Court Opinion

ID: 2968781
Source: CourtListenerOpinion
Date Created: 2015-09-22 07:59:59.163878+00
Date Added: 2024-06-11T15:28:56.814318
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                               No. 11-1726

UNITED STATES OF AMERICA ex rel. PAUL R. BLACK,

                 Plaintiff - Appellant,

           v.

HEALTH & HOSPITAL CORPORATION OF MARION COUNTY,

                 Defendant – Appellee,

           and

DOUGLAS L. ELWELL; MATTHEW R. GUTWEIN; MYERS AND STAUFFER
LC,

                 Defendants.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.    Richard D. Bennett, District Judge.
(1:08-cv-00390-RDB)

Argued:   May 18, 2012                       Decided:   August 17, 2012

Before AGEE, DAVIS, and THACKER, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Barry Coburn, COBURN & GREENBAUM, PLLC, Washington,
D.C., for Appellant.  Jessica Lynn Ellsworth, HOGAN LOVELLS US
LLP, Washington, D.C., for Appellee.    ON BRIEF: Jonathan L.
Diesenhaus, Thomas J. Widor, HOGAN LOVELLS US LLP, Washington,
D.C.; Joseph H. Young,      HOGAN   LOVELLS   US   LLP,   Baltimore,
Maryland, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

            Relator     Paul    R.    Black     appeals    the    district     court’s

dismissal    of   his   Amended       Complaint,      alleging       various   claims

under the False Claims Act, 31 U.S.C. §§ 3729, et seq. (the

“FCA”).     The district court held that it did not possess subject

matter    jurisdiction    over       Black’s    claims,     and   even   if    it   did

possess jurisdiction, the Amended Complaint failed to state a

claim under the Federal Rules of Civil Procedure.                        Black also

challenges the district court’s denial of his request for leave

to file a Second Amended Complaint.                 Because we agree that the

district court lacked subject matter jurisdiction pursuant to

the FCA’s public disclosure bar, 31 U.S.C. § 3730(e)(4)(A), we

affirm without reaching the alternate grounds for dismissal.                        We

also affirm the district court’s denial of Black’s request for

leave to file a Second Amended Complaint.

                                           I.

                                           A.

            On February 12, 2008, Relator Black filed this FCA qui

tam action in the United States District Court for the District

of Maryland against Appellee Health and Hospital Corporation of

Marion    County,   Indiana         (“HHC”),    a   municipal       corporation     and

political    subdivision       of    the   State    of    Indiana    that    owns   and

                                           3
operates nursing home facilities. 1       See J.A. 8-73. 2   Although the

government declined to intervene in this action, Black proceeded

individually pursuant to 31 U.S.C. § 3730(b)(4)(B).              He then

filed an Amended Complaint on August 23, 2010, which alleges a

scheme orchestrated by HHC in which Medicaid reimbursements were

fraudulently   obtained   for   nursing   home   expenditures   that    HHC

never made.    See id. at 100-57.

          Specifically,    the    Amended    Complaint   includes      four

counts:

     Count I, that HHC caused state Medicaid agencies to
     submit factually false claims to the Centers for
     Medicare and Medicaid Services (“CMS”), in violation
     of 31 U.S.C. § 3729(a)(1); 3

     Count II, that HHC caused state Medicaid agencies to
     submit legally false claims to CMS, in violation of 31
     U.S.C. § 3729(a)(1);
     1
       This is the second qui tam action Black, an attorney
licensed in Indiana, has filed against HHC. He filed the first
in the United States District Court for the Southern District of
Indiana in October 2003. After he amended his complaint once in
Indiana and the government declined to intervene, he dismissed
that action without prejudice.
     2
       Citations to the “J.A.” refer to the Joint Appendix filed
by the parties in this appeal.
     3
       The subsections under which these claims arose were re-
numbered in May 2009.      At the time that Black’s initial
Complaint was filed, § 3729(a)(1) provided that a person could
be held liable for a civil penalty and treble damages if he or
she “knowingly presents, or causes to be presented, to an
officer or employee of the United States Government or a member
of the Armed Forces of the United States a false or fraudulent
claim for payment or approval[.]”      31 U.S.C. § 3729(a)(1)
(2006), amended May 2009.

                                    4
       Count III, that HHC made and used, and caused to be
       made and used, false records and statements to get
       false or fraudulent claims paid or approved by the
       government, in violation of 31 U.S.C. § 3729(a)(2); 4
       and

       Count IV, that HHC entered into a conspiracy to
       defraud the government, in violation of 31 U.S.C. §
       3729(a)(3). 5

J.A.       153-55.   The   following       excerpt   from   Black’s   Amended

Complaint summarizes the allegations of HHC’s wrongdoing:

            Congress     has   made  federal   taxpayer   funds
       available to help states provide medical care to their
       poorest citizens. But Congress requires a basic
       commitment in return — each state must use its own
       funds to pay its fair share of those Medicaid
       expenses.     The     federal   government    reimburses
       approximately 62% of Indiana’s Medicaid expenditures.
       In order to qualify for that 62% reimbursement, the
       State of Indiana must spend the other 38% from its own
       funds on actual care for Medicaid recipients. . . .

