NOT FOR PUBLICATION WITHOUT THE 

APPROVAL OF THE APPELLATE DIVISION 

 SUPERIOR COURT OF NEW JERSEY 

 APPELLATE DIVISION 

 DOCKET NOS. A-2731-20

 A-2733-20

 

THE STATE OF NEW JERSEY 

ex rel. HEALTH CHOICE 

GROUP, LLC, 

 Plaintiff-Appellant, 

v.

BAYER CORPORATION and 

BAYER HEALTHCARE 

PHARMACEUTICALS, INC., 

 Defendants-Respondents. 

____________________________

THE STATE OF NEW JERSEY 

ex rel. HEALTH CHOICE 

ALLIANCE, LLC, 

 Plaintiff-Appellant, 

v.

ELI LILLY AND COMPANY, 

INC., 

 Defendant-Respondent. 

____________________________

Argued November 14, 2023 – Decided March 1, 2024 

APPROVED FOR PUBLICATION 

March 1, 2024

APPELLATE DIVISION 
2 A-2731-20

Before Judges Gilson, Berdote Byrne, and BishopThompson. 

On appeal from the Superior Court of New Jersey, Law 

Division, Middlesex County, Docket Nos. L-3311-20 

and L-3312-20.

Radu A. Lelutiu (McKool Smith PC) of the New York 

bar, admitted pro hac vice, and Ruby Khallouf argued 

the cause for appellant Health Choice Group, LLC, in 

A-2731-20 and appellant Health Choice Alliance, LLC, 

in A-2733-20 (Florio Perrucci Steinhardt Cappelli 

Tipton & Taylor, LLC, Radu A. Lelutiu, W. Mark 

Lanier (The Lanier Law Firm) of the Texas bar, 

admitted pro hac vice, Zeke DeRose III (The Lanier 

Law Firm) of the Texas bar, admitted pro hac vice, and 

Eric B. Halper (McKool Smith PC) of the New York 

bar, admitted pro hac vice, attorneys; Brian Russell 

Tipton, Ruby Khallouf, W. Mark Lanier, Zeke DeRose 

III, Eric B. Halper, and Radu A. Lelutiu, of counsel and 

on the briefs).

 

Lawrence S. Lustberg argued the cause for respondents

Bayer Corporation and Bayer Healthcare 

Pharmaceuticals, Inc., in A-2731-20 (Gibbons PC, 

Matthew J. O’Connor (Covington & Burling LLP) of 

the District of Columbia and Massachusetts bars, 

admitted pro hac vice, Matthew F. Dunn (Covington &

Burling LLP) of the District of Columbia and Maryland 

bars, admitted pro hac vice, and Kristin M. Cobb 

(Covington & Burling LLP) of the District of Columbia 

and Virginia bars, admitted pro hac vice, attorneys; 

Lawrence S. Lustberg, Matthew J. O'Connor, Matthew 

F. Dunn, and Kristin M. Cobb, of counsel and on the

brief). 

Allon Kedem (Arnold & Porter Kaye Scholer LLP) of 

the District of Columbia and New York bars, admitted 
3 A-2731-20

pro hac vice, argued the cause for respondent Eli Lilly 

and Company, Inc., in A-2733-20 (Faegre Drinker 

Biddle & Reath LLP, Michael A. Rogoff (Arnold & 

Porter Kaye Scholer LLP) of the New York bar, 

admitted pro hac vice, Sara L. Shudofsky (Arnold & 

Porter Kaye Scholer LLP) of the New York bar, 

admitted pro hac vice, and Debra E. Schreck, attorneys; 

Jeffrey S. Jacobson, Michael Charles Zogby, Michael

A. Rogoff, Sara L. Shudofsky, and Debra E. Schreck,

of counsel and on the brief). 

 The opinion of the court was delivered by 

GILSON, P.J.A.D. 

 These two appeals, which we consolidate for purposes of this opinion, 

arise out of separate, but similar, qui tam lawsuits filed by plaintiffs Health 

Choice Group, LLC (HCG) and Health Choice Alliance, LLC (HCA) 

(collectively, plaintiffs or Relators) on behalf of the State of New Jersey. HCG 

sued defendants Bayer Corporation and Bayer Healthcare Pharmaceuticals, Inc. 

(collectively, Bayer), and HCA sued Eli Lilly and Company, Inc. (Lilly). 

