleading standard of Rule 9(b) generally applies to state law fraud claims brought in federal court. See Universal Commc'n Sys., Inc. v. Lycos, Inc., 478 F.3d 413, 427 (1st Cir. 2007); see also 5A Wright & Miller, Federal Practice and Procedure § 1297 (3d ed. 2004). The district court did not err in applying the rule to Rost's entire action. -24- o t h e r grounds, Private Securities Litigation Reform Act of 1995, Pub. L. No. 104-67, 109 Stat. 737). Conclusory allegations and references to "plans and schemes" are not sufficient. Id. (quoting Hayduk v. Lanna, 775 F.2d 441, 444 (1st Cir. 1985)). Rule 9(b) applies to FCA claims. Karve l a s , 3 6 0 F .3d at 228. In the FCA context, this court has previously held that the rule requires relators to "provide details that identify particular false claims for payment that were submitted to the government." Id. at 232.

Rost argues that the district court overall applied too stringent a standard. He also argues that he asserted two different claims -- one under 31 U.S.C. § 3729(a)(1) for false claims, the other under § 3729(a)(2) for false statements -- and that the court erred in not analyzing the particularity requirements separately for the two subsections. 8

In defense of the district court's ruling, Pfizer first argues this result is req u i r e dby this court's decision in Karvelas. Pfizer, we think, over

- r e a d s Karvelas, which has more flexibility than Pfizer posits.

Karvelas, like this case, involved allegations of submiss i o n of false claims for medical insurance payments to-25-

f e d e ral health insurance programs such as Medicare and Medicaid. The FCA, Karvelas held, a t t a ches liability not to the underlying fraudulent activity or to the government's wrongful payment, but to the claim for payment. 360 F.3d at 225. Karvelas held that "a qui tam relator may not present general allegations in lieu of the details of actual false claims in the hope that such details will emerge through subsequent discovery." Id. at 231. That principle is not at stake here.

In Karvelas, the relator worked at a hospit a l that allegedly submitted false claims to government health care programs for services that were "provi d e d improperly or not at all." 360 F.3d at 223. In the context of a defendant that submits claims directly to government programs, Karvelas held that relators must provide details that identify particular false claims for payment that were actually submitted to the government. Id. at 232. Karvelas's claim failed because it provided no specifics, such as the dates of claims, identification numbers, or amounts charged to the government, that identified particular false claims

. I d . at 233-35.
N o n e theless, Karvelas recognized that Rule 9(b) may be satisfied where, although some questions remain unanswered, the complaint as a whole is sufficiently particular to pass muster under the FCA. Id. at 233 n.17. Giving Rost the benefit of such-26-

flexibility, we analyze the case with this test in mind; the claim still fails.

The fraud alleged here is in a different category than in Karvelas. Those differences both help and hurt Rost. The submission of the alleged false claims here was not by defendants Pharmacia and Pfizer; false claims were allegedly submitt e dby doctors who were allegedly induced and seduced by defendants into prescribing Genetro p i n f or off-label uses to their patients, including federally insured patients. According to Rost's complaint, more than h a l f o f all adult and a quarter of all pediatric sales of Genotropin are for off-label uses. Given that, it is a possible but not a necessary or even strong inference that doctors, persuaded by Pharmacia's financial and other incentives to prescribe Genotropin for off-label uses, have written such prescriptions even if the patient was federally insured. And it is not irrational to infer that, given the large percentage of children a n d the elderly who are insured under federal health programs, some false claims for Genotro p in reimbursement were submitted to the government.

We also note, though, that while the April 2007 criminal information against Pfizer covering off-label uses of Gen o t r opinacknowledges that "Pharmacia earned millions of dollars for [offlabel uses]," it also states that "[i]n most, if not all, instances, patients taking Genotropin [for off-label uses] paid .Rule 9(b) ' s heightened pleading standards apply to the 9 allegations that false claims were submitted to the government. There is a separate element to the cause of action. Under the FCA, Rost must show that Pfizer "cause[d] to be presented" a false claim for payment. 31 U.S.C. § 3729(a)(1). That there w e r e allegedly intervenin g p ersons who actually submitted the claims does not itself necessarily break the causal connection when the claims are foreseeable. See United States ex rel. Cantekin v. Univ. of Pittsburgh, 192 F.3d 402, 416-17 (3d Cir. 1999).

I n other cases, relators have pled a connecting causal link , w h i c h s t r e n g t h e n s t h e i n f e r e n c e t h a t f a l s e c l a i m s w e re submitted. Cf. United States ex rel. Franklin v. Parke-Davis, 147 F. Supp. 2d 39, 46 (D. Mass. 2001) (describing pharma c e u t i cal company's efforts "to coach doctors on how to conceal the off-label nature of the prescription"). No such allegations are made here. -27- . . out-of-pocket without reimbursement from any public or private third-party payors." This tends to undercut the strength of the inference that fraud on the government in fact occurred.