            In 2001, HHC persuaded Indiana Medicaid officials
       to tell the federal government that Indiana was
       spending an extra $57 per day on all Medicaid patients
       living in county nursing homes.   Since 2001, HHC has
       given Indiana Medicaid officials pieces of paper
       saying that HHC had spent enough money on nursing home

       4
       Subsection (a)(2) provided that a person could                 be held
liable for a civil penalty and treble damages if he                    or she
“knowingly makes, uses, or causes to be made or used,                 a false
record or statement to get a false or fraudulent claim                paid or
approved by the Government[.]” 31 U.S.C. § 3729(a)(2)                 (2006),
amended May 2009.
       5
       Subsection (a)(3) provided that a person could be held
liable for a civil penalty and treble damages if he or she
“conspires to defraud the Government by getting a false or
fraudulent claim allowed or paid[.]” 31 U.S.C. § 3729(a)(3)
(2006), amended May 2009.

                                       5
     patients to cover Indiana’s share of that extra $57
     per patient per day on all county nursing homes in the
     state, and was doing “intergovernmental transfers” to
     the state of Indiana matching those amounts.   Indiana
     Medicaid officials then gave HHC pieces of paper
     saying that the state was returning the money to HHC.
     In fact, HHC had not spent any substantial extra money
     on the patients in its nursing homes.

          Relying on Indiana’s false claims that it had
     used state funds to pay its share of an extra $57 per
     patient per day for Medicaid patients in county
     nursing homes, the federal government reimbursed
     Indiana 62% of those claimed expenditures, amounting
     to hundreds of millions of dollars in unwarranted
     federal reimbursements since 2001.       Indiana then
     shared that extra federal money with HHC.      Neither
     Indiana nor HHC spent a substantial percentage of that
     extra federal money on patient care for nursing home
     residents, as required by law[.]

J.A. 100-101.

          On November 19, 2010, HHC filed a Motion to Dismiss,

arguing (1) the court lacked subject matter jurisdiction under

the FCA pursuant to the “public disclosure bar,” 31 U.S.C. §

3730(e)(4), and Federal Rule of Civil Procedure 12(b)(1); (2)

venue was improper in the District of Maryland, pursuant to Rule

12(b)(3); and (3) the Amended Complaint failed to state a claim

under the FCA, pursuant to Rules 12(b)(6) and 9(b).    See Mem.

Supp. Motion to Dismiss at 15, United States ex rel. Black v.

Health & Hosp. Corp., No. 1:08-cv-00390 (D. Md. Feb. 12, 2008;

filed Nov. 19, 2010), ECF No. 30-1.   Black responded on January

3, 2011, and also filed a separate “Motion to Defer Potential

Motion for Leave to Amend Until Resolution of Motion to Dismiss”

                               6
(hereinafter, “Motion to Defer”).             The motion asked the court to

“defer the period for him to move to amend until after the Court

resolves the Motion to Dismiss” and stated, “the Court will be

in a better position to evaluate any motion for leave to amend .

. . after it has decided HHC’s pending Motion to Dismiss.”                         Mem.

Supp. Motion to Defer at 2, Black, No. 1:08-cv-00390 (D. Md.

Feb. 12, 2008; filed Jan. 3, 2011), ECF No. 33-1.

              On March 28, 2011, the district court dismissed the

Amended Complaint with prejudice and denied the Motion to Defer.

See United States ex rel. Black v. Health & Hosp. Corp., No.

RDB-08-0390,        2011   WL   1161737   (J.A.   559-84)   (D.       Md.   Mar.   28,

2011) (the “District Court Opinion”).                 First, the court held

that subject matter jurisdiction was lacking under Federal Rule

of Civil Procedure 12(b)(1) based on the FCA’s jurisdictional

public disclosure bar.           Second, the court explained that even if

it possessed subject matter jurisdiction, the Amended Complaint

could also be dismissed under Rules 12(b)(6) or 9(b). 6                     See J.A.

8-24.

               On April 11, 2011, Black filed a Motion for Leave to

File       Second    Amended     Complaint,   along    with       a    Motion      for

       6
       The District Court Opinion did not address the venue
argument. Although we have doubts about the reasoning proffered
by Black on this point at the district court level, we assume
without deciding that venue was proper in the District of
Maryland.

                                          7
Reconsideration of the court’s denial of his Motion to Defer.

The court denied both on June 15, 2011.                  See J.A. 720-25.

                                            B.

                                            1.

            The     backdrop      to    Relator       Black’s        Amended    Complaint

involves the interplay between state and federal funding of the

Medicaid program.          Medicaid is a state-administered health care

program for low-income individuals, but the federal government

contributes varying costs, depending on the state.                               See Ark.

Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275

(2006); 42 U.S.C. § 1396, et seq.                    The program is regulated by

the    Secretary    of     the   United     States     Department       of     Health   and

Human Services, who acts through CMS.                   See Ahlborn, 547 U.S. at

275.