Plaintiffs alleged that Bayer and Lilly (collectively, defendants) had violated the 

New Jersey False Claims Act (NJFC Act), N.J.S.A. 2A:32C-1 to -15, -17 to -18, 

by engaging in unlawful marketing schemes that caused false claims to be 

submitted to and paid by government-funded healthcare programs. 

 Defendants moved to dismiss plaintiffs' complaints on several grounds, 

including under Rule 4:6-2(e) and Rule 4:5-8(a). The trial court granted those 
4 A-2731-20

motions, holding that plaintiffs' claims were barred by the public disclosure and 

first-to-file provisions in the NJFC Act. The trial court also ruled that plaintiffs 

had failed to plead fraud with the particularity required by Rule 4:5-8(a). 

Plaintiffs appeal from the orders dismissing their complaints with prejudice. 

Because the allegations in plaintiffs' complaints had previously been publicly 

disclosed and because plaintiffs were not the original source of that information, 

we hold that plaintiffs' complaints were properly dismissed under the public 

disclosure bar of the NJFC Act. See N.J.S.A. 2A:32C-9(c). Accordingly, we 

affirm on that basis and do not address the alternative grounds for the dismissals. 

I.

 Plaintiffs are subsidiaries of the National Health Care Analysis Group (the 

NHCA Group), a partnership of limited liability companies established by 

investors and former bankers "for the purpose of filing qui tam actions alleging 

instances of fraud in medicine and pharmaceuticals." United States ex rel. 

Health Choice All., L.L.C. v. Eli Lilly & Co., 4 F.4th 255, 259 (5th Cir. 2021) 

(italicization omitted). The federal False Claims Act (FCA), 31 U.S.C. §§ 3729-

33, and similar state statutes, including the NJFC Act, permit private persons, 

called "relators," to bring qui tam suits on behalf of the government and, if the 
5 A-2731-20

relators prove that false claims were paid by the government, receive a portion 

of any recovery. 31 U.S.C. § 3730(b), (d)(2); N.J.S.A. 2A:32C-5(b), -7(d). 

 In June 2017, plaintiffs filed separate, sealed qui tam actions against 

Bayer and Lilly in the United States District Court for the Eastern District of 

Texas (the Federal Actions). Both actions were filed on behalf of the United 

States and thirty-one states, including New Jersey, and alleged that defendants 

had violated the FCA and similar state false claims statutes, including the NJFC 

Act. At approximately the same time, affiliates of plaintiffs filed numerous 

other qui tam actions against other pharmaceutical companies based on similar 

allegations.1

 In the Federal Actions, plaintiffs alleged that Bayer and Lilly had used 

unlawful marketing schemes to induce healthcare providers to prescribe their 

drugs, thereby causing billions of dollars of false claims to be submitted to and 

paid by government-administered programs, primarily Medicaid and Medicare. 

Plaintiffs represented in their complaints that agents of the NHCA Group had 

conducted multi-part investigations, which included interviewing various 

1

 Another subsidiary of the NHCA Group sued Gilead Sciences, Inc. first in the 

federal Eastern District of Texas and later in New Jersey. In a separate 

unpublished opinion, we have affirmed the dismissal of the claims against 

Gilead. See State ex rel. Health Choice Advocs., LLC v. Gilead Scis., Inc., No. 

A-2736-20 (App. Div. 2024). 
6 A-2731-20

individuals who were familiar with defendants' practices and examining 

Medicare and Medicaid data for defendants' products. Through those 

investigations, plaintiffs contend they discovered that Bayer and Lilly were 

engaging in three marketing schemes that violated the FCA and the NJFC Act. 

 The first two schemes involved providing free nurse services (the "Free 

Nurse Scheme") and reimbursement support services (the "Support Services 

Scheme") to healthcare providers who wrote prescriptions for Bayer's and Lilly's 

drugs. Bayer and Lilly allegedly allowed prescribers who prescribed their drugs 

to use free "nurse educators" to provide follow-up care and monitoring for 

patients, thereby relieving the prescribers of the responsibility to provide those 

services. Bayer and Lilly also allegedly provided free support services to assist 

providers who prescribed patients their drugs. These services assisted providers 

with determining and obtaining insurance coverage for patients for the cost of 

the drugs and obtaining prior authorization. Plaintiffs asserted that those free 

services induced providers to prescribe Bayer's and Lilly's drugs over 

competitors' drugs and caused false claims to be submitted to and paid for by 

government programs. 

