United States Ex Rel. Hartpence v. Kinetic Concepts, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES EX REL. STEVEN J. No. 12-55396

HARTPENCE,

Plaintiff-Appellant, D.C. No.

2:08-cv-01885-

v. GHK-AGR

KINETIC CONCEPTS, INC.; KCI-USA,

INC.,

Defendants-Appellees.

UNITED STATES EX REL. GERALDINE No. 12-56117

GODECKE,

Plaintiff-Appellant, D.C. No.

2:08-cv-06403-

v. GHK-AGR

KINETIC CONCEPTS, INC.; KCI-USA,

INC., OPINION

Defendants-Appellees.

Appeal from the United States District Court

for the Central District of California

George H. King, Chief District Judge