            In     order    to   receive      federal        funds    for    Medicaid,    a

state must create a “State plan.”                  42 U.S.C. § 1396a.           The State

plan is “a comprehensive written statement . . . describing the

nature    and    the     scope   of    [the       state’s]    Medicaid       program    and

giving assurance that it will be administered in conformity”

with the applicable federal laws and regulations.                            42 C.F.R. §

430.10.     CMS reviews each plan to determine whether it can be

approved     “to       serve     as     a     basis     for      Federal        financial

participation (FFP) in the State program.”                     Id.

                                              8
              Once a State plan is submitted and approved by CMS,

the state can receive federal reimbursement for “an amount equal

to the Federal medical assistance percentage . . . of the total

amount expended . . . as medical assistance under the State

plan,” 42 U.S.C. § 1396b(a)(1), also known as the “FMAP.”                              42

C.F.R.    §    400.203.         Each     state    must      provide    a    prospective

quarterly estimate of its anticipated Medicaid expenditures, and

CMS uses that number and the FMAP to calculate the federal funds

due to the state.         See id. § 430.30 (a)–(d).

              For     years,    state    governments        have   utilized     various

funding mechanisms to maximize their state Medicaid expenditures

in order to obtain an increased federal match, and three such

mechanisms      are    relevant     to    this     appeal.         First,     the   upper

payment       limit    mechanism    (“UPL”)       allows      states    to    reimburse

health care facilities for uncompensated care, but reimbursement

is limited to the amount that the Medicare program would have

paid   for     the    same     services.         See   42    C.F.R.    §     447.272(b).

Second, states can receive intergovernmental transfers (“IGTs”)

from local governments, usually in the form of taxes, which can

then qualify for federal matching funds.                      IGTs “allow units of

local government, including government health care providers, to

share in the cost of the State Medicaid program.”                          72 Fed. Reg.

                                            9
2236,    2238    (Jan.    18,    2007). 7          Finally,    states    also    utilize

certified       public   expenditures         (“CPEs”),       which    allow    Medicaid

providers to make direct Medicaid expenditures that qualify as

part of the state’s share for federal matching funds.                          CPEs must

be “certified by the contributing public agency as representing

expenditures for FFP[.]”             42 C.F.R. § 433.51(b).

            In    the    early       2000s,    the   Medicaid    funding       landscape

changed when Congress adopted a system that would set new UPLs

on overall aggregate payments to Medicaid providers by class

(e.g.,    state        government-owned,            local     government-owned,         or

private entities), rather than by provider.                          See 66 Fed. Reg.

3148 (Jan. 12, 2001); Alameda County Med. Cntr. v. Leavitt, 559

F. Supp. 2d 1, 2 (D.D.C. 2008) (explaining that CMS had “refined

a system based on [UPLs], with reimbursements calculated using

aggregate,       and     not    provider-specific,            cost     data”).          The

revisions    were      meant    to    limit    the    ability    of     the    states   to

     7
        IGTs are authorized by the Social Security Act.
Specifically, the Social Security Act provides that “the
Secretary may not restrict States’ use of funds where such funds
are derived from State or local taxes . . . transferred from or
certified by units of government within a State as the non-
Federal share of [Medicaid] expenditures . . . regardless of
whether the unit of government is also a health care
provider[.]”   42 U.S.C. § 1396b(w)(6)(A).   Indeed, Indiana law
requires that “[e]ach governmental transfer or other [Medicaid]
payment mechanism . . . must maximize the amount of federal
financial participation that the state can obtain through the
[IGT] or other payment mechanism.” Ind. Code § 12-15-14-1(c).

                                              10
manipulate UPL/IGT mechanisms in order to increase receipt of

federal matching funds.             See 67 Fed. Reg. 2602 (Jan. 18, 2002).

          However, because the UPL scheme came to be defined in

the class aggregate, rather than by Medicaid provider, it was

possible for a provider to receive an amount in excess of its

former “individual UPL,” as long as the overall “class UPL” was

not exceeded.         Because Medicaid is generally funded at a lower

rate than Medicare, states often had an excess of funds, or a

“UPL Gap,” from which to distribute monies to Medicaid providers

of their choice.          In practical terms, a state could make a

“supplement     payment”       to    any    provider       in   a    class    and    could

structure that payment so that it would be funded in part by

federal matching funds and in part by state funds.                             It could

then recoup that payment through an IGT from the same provider.

This method was permissible under the new regulations.

                                            2.

          CMS repeatedly and publicly expressed concern with the

UPL/IGT financing scheme used by the states to take advantage of

aggregate UPLs, beginning at least as early as 2000.                            In 2007,

CMS   sought     to     issue       a   new       regulation        that     would    have

significantly curtailed the states’ use of the UPL/IGT scheme by

returning to a system of reimbursement on a cost-to-provider

basis.    See    72     Fed.    Reg.       2236    (Jan.    18,     2007)    (the    “2007

                                            11
Proposed Rule”). 8      The 2007 Proposed Rule was never adopted.             In

fact, Congress enacted a one-year moratorium on the issuance of

the rule or any rule like it.         See Leavitt, 559 F. Supp. 2d at

2.