 In the third scheme, Bayer and Lilly allegedly used registered nurses to 

promote their drugs (the "White Coat Marketing Scheme"). The registered 
7 A-2731-20

nurses, who were independent contractors, used their professional credentials to 

gain access to providers. Bayer and Lilly allegedly paid those nurses to 

recommend their drugs, and plaintiffs alleged that those payments were illegal 

kickbacks. 

 In October 2017, the United States and all named states, including New 

Jersey, declined to intervene in the Federal Actions, and the complaints were 

then unsealed and served on Bayer and Lilly. Shortly thereafter, Bayer and Lilly 

moved to dismiss the claims in the Federal Actions. Plaintiffs then filed an 

amended complaint, and defendants again moved to dismiss. 

 Before the federal court ruled on defendants' motions, the United States 

moved to dismiss the Federal Actions. The United States offered two reasons 

to support its request for dismissal: (1) "the allegations . . . lack[ed] sufficient 

merit to justify the cost of investigation and prosecution[;]" and (2) "further 

litigation . . . [would] undermine practices that benefit federal healthcare 

programs by providing patients with greater access to product education and 

support." Eli Lilly, 4 F.4th at 267. The United States also asserted that the drug 

education services provided by Bayer and Lilly "benefit[ed] federal healthcare 

programs" and were lawful. Id. at 268. New Jersey took no position on the 

United States' motion to dismiss the Federal Actions. 
8 A-2731-20

 In September 2019, the court overseeing the Federal Actions dismissed 

with prejudice plaintiffs' FCA claims but dismissed without prejudice plaintiffs' 

state law claims, including the claims based on the NJFC Act. Shortly thereafter, 

plaintiffs appealed the dismissal of their FCA claims. They did not challenge 

the dismissal without prejudice of their state law claims. 

 In July 2021, the United States Court of Appeals for the Fifth Circuit 

affirmed the dismissal of the FCA claims against Bayer and Lilly in the Federal 

Actions. Id. at 269. The Fifth Circuit held that the United States' dismissal of 

the action was proper, id. at 267, and plaintiffs did not show the government had 

acted arbitrarily, capriciously, or illegally in seeking the dismissal, id. at 269. 

 In October 2019, while the Federal Actions were on appeal, plaintiffs filed 

these two qui tam actions under seal on behalf of the State of New Jersey. When 

New Jersey declined to intervene, both complaints were unsealed in April 2020. 

 The complaints filed in New Jersey alleged the same marketing schemes 

identified in the Federal Actions and contended that those schemes resulted in 

false claims being submitted to and paid by New Jersey in violation of the NJFC 

Act. In that regard, plaintiffs' complaints against Bayer and Lilly filed in New 

Jersey were based on the Free Nurse Scheme, the Support Services Scheme, and 

the White Coat Marketing Scheme. 
9 A-2731-20

 Bayer and Lilly moved to dismiss plaintiffs' complaints under Rule 4:46-

2 on three grounds. They argued that the claims filed in New Jersey were (1) 

barred by the public disclosure provision in the NJFC Act, N.J.S.A. 2A:32C9(c); (2) barred by the first-to-file provision, N.J.S.A. 2A:32C-5(i); and (3) 

inadequate because they did not plead fraud with the particularity required by 

Rule 4:5-8(a). The trial court heard arguments on both motions to dismiss. 

On April 22, 2021, the trial court issued two orders and a consolidated 

opinion granting Bayer's and Lilly's motions to dismiss with prejudice. The trial 

court based its rulings on three grounds. First, the court found that the 

allegations in plaintiffs' complaints filed in New Jersey were based on 

transactions previously publicly disclosed in the Federal Actions, as well as in 

newspaper articles. The court then determined that plaintiffs did not qualify as 

the original source of the information as required by the NJFC Act. See N.J.S.A. 

2A:32C-9(c). 

 Second, the trial court held that plaintiffs' complaints should be dismissed 

under the NJFC Act's first-to-file bar. That bar prohibits a plaintiff from 

bringing a related action based on facts underlying a pending NJFC Act action. 

N.J.S.A. 2A:32C-5(i). The trial court found that the allegations in the 

complaints filed in New Jersey were like the allegations in the then-pending 
10 A-2731-20

Federal Actions. In that regard, the trial court issued its rulings several months 

before the Fifth Circuit affirmed the dismissal of the federal FCA claims in the 

Federal Actions. 