Rost's complaint amply describes illegal practices in which Pfizer allegedly engaged. But those practices, while illegal, are not a sufficient basis for an FCA action because they do not involve claims for gove r n m ent reimbursement. Id. at 234. 9 As presently pled, the comp l a i nt does not sufficiently establish that false claims were submitted for government payment in a way that satisfies the particularity requirement. Cf. id. at 233.

Rost argues that th e p rimary purpose of pleading fraud with particularity is to give notice to Pfizer of the false claims, and that his complaint accomplishes this. The argument fails on two grounds: First, the complaint does not give notice to Pfizer of false claims submitted by others for federal reimb u r s e m ent of off-label uses, only of illegal practices in promotion of the drug.-28-

Second, notice is not the only reason for the requirement of Rule 9(b). I t i s a s e rious matter to accuse a person or company of committing fraud, and the mere accusation often causes harm. See Doy l e , 103 F.3d at 194; 5A Wright & Miller, Federal Practice and Procedure § 1296 (3d ed. 2004). Further, the rule discourages plaintiffs from filing allegations of fraud merely in the hopes of conducting embarrassing discovery and forcing settlement. See New Eng. Data Servs., Inc. v. Becher, 8 2 9 F . 2 d286, 288 (1st Cir. 1987). At most, Rost raises facts that suggest fraud was possible; but the complaint contained no factual or statistical evidence to strengthen the inference of fraud beyond possibility. It may well be that doctors who prescribed Genotropin for off-label uses as a result of Pharmacia's illegal marketing of the drug withstood the temptation and did not seek federal rei m b u rsement, and neither did their patients. It may be that physicians prescribed Genotropin for off-lab e l uses only where the patients paid for it themselves or when the patients' private insurers paid for it. Rost did not plead enough to satisfy the concerns behind Rule 9(b).
As for Rost's § 3729(a)(2) argument, Pfizer asserts that Rost waived the argument by not presenting it below. See Tobin v. Liberty Mut. Ins. Co., 433 F.3d 100, 105 n.3 (1st C ir. 2005) ("Theories not raised in the district court cannot be raised for-29-

the first time on appeal.") We do not address the waiver issue. Our analysis -- which recognizes the role played by third parties other than Pfizer in submitting claims and making statements to the government -- undermines Rost's § 3729(a)(2) argument as well. In addition, the plain language of § 3729(a)(2) requires proof of a "false record or statement" for l i a b i l ity to attach under the section. Rost's complaint alleges that Pharmacia made statements in violation of federal law, but does not allege that those statements were f a l s e. Cf. Franklin, 147 F. Supp. 2d at 48-49 (describing allegations that defendant trained salespeople to "actively deceive physicians" about off-label uses of drugs). We affirm the Rule 9(b) ruling.

That does not end the matter. In dismissing the action, the district court never ruled on Rost's request that he be allowed to amend his complaint to allege fraud with particularity. If it were obvious that leave to amend should be denied, we would affirm. That level of certainty does not exist. This distinguishes our decision here from the disposition of Epstein v. C.R. Bard, Inc., 460 F.3d 183 (1st Cir. 2006).

Federal Rule of Civil Procedure 15(a) provides that leave to amend a pleading "shall be freely given when justice so requires," and reflects a liberal amendment policy. O'Connell v. Hyatt Hotels of P.R., 357 F.3d 152, 154 (1st Cir. 2004). Grounds for denial generally involve undue delay, bad faith, dilatory-30-

motive of the requesting party, repeated failure t o cure deficiencies, and futility of amendment. Foman v. Davis, 371 U.S. 178, 182 (1962). At this stage we cannot say amendment would be futile, and the district court sh o u l d make the initial determination.

Pfizer says Rost has waived his opportunity to amend by making only a "passing reference" to a request for leave to amend in his briefs to the distri c t court. That is not our law. This court has treated many si m i l ar requests to be sufficient invocations for leave to amend under Rule 15(a). See, e.g., Epstein, 460 F.3d a t 1 9 0

- 9 1 (request for leave to amend made in opposition to motion to dismiss treated as motion to amend pursuant to Rul e 1 5 ( a ) ); Rodi v. S. New Eng. Sch. of Law, 389 F.3d 5, 20 (1st Cir. 2004) ( r equest to amend contained in motion for

reco n s i d e r a t i o n t r e a t e da s R u l e 1 5 ( a ) m o t i o n ) ; I n v e s t A l m a z v. Temple-Inland Forest Prods. Corp., 243 F.3d 57, 71 (1st Cir. 2001) (request at oral argument on motion to dismiss for leave to amend complaint "if necessary" constituted motion to amend pu r s u ant to Rule 15(a)). We express no views on the outcome of this issue before the district court.

The dismissal of the action is vacated. The case is remanded to the district court for further proceedings consistent with this opinion. No costs are awarded.