            During the time leading up to the introduction of the

2007 Proposed Rule and thereafter, however, public debate on

this issue thrived.        Congress held numerous public hearings on

the subject.      See, e.g., Upper Payment Limits: Federal Medicaid

Spending for Non-Medicaid Purposes, Hearing Before S. Comm. On

Finance,   106th   Cong.   1-2   (Sept.    6,   2000)   (statement     of   Sen.

William    V.   Roth,   Jr.,   Chairman)   (describing     the   use   of    UPL

payments as a “complicated accounting mechanism” that “tak[es]

advantage of a loophole” in the applicable federal regulations);

id. at 3 (statement of Sen. John Breaux) (“[M]y State has found

out that this procedure, in fact, is not illegal, and therefore,

is legal and has filed an application to do what, apparently, 19

other States currently are doing, and 14 states, in addition to

     8
       The “Background” section of the 2007 Proposed Rule states,
“We have found instances in which the State or local government
has used the funds returned by the health care provider for
costs outside the Medicaid program or to help draw additional
Federal dollars for other Medicaid program costs.             The
Government Accountability Office (GAO) and the Department of
Health and Human Services Office of Inspector General (OIG) have
reviewed these practices and shared our concerns that they are
not consistent with Medicaid financing requirements.”     72 Fed.
Reg. at 2238.

                                     12
mine, have applications, in fact, to do.”).                     Legislative reports

addressed the same.           See, e.g., Elicia J. Herz, Cong. Research

Serv.,         RL31021,      Medicaid         Upper      Payment        Limits      and

Intergovernmental          Transfers:          Current      Issues      and      Recent

Regulatory         and     Legislative        Action      (2005);       U.S.      Gov’t

Accountability Office, GAO-02-147, Medicaid: HCFA Reserved Its

Position and Approved Additional State Financing Schemes (2001).

               Indiana     media    outlets    also     featured     these      issues.

See, e.g., Art Lodgson, Editorial: Medicaid Patients at Risk

from State’s Budget Knife, The Indianapolis Star, Mar. 11, 2002,

at   A9       (J.A.   400-01);      Nursing     Homes,     Medicaid      Make     Deal,

Evansville Courier & Press, Mar. 12, 2002, at B3 (J.A. 403).                         In

fact,     Indiana’s        Medicaid     financing        scheme     drew       national

attention when the New York Times highlighted a dispute between

Indiana and CMS over Marion County’s IGTs.                        See Robert Pear,

U.S. Nears Clash with Governors on Medicaid Cost, N.Y. Times,

Feb. 16, 2004 (J.A. 405).

                                         C.

              In   his    Amended     Complaint,       Black    alleges    that     HHC

executives and officials at the Office of Medicaid Policy and

Planning       (“OMPP”),    the     Indiana    state     agency    responsible      for

administering the state Medicaid program, acted “in concert” to

draft     a   proposed     amendment    to    the     Indiana   State    Plan.      Am.

Compl. ¶ 51.          This amendment, Black claims, “was designed to

                                         13
appear to take advantage of the Medicaid UPL Regulation that

permits    state     Medicaid        agencies         to   claim       and   receive      .    .   .

additional      [UPL   payments],           provided          that     the   state     actually

expended    such     amounts        on    nursing       facility        care.”       Id.      ¶    52

(emphases in original).

               The   amendment       to     the       State    Plan     about     which       Black

complains was approved by CMS.                        Nonetheless, Black claims that

“under the fraudulent scheme entered into between HHC and OMPP,

no expenditures were actually made by OMPP and, ultimately, only

CMS paid any part toward the supposed supplemental UPL Medicaid

Payments.”       Am. Compl. ¶ 63.                Black says that, as part of this

“scheme,” “HHC avoided having OMPP make any actual expenditures

simply by having OMPP falsely . . . claim . . . amounts that

OMPP   ‘certified’        it    had       ‘spent,’         and/or      amounts      that      were

purportedly transferred to OMPP by means of [IGTs], which were

subsequently ‘transferred’ back from OMPP to HHC, rather than

‘spent.’”       Id. ¶ 64.

               Black also claims that HHC and OMPP entered into a

“[s]ecret”      written     agreement         in      February       2002    to   “unlawfully

obtain    FFP    for   UPL      payments[.]”               Am.    Compl.      ¶   92.          This

agreement        shows,        he        says,        that       HHC     provided          “false

certification” that its “funds” constituted “expenditures” under

the Social Security Act, but an expenditure “cannot be merely a

refund    or    reduction       in       accounts      receivable.”           Id.    ¶     98-99.

                                                 14
Black further claims that “OMPP’s use of HHC’s purported IGTs as

a basis for the UPL Medicaid payments violates OMPP’s commitment

in the State Plan that only state funds are used to pay all of

the non-federal share of the total expenditures.”                              Id. ¶ 106.

Likewise,    he    claims       that       HHC    reported      “contrived”      CPEs   in

violation of CMS’s policies set forth in the 2007 Proposed Rule.

Id. ¶ 102.