 Finally, the trial court found that both complaints failed to plead fraud 

with the specificity required by Rule 4:5-8(a). In particular, the trial court noted 

that plaintiffs' complaints failed to allege specific facts showing that the schemes 

increased prescriptions of Bayer and Lilly products or that any prescriptions 

were issued for reasons other than valid medical reasons. 

 Plaintiffs filed separate appeals from the orders dismissing their New 

Jersey complaints with prejudice. 

II. 

 In both appeals, plaintiffs make the same three arguments. They contend 

that the trial court erred in holding that (1) the public disclosure bar applied; (2) 

the first-to-file bar applied; and (3) the complaints failed to plead fraud with 

particularity. Regarding their arguments about pleading fraud with particularity, 

plaintiffs contend that the court compounded its error by dismissing the 

complaints with prejudice because they should have been allowed to amend their 

complaints. 
11 A-2731-20

 Appellate courts review orders granting motions to dismiss for failure to 

state a claim under a de novo standard. Baskin v. P.C. Richard & Son, LLC, 

246 N.J. 157, 171 (2021) (citing Dimitrakopoulos v. Borrus, Goldin, Foley, 

Vignuolo, Hyman & Stahl, P.C., 237 N.J. 91, 108 (2019)). In doing so, we 

"examine 'the legal sufficiency of the facts alleged on the face of the complaint,' 

giving the plaintiff the benefit of 'every reasonable inference of fact.'" Ibid. 

(quoting Dimitrakopoulos, 237 N.J. at 107). "The complaint must be searched 

thoroughly 'and with liberality to ascertain whether the fundament of a cause of 

action may be gleaned even from an obscure statement of claim, opportunity 

being given to amend if necessary.'" Ibid. (quoting Printing Mart-Morristown 

v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989)). 

 We hold that the complaints were properly dismissed with prejudice under 

the NJFC Act's public disclosure bar. In that regard, we point out that the public 

disclosure bar involves a question of standing. Relators lack standing to bring 

claims under the NJFC Act when the claims are based on allegations or 

transactions that have already been publicly disclosed and the relators were not 

the original source of the information. See Brennan v. Lonegan, 454 N.J. Super. 

613, 620 (App. Div. 2018). 
12 A-2731-20

 Standing "involves a threshold determination of the court's power to hear 

the case." Watkins v. Resorts Int'l Hotel & Casino, Inc., 124 N.J. 398, 418 

(1991). Although our courts "have historically taken a much more liberal 

approach on the issue of standing than have the federal cases," Crescent Park 

Tenants Ass'n v. Realty Equities Corp. of N.Y., 58 N.J. 98, 101 (1971), the 

public disclosure bar in the NJFC Act uses the word "shall," which denotes that 

it is a mandatory bar when applicable. See Aponte-Correa v. Allstate Ins. Co., 

162 N.J. 318, 325 (2000) (explaining that a statute's use of "shall" generally 

means that the statutory provision is mandatory).

 "Whether a party has standing to pursue a claim is a question of law 

subject to de novo review." Cherokee LCP Land, LLC v. City of Linden Plan. 

Bd., 234 N.J. 403, 414 (2018); accord Brennan, 454 N.J. Super. at 618. An 

appellate court therefore owes no "special deference" to the "trial court's 

interpretation of the law and the legal consequences that flow from established 

facts." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 

378 (1995). 

A. The NJFC Act. 

 The NJFC Act imposes civil penalties on any person who "[k]nowingly 

presents . . . a false or fraudulent claim for payment or approval." N.J.S.A. 
13 A-2731-20

2A:32C-3(a). The NJFC Act is modeled on the FCA and is intended to protect 

the government, and ultimately taxpayers, from paying false claims. See State 

ex rel. Hayling v. Corr. Med. Servs., Inc., 422 N.J. Super. 363, 372 (App. Div. 

2011) (quoting Assemblyman Herb Conaway, Jr., who described the NJFC Act 

to the Assembly Judicial Committee "as New Jersey's [whistleblower] statute 

which tracks the federal law that allows private individuals . . . to sue on behalf 

of the government to recover the losses to the public"). A "claim" is defined to 

include a request or demand for money, property, or services that is "made to 

any employee, officer, or agent of the State" if the State provides any portion of 

the money, property, or services requested. N.J.S.A. 2A:32C-2.