            The district court dismissed Black’s Amended Complaint

pursuant to the FCA’s jurisdictional “public disclosure bar,” 31

U.S.C. § 3730(e)(4)(A).               The purpose of the public disclosure

bar is “to prevent lawsuits by private citizens [when] th[e]

[relevant]   authority          is    already      in     a    position   to    vindicate

society’s    interests,         and    a    qui     tam       action   would    serve   no

purpose.”    Glaser v. Wound Care Consultants, Inc., 570 F.3d 907,

913 (7th Cir. 2009) (internal quotation marks omitted).                           This is

because, where a public disclosure has occurred, “the critical

elements exposing the [alleged fraud]” are already placed in the

public domain.          Id. (internal quotation marks omitted).

            At    the    time    the       Amended      Complaint      was     filed,   the

public disclosure bar provided,

          (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
     Account[ability] Office report, hearing, audit, or
     investigation, or from the news media, unless the

                                             15
     action is brought by the Attorney General or the
     person bringing the action 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.

31 U.S.C. § 3730(e)(4) (2006), amended March 23, 2010. 9

     9
         The statute was later amended to provide,

     The court shall dismiss an action or claim under this
     section,   unless  opposed  by   the  Government,   if
     substantially the same allegations or transactions as
     alleged in the action or claim were publicly disclosed
     —

            (i)   in  a   Federal   criminal,  civil,  or
            administrative    hearing    in   which   the
            Government or its agent is a party;

            (ii)    in   a    congressional,    Government
            Accountability   Office,  or   other   Federal
            report, hearing, audit, or investigation; or

            (iii) from the news media,

            unless the action is brought by the Attorney
            General or the person bringing the action is
            an original source of the information.

31 U.S.C. § 3730(e)(4). The Supreme Court has observed that the
new statute lacks the explicit language that would make it
retroactive.   See Graham Cnty. Soil & Water Conservation Dist.
v. United States ex rel. Wilson, ___ U.S. ___, 130 S. Ct. 1396,
1400 & n.1 (2010).      Even if it would apply retroactively,
however, as explained infra, Black’s claim still does not
survive under the narrower reading adopted by this court prior
to March 23, 2010.

                                 16
            In invoking the public disclosure bar to dismiss this

action, the district court found that Black’s allegations in the

Amended Complaint “largely mimic the public criticism of the

UPL/IGT Medicaid financing mechanisms that have been the subject

of great debate within CMS, Congress, the GAO, and elsewhere

since at least as early as 2000.”                   District Court Opinion 13.

It also observed that many of Black’s concerns with Indiana and

HHC’s Medicaid financing schemes “are substantially similar to

[the] 2007 Proposed Rule[.]”          Id. at 14.

                                        II.

            As   an   initial     matter,      we       are   “obliged     to   satisfy

ourselves of subject-matter jurisdiction[.]”                      United States v.

Urutyan, 564 F.3d 679, 684 (4th Cir. 2009).                       See also Wye Oak

Tech., Inc. v. Republic of Iraq, 666 F.3d 205, 218 (4th Cir.

2011)    (“[A]   federal      court   has     an    independent      obligation      to

assess    its    subject-matter       jurisdiction.”           (internal    quotation

marks omitted)).      Federal district courts are “courts of limited

subject matter jurisdiction” and “possess only the jurisdiction

authorized them by the United States Constitution and by federal

statute.”    Vuyyuru v. Jadhav, 555 F.3d 337, 347 (4th Cir. 2009).

            When a defendant challenges the existence of subject

matter jurisdiction in fact, “the plaintiff bears the burden of

proving   the    truth   of    such    facts       by    a    preponderance     of   the

                                        17
evidence.”      Vuyyuru, 555 F.3d at 347.         We review a district

court’s jurisdictional findings of fact “on any issues that are

not intertwined with the facts central to the merits of the

plaintiff’s claims” for clear error.            Id. at 348.       We review

“any legal conclusions flowing therefrom” de novo.          Id.

            Under the clearly erroneous standard of review, the

fact that this court may have decided the case differently is an

insufficient basis to overturn a finding of fact.           See Easley v.

Cromartie, 532 U.S. 234, 242 (2001).            We will only overturn a

court’s finding of fact as clearly erroneous when, “although

there is evidence to support it, the reviewing court on the

entire evidence is left with the definite and firm conviction

that   a   mistake   has   been   committed.”    United   States   v.   U.S.

Gypsum Co., 333 U.S. 364, 395 (1948).

            When reviewing a district court’s denial of a motion

for leave to amend a complaint, we employ an abuse of discretion

standard.     See Nolte v. Capital One Fin. Corp., 390 F.3d 311,

317 (4th Cir. 2004).

                                     III.

                                      A.

             In adopting the FCA, Congress intended “to protect the

funds and property of the Government from fraudulent claims[.]”

                                      18
Rainwater v. United States, 356 U.S. 590, 592 (1958).                                  This

court has explained,

       [The FCA’s] roots lie in the rampant fraud perpetrated
       by contractors against the government during the Civil
       War, and it has served ever since as a safeguard
       against unscrupulous government contractors.       The
       cornerstone provision of the FCA prohibits any person
       from presenting a false or fraudulent claim for
       payment or approval to the United States.

Mann v. Heckler & Koch Def., Inc., 630 F.3d 338, 342-43 (4th

Cir.    2010)    (internal    citations        and    quotation       marks     omitted).

See    also    United   States    ex   rel.     Owens    v.     First    Kuwaiti       Gen.

Trading & Contracting Co., 612 F.3d 724, 728 (4th Cir. 2010).

FCA actions may be brought by the Attorney General or by a

private party.          See 31 U.S.C. § 3730(a), (b).                    If a private

party, commonly known as a “relator,” brings the claim, it is

known as a “qui tam” action, and the relator acts “in the name

of the United States.”            Mann, 630 F.3d at 343.                A relator may

recover up to thirty percent of the proceeds of a successful

action,       plus   attorney’s    fees      and     costs.      See     31     U.S.C.    §

3730(d).       The relator files his or her complaint under seal and

notifies       the    government,      and     the     government        will       either

intervene or allow the relator to proceed alone.                        Id. § 3730(b),

(c).    The public disclosure bar was enacted to “strike a balance

between       encouraging    private      persons      to     root    out      fraud    and

stifling       parasitic    lawsuits[.]”        Graham        Cnty.     Soil    &      Water

                                          19
Conserv. Dist. v. United States ex rel. Wilson, ___ U.S. ___,

130 S. Ct. 1396, 1407 (2010).

                                            B.

               In an FCA action, when subject matter jurisdiction is

challenged under the public disclosure bar, a court must engage

in a three-pronged analysis to determine (1) if there was a

public disclosure, (2) if the relator’s allegations were “based

upon” the public disclosure, and, if so, (3) whether the relator

is   nonetheless         “entitled   to    original      source    status”    as       “‘an

individual         who   has   direct     and    independent      knowledge       of   the

information on which the allegations [] are based[.]’”                            United

States ex rel. Wilson v. Graham Cnty. Soil & Water Conserv.

Dist.,       528     F.3d   292,   299    (4th    Cir.   2008),    rev’d     on    other

grounds, Graham Cnty., 130 S. Ct. at 1411; Vuyyuru, 555 F.3d at

348 (quoting 31 U.S.C. § 3730(e)(4)(B) (2006)). 10

                                            1.

               First, we must determine if the district court erred

in concluding that a public disclosure occurred.                       The pre-March

2010        public    disclosure     bar    is     triggered      by   “the       public

       10
        Because the factual issues regarding the FCA’s public
disclosure bar concern issues that are not intertwined with the
facts central to Black’s FCA claims, the district court was
entitled to go beyond the allegations of the Amended Complaint
and consider evidence outside the pleadings, including Black’s
statements in his sworn declaration filed on January 3, 2011.
See Vuyyuru, 555 F.3d at 348-50; J.A. 495-501.

                                            20
disclosure of allegations or transactions in a criminal, civil,

or administrative hearing, in a congressional, administrative,

or [GAO] report, hearing, audit, or investigation, or from the

news media[.]”      31 U.S.C. § 3730(e)(4)(A) (2006); United States

ex rel. Grayson v. Advanced Mgmt. Tech., Inc., 221 F.3d 580, 582

(4th Cir. 2000).     The district court found that this requirement

was satisfied, explaining,

      CMS,   the  agency   charged  with   administering the
      Medicaid program, has publicly expressed its concern
      with the individual states’ use of UPL and IGT
      financing mechanisms to leverage Federal Match funding
      from at least as early as 2000. As a result, the CMS
      and GAO engaged in a lengthy and systematic review of
      the state Medicaid financing programs.      As part of
      this review, the CMS Administrator specifically noted
      that Indiana was among seven states that have worked
      cooperatively   with   [CMS]  either   to   remove new
      recycling features or terminate existing recycling
      provisions in the future.      While these disclosure
      [sic] did not specifically identify the Defendant HHC,
      they clearly show that the government was aware of the
      Medicaid financing schemes being utilized by the
      states in general, and Indiana in particular[.]

District    Court   Opinion    11-12    (internal   quotation        marks   and

citations omitted).

            Black   contends   that     “[t]he   district    court     did   not

attempt to parse in detail the alleged similarity between the

general observations about Medicaid reimbursement made by the

GAO   and   Congress,    as    compared     with    the     highly    specific

allegations” made in the Amended Complaint.               Br. of Appellant

16.   The district court was not required to do so.              There is no

                                       21
requirement       under     our    case      law    that       the     public          disclosure

matches    with     specificity        the    allegations           made        by    a     qui    tam

relator.      Indeed,       the    Supreme     Court       has      recognized             that    the

first prong of the public disclosure bar is satisfied if the

disclosure     “put[s]       the       Federal      Government         on        notice       of    a

potential fraud.”         Graham Cnty., 130 S. Ct. at 1404.

            Since     Graham       County,         this    court          has        held    in     an

unpublished       opinion    that      SEC    forms       were     “public           disclosures”

because, even though they “[did] not necessarily alert federal

agencies     to     wrongdoing,         [they]      certainly             provide[]          easily

accessible    notice        of    []    transactions           .   .   .    from          which     an

investigation could have begun or developed.”                              United States ex

rel. Jones v. Collegiate Funding Servs., No. 11-1103, 2012 WL

835747, at *10 (4th Cir. Mar. 14, 2012).                               Other courts have

likewise     held    that        public      disclosures           need     not        match       the

specificity of the FCA allegations.                   See, e.g., United States ex

rel. Gear v. Emergency Med. Assocs. of Ill., 436 F.3d 726, 729

(7th Cir. 2006) (citing GAO reports and medical news reports

about     improper        Medicare        billing         as       examples           of     public

disclosures, even when they did not name the FCA defendant);

United States ex rel. Gilligan v. Medtronic, Inc., 403 F.3d 386,

389 (6th Cir. 2005) (“[W]e do not require specific disclosure of

fraud to find public disclosure.”).