 The NJFC Act precludes actions by private persons based on allegations 

or transactions that have previously been publicly disclosed, unless "the person 

bringing the action is an original source of the information." N.J.S.A. 2A:32C9(c). In construing the FCA, the United States Supreme Court has held that the 

"original source" language was "an effort to strike a balance between 

encouraging private persons to root out fraud and stifling parasitic lawsuits." 

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

559 U.S. 280, 295 (2010). Because our Legislature has adopted "essentially the 

same 'original source' language" for the NJFC Act, we have previously 
14 A-2731-20

concluded "our Legislature likewise intended to avoid 'parasitic lawsuits' based 

on publicly disclosed information." Brennan, 454 N.J. Super. at 620. 

B. The 2023 Amendment to the NJFC Act. 

 In 2023, the New Jersey Legislature amended several sections of the NJFC 

Act, including the definition of "original source." L. 2023, c. 73. So, the initial 

question we must decide is which definition applies to plaintiffs' actions, which 

were brought in 2019, dismissed by the trial court in 2021, and are currently on 

appeal. That question, in turn, depends on whether the 2023 amendments apply 

retroactively. 

 When the Legislature first adopted the NJFC Act in 2008, it used 

substantially the same "original source" definition that was used in the FCA. 

Brennan, 454 N.J. Super. at 620. Thus, "original source" was defined as "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 State before filing an action under this act based on the information." 

N.J.S.A. 2A:32C-9(c) (2008). 

 In 2010, Congress amended the FCA and defined "original source" to 

mean: 

[A]n individual who either (i) prior to a public 

disclosure under subsection (e)(4)(a), has voluntarily 
15 A-2731-20

disclosed to the Government the information on which 

allegations or transactions in a claim are based, or (2) 

who has knowledge that is independent of and 

materially adds to the publicly disclosed allegations or 

transactions, and who has voluntarily provided the 

information to the Government before filing an action 

under this section. 

[31 U.S.C. § 3730(e)(4)(B).] 

 As noted, in 2023, our Legislature amended the definition of "original 

source" to track the federal definition. Consequently, original source is now 

defined to mean: 

[A]n individual who either (1) prior to a public 

disclosure as described in this paragraph has 

voluntarily disclosed to the State the information on 

which allegations or transactions in a claim are based, 

or (2) has knowledge that is independent of and 

materially adds to the publicly disclosed allegations or

transactions, and who has voluntarily provided the 

information to the State before filing an action under 

this act. 

[N.J.S.A. 2A:32C-9(c).] 

In the related legislative history, the Assembly explained it was revising 

the NJFC Act "to comply with certain provisions in federal law" because 

"[c]ompliance would make the State eligible for greater recoveries in Medicaid 

fraud cases." Assemb. Budget Comm. Statement to A. 5584 (June 27, 2023). 

The Assembly explained that, 
16 A-2731-20

[u]nder federal law, a state is entitled to enhanced 

recovery in Medicaid fraud cases if the Inspector 

General in the federal Department of Health and Human 

Services determines that the state has a False Claims 

Act that is "at least as effective" as the [FCA] in 

facilitating these whistleblower actions. Presently, the 

Inspector General has determined that the [NJFC Act] 

is not "at least as effective" as the [FCA], and has 

recommended specific revisions. This bill would

implement the Inspector General's recommendations. 

[Ibid.] 

The Legislature adopted the amendments on June 30, 2023, and stated that they 

were to "take effect immediately." L. 2023, c. 73, § 11. 

 "Settled rules of statutory construction favor prospective rather than 

retroactive application of new legislation." Pisack v. B & C Towing, Inc., 240 

N.J. 360, 370 (2020) (quoting James v. N.J. Mfrs. Ins. Co., 216 N.J. 552, 563 

(2014)); see also Twiss v. State, Dep't of the Treasury, 124 N.J. 461, 466 (1991) 

(explaining that "[g]enerally, courts favor prospective application of statutes"). 

"In determining whether a statute applies retroactively," the primary goal is to 

determine whether the Legislature intended the amendment to be prospective or 

retrospective in application. Pisack, 240 N.J. at 370; Twiss, 124 N.J. at 466-67. 

Accordingly, our Supreme Court has explained that there are "three scenarios 

that justify retroactive application of a legislative amendment: '(1) when the 

Legislature expresses its intent that the law apply retroactively, either expressly 
17 A-2731-20

or implicitly; (2) when an amendment is curative; or (3) when the expectations 

of the parties so warrant.'" Pisack, 240 N.J. at 370 (quoting James, 216 N.J. at 

563); see also Gibbons v. Gibbons, 86 N.J. 515, 522 (1981) (explaining that 

amendments will be applied retroactively when it is "necessary to make the 

statute workable or to give it the most sensible interpretation"). 

 The 2023 amendments to the NJFC Act used language clearly indicating 

that the Legislature intended the amendments to apply prospectively. In that 

regard, the Legislature stated that the amendments "shall take effect 

immediately." L. 2023, c. 73, § 11. "Our Supreme Court has consistently held 

that an amendment that is to take effect immediately is to be applied only 

prospectively." State v. Rosado, 475 N.J. Super. 266, 276 (App. Div. 2023); see 

also Pisack, 240 N.J. at 371 (explaining that "the Legislature provided that the 

2018 amendatory legislation 'shall take effect immediately.' Those 'words 

bespeak an intent contrary to, and not supportive of, retroactive application.'" 

(internal citation omitted) (quoting Cruz v. Cent. Jersey Landscaping, Inc., 195 

N.J. 33, 48 (2008))). 

The amendments to the NJFC Act were also not curative. Although the 

amendments were designed to bring the NJFC Act into compliance with the 
18 A-2731-20

FCA, the Legislature explained that the goal was to enhance recoveries in 

Medicaid fraud cases. 

Federal courts have consistently construed the 2010 amendment to the 

FCA to apply prospectively. See, e.g., United States ex rel. Zizic v. 

Q2Administrators, LLC, 728 F.3d 228, 232 n.3 (3d Cir. 2013); United States ex 

rel. Poteet v. Bahler Med., Inc., 619 F.3d 104, 107 n.2 (1st Cir. 2010); United 

States ex rel. May v. Purdue Pharma L.P., 737 F.3d 908, 914-18 (4th Cir. 2013); 

Bellevue v. Universal Health Servs. of Hartgrove, Inc., 867 F.3d 712, 717-18

(7th Cir. 2017); Prather v. AT&T, Inc., 847 F.3d 1097, 1103 (9th Cir. 2017). 

Accordingly, we presume that the New Jersey Legislature was aware of the 

federal law concerning the prospective application of the new definition of 

original source and meant to likewise apply the NJFC Act amendments 

prospectively. 

C. Whether the Public Disclosure Provision Bars Plaintiffs' New 

Jersey Actions. 

The public disclosure bar in the NJFC Act prevents a private person from 

bringing a qui tam action that is based upon publicly disclosed allegations or 

transactions "unless the person bringing the action is an original source of the 

information." N.J.S.A. 2A:32C-9(c). Accordingly, the public disclosure 

provision bars an action by a private person when (1) there has been a prior 
19 A-2731-20

public disclosure of the alleged fraud; and (2) the person's lawsuit is based upon 

"substantially the same allegations or transactions[;]" unless (3) the person is an

original source of the information. Ibid. 

There is no dispute that there was a prior disclosure of the fraud. Plaintiffs 

first sued Bayer and Lilly in federal court in Texas, and the complaints in those 

actions were unsealed in 2017. The NJFC Act identifies allegations made in a 

"criminal, civil, or administrative hearing in which the State or an agent of the 

State is a party" as prior disclosures. Ibid. Because the term "hearing" is used 

identically in the NJFC Act and FCA, we adopt the well-established federal rule 

that the public disclosure bar applies even when the prior complaint was filed 

by the same relator. See, e.g., Poteet, 619 F.3d at 113 (holding that the public 

disclosure bar applies when relator's own lawsuit was the source of the prior 

public disclosure and noting that after a relator has "blow[n] the whistle on fraud 

. . . . there seems to be little need to encourage them to give the whistle a second 

toot"); United States ex rel. Schweizer v. Canon, Inc., 9 F.4th 269, 275-76 (5th 

Cir. 2021) (relator's prior complaint barred the subsequent action). 

There is also no dispute that plaintiffs' allegations in the New Jersey 

actions are substantially the same allegations they made in the Federal Actions. 

The complaints in the New Jersey actions identified the same three schemes 
20 A-2731-20

identified in the Federal Actions and were brought against the same defendants. 

Although the New Jersey actions were more limited in scope in that they did not 

involve claims under the FCA, they included the same claims concerning New 

Jersey because New Jersey was originally named as a plaintiff in the Federal 

Actions. 

Therefore, a critical issue in these appeals is whether plaintiffs are the 

original source of the allegations. In 2019, original source was defined to mean 

"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 State before filing an action under this act based on the information." 

N.J.S.A. 2A:32C-9(c) (2010).

Bayer and Lilly argue that plaintiffs are not "individuals" that can qualify 

as an original source under the NJFC Act because they are limited liability 

companies, not natural persons. No New Jersey caselaw analyzes the meaning 

of the word "individual" in the context of the original source exception to the 

NJFC Act's public disclosure bar. In analyzing other statutes that use both 

"person" and "individual," the United States Supreme Court has interpreted 

"individual" to mean "a natural person, and in particular to distinguish between 

a natural person and a corporation." Mohamad v. Palestinian Auth., 566 U.S. 
21 A-2731-20

449, 454 (2012). Nevertheless, courts in other jurisdictions have assessed 

whether a corporate entity may be an original source without deciding this issue. 

See, e.g., United States ex rel. Precision Co. v. Koch Indus., Inc., 971 F.2d 548 

(10th Cir. 1992). We decline to decide this issue because even if a limited 

liability company may be considered an original source under the NJFC Act, 

plaintiffs are not an original source because their knowledge is not "direct" and 

"independent." 

In construing "direct" and "independent," we start with the plain language 

of the statute. See State v. Thompson, 250 N.J. 556, 572 (2022). The definition 

of "direct" includes "marked by absence of an intervening agency, 

instrumentality, or influence." Merriam-Webster's Collegiate Dictionary 353 

(11th ed. 2020). The definition of "independent" includes "not requiring or 

relying on something else." Id. at 633. Taking those definitions together, "direct 

and independent" requires that the relator's knowledge be gained from its own 

efforts and that the knowledge does not depend on public information. 

New Jersey courts have not previously defined the terms direct and 

independent, but federal courts have. The definitions used by federal courts are 

consistent with the plain language of the NJFC Act. Federal courts have held 

that for knowledge to be "direct," it must be "'obtained without any intervening 
22 A-2731-20

agency, instrumentality, or influence.'" United States ex rel. Schumann v. 

Astrazeneca Pharms., L.P., 769 F.3d 837, 845 (3d Cir. 2014) (quoting United 

States ex rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 520 (3d Cir. 

2007)) (internal quotation marks omitted). Direct knowledge must be "based on 

'first-hand' information," Zizic, 728 F.3d at 239 (quoting United States ex rel. 

Paranich v. Sorgnard, 396 F.3d 329, 336 (3d Cir. 2005)), and cannot be 

"derivative of the information of others," Paranich, 396 F.3d at 336 (quoting 

United States ex rel. Hafter v. Spectrum Emergency Care, Inc., 190 F.3d 1156, 

1162 (10th Cir. 1999)). 

 In their complaints, plaintiffs acknowledge that they learned of the alleged 

fraudulent schemes by having their agents conduct a series of interviews. 

Indeed, those interviews were conducted before plaintiffs, which are limited 

liability companies, were even formed. Therefore, plaintiffs did not have direct 

and independent knowledge of the alleged fraud. Instead, they were twice 

removed from direct knowledge. Their parent corporation used agents to 

conduct interviews, then analyzed publicly available data. After that 

information was collected indirectly, plaintiffs were then incorporated to bring 

the actions. In short, plaintiffs' knowledge was not direct and independent 
23 A-2731-20

because it came from interviews conducted by agents who, in turn, were not 

directly involved in the alleged transactions. 

Plaintiffs argue that the definition of direct and independent should not be 

narrowly construed because the goal of the NJFC Act is to root out fraud. The 

New Jersey Legislature, like Congress, however, has struck a balance. After 

there is a public disclosure of the alleged fraud, a private party's suit is not 

always necessary because the Attorney General can investigate and bring a 

direct action on behalf of the State. See N.J.S.A 2A:32C-5(a), (d). Therefore, 

applying the plain-language definition of direct and independent maintains the 

balance of rooting out fraud but also preventing parasitic private lawsuits. 

Brennan, 454 N.J. Super. at 620. 

 Having conducted a de novo review, we affirm the orders dismissing 

plaintiffs' complaints in New Jersey against Bayer and Lilly based on the public 

disclosure bar. Given that ruling, we need not reach the issues of the first-tofile rule and the sufficiency of the pleadings. 

 Affirmed.