                                              22
            Furthermore, since at least 2000, there has been a

robust    public    discussion           about     the      propriety      of    the    UPL/IGT

mechanism.         As       the     district          court       acknowledged,         CMS,    a

government agency, publicly relayed perceived deficiencies with

the UPL/IGT mechanism throughout the country and, specifically,

in Indiana.       See District Court Opinion 11-12.                           The discussion

was   manifested        in     GAO       reports,          congressional         reports       and

hearings, and in various forms of news media.                              These items fall

directly     within     the        confines      of      the      public    disclosure         bar

statute,   and     as   a     result,      they       were       sufficient      to    “put    the

Federal    Government         on    notice       of    a     potential      fraud.”      Graham

Cnty., 130 S. Ct. at 1404.

            Therefore, the district court did not err in finding

that a public disclosure occurred.

                                              2.

            Second, we address whether the district court erred in

finding    that    Black’s         allegations        underpinning         his    FCA    claims

were “based upon” public disclosures.

            Before      the       2010    revisions         to    the   public        disclosure

bar, the “based upon” language of (e)(4)(A) was construed more

narrowly in the Fourth Circuit than in other courts.                                  In Siller

v. Becton Dickinson & Co., the court held that “a relator’s

action is ‘based upon’ a public disclosure of allegations only

where the relator has actually derived from that disclosure the

                                              23
allegations upon which his qui tam action is based.”                                21 F.3d

1339, 1348 (4th Cir. 1994) (emphasis added).                           See also United

States ex rel. Ondis v. City of Woonsocket, 587 F.3d 49, 57 (1st

Cir. 2009) (“[T]he Fourth Circuit [is] alone among the courts of

appeals       in    favoring     a    narrow     reading       of    the    ‘based    upon’

language.”).          However, in 2009, this court held that the public

disclosure bar “encompasses actions even partly based upon prior

public    disclosures.”              Vuyyuru,    555    F.3d    at    351-52       (emphasis

added).

                Black’s     Amended      Complaint      —   at      the     very    least   —

encompasses actions partly based on public disclosures.                                  The

district      court      found   that    the     Amended    Complaint        “essentially

parrot[s]”         the   concerns      outlined    in    the    2007       Proposed   Rule;

“tracks the public debate surrounding the issue”; and “borrows

heavily from CMS’ publicly disclosed concerns with the UPL/IGT

program.”          District Court Opinion 14-15.            These findings are not

clearly erroneous.

               First, the Amended Complaint reflects the core of the

2007 Proposed Rule and other public disclosures.                          For example,

          •    Black alleges that UPL payments to Indiana were
               impermissible because the state did not actually
               expend   such  amounts  of   nursing  care  under
               Medicaid. See Am. Compl. ¶ 52, 63-64. The 2007
               Proposed Rule provides similarly.    See 72 Fed.
               Reg. at 2236-40. See also J.A. 290, 292 (Office
               of   Inspector  General  Memorandum)  (explaining
               that, in conducting audits of six states, the OIG
               found “the enhanced payments to local government-

                                            24
             owned providers were not based on the actual cost
             of providing services to Medicaid beneficiaries”
             and recommending that states “must demonstrate
             that . . . payments were actually made available
             to the facilities and the facilities used the
             fund to furnish Medicaid approved services”).

         •   Black alleges that HHC’s IGTs or CPEs were
             “merely   a   refund    or  reduction   in    accounts
             receivable.”     Am. Compl. ¶ 99.          This same
             sentiment was echoed in public documents.         See,
             e.g., J.A. 291 (Office of Inspector General
             Memorandum) (“[Use of UPL Gap funds for IGTs]
             draws into question whether the amounts returned
             to   the   State   agencies   constitute    a   refund
             required      to     be     reported     as      other
             collections[.]”).

         •   Black alleges that HHC’s IGTs or CPEs were not in
             compliance with the 2007 Proposed Rule.       Am.
             Compl. ¶ 100-04 (citing 2007 Proposed Rule, 72
             Fed. Reg. 2236-01).

         •   Black alleges that the source of IGTs were not
             state and local tax revenue, as required under
             the Indiana State Plan. See Am. Compl. ¶ 106-07.
             The 2007 Proposed Rule similarly provides, “the
             State must be able to demonstrate [] [t]hat the
             source of the [IGTs] is State or local tax
             revenue[.]” 72 Fed. Reg. 2236.

Moreover, Black’s own sworn declaration undercuts his argument.

He admits that before he filed his initial complaint in this

court,   he    “reviewed   the   2007    CMS   proposal   to    adopt   new

regulations      related   to    IGTs,    CPEs,   and     UPL    financing

arrangements” and used it to “help[] [him] better articulate”

his legal theory.       J.A. 500.    For these reasons, the district

court did not clearly err in its decision on the second prong.

                                    25
                                               3.

            Finally,     Black’s         last       opportunity         to    survive       HHC’s

motion to dismiss is to prove that he is entitled to “original

source” status.         In order to achieve original source status,

Black must prove beyond a preponderance of the evidence that he

has   “direct     and   independent            knowledge    of     the       information         on

which his allegations are based and has voluntarily provided the

information to the Government[.]”                      31 U.S.C. § 3730(e)(4)(B)

(pre-March    2010).         A    relator’s         knowledge      is    “direct”         if    “he

acquired    it    through        his    own    efforts,     without          an    intervening

agency,”    and    it   is       “independent”         if   “the        knowledge         is    not

dependent    on    public        disclosure.”          Grayson,         221       F.3d    at    583

(internal quotation marks omitted).

            Black has simply not put forth the evidence necessary

to prove that he is an original source of the information in his

Amended    Complaint.            In     this    regard,       he   proffered             that   he

contacted Bob Decker, a client who “had considerable experience

with Indiana nursing homes, and is a smart man.”                                     J.A. 496.

According    to    Black,        they    discussed      the     UPL/IGT           mechanism      at

length, and Decker supplied Black with documents concerning the

Medicaid financing arrangements between HHC and Indiana.                                  Id. at

496-97.      Black says he also spoke with a woman named Faith

Laird, who said she had “recorded a statement from a nursing

home operator admitting that he had received a cash payout from

                                               26
HHC   as   a    share   of   the    extra    FFP    HHC   has    received”     and   had

“written out a ‘conspiracy chart’” related to the UPL scheme.

Id. at 498.

               Moreover,     Black’s      purported     status   as    the    “original

source” must rest on more than a guessing game.                       As explained in

Vuyyuru, a person’s “mere suspicion that there must be a false

or fraudulent claim lurking around somewhere simply does not

carry his burden of proving that he is entitled to original

source status.”         555 F.3d at 353.             Yet Black admitted in his

initial Complaint that he never had “access to all the books and

records of Defendants that may be relevant to this action” and

was therefore not “in a position to identify, in all cases, all

the   specific     documents       used    to    make   the   false    or    fraudulent

claims[.]”       Compl. ¶ 24 (J.A. 14).            Rather, he explains that, “I

knew in my gut that HHC’s UPL deal with the State was illegal.”

J.A. 498.        This is not enough.               Due to the “glaring lack of

evidence” of Black’s direct and independent knowledge, Vuyyuru,

555 F.3d at 354, we affirm the district court’s decision on the

original source issue.

               We therefore affirm the district court’s dismissal of

this claim under the public disclosure bar. 11

      11
       Because we agree with the court’s decision on the public
disclosure bar, we need not reach the alternative ground for
(Continued)
                                            27
                                        C.

               Black also asks us to reverse the district court’s

denial    of    his   request    for   leave       to   file   a    Second   Amended

Complaint.       First, he filed the Motion to Defer on January 3,

2011, and then, the Motion for Leave to File Second Amended

Complaint and Motion for Reconsideration of the court’s denial

of the Motion to Defer on April 11, 2011.                  The court denied all

three, and Black argues that the court erred in doing so.                           We

find his arguments to be without merit.

               Black admits that “[t]his issue arose in a somewhat

unusual   procedural        posture”   in    his    filing     of   the    Motion   to

Defer, but he argues that his motion “was tantamount to making a

standard request for leave to amend if the motion to dismiss was

granted.”       Br. of Appellant 21.         We disagree.           As the district

court explained, “this unusual request certainly runs afoul of

its purpose, which is to ‘provide the district court with a

means by which to determine whether the amendment would cure the

defects in the initial complaint.’”                 District Court Opinion 24

(quoting Francis       v.    Gaicomelli,     588    F.3d     186,    197   (4th   Cir.

2009)).

dismissal under Rules 12(b)(6) and 9(b).    See Schramm, Inc. v.
Shipco Transp., Inc., 364 F.3d 560, 566 n.2 (4th Cir. 2004).

                                        28
           Turning to the denial of Black’s Motion to Amend and

Motion for Reconsideration on April 11, 2011, the district court

correctly noted that these motions are essentially “moving this

Court to reconsider its dismissal of the complaint.”                           J.A. 722.

The court had already ruled that after “four[] iteration[s]” of

his   complaint,      Black      still       failed          to   provide    allegations

sufficient    to    survive      a    motion      to    dismiss,    and     that   further

amendments would be futile.             District Court Opinion 25.                 Indeed,

the   Supreme      Court   has       held   that       “repeated     failure       to   cure

deficiencies by amendments previously allowed” and “futility of

amendment”    are    acceptable        grounds         for    denying   a   request     for

leave to amend the complaint.               Foman v. Davis, 371 U.S. 178, 182

(1962).      The district court did not abuse its discretion in

denying the motions.

                                            IV.

           For      the    foregoing        reasons,          the   judgment       of   the

district court is

                                                                               AFFIRMED.

                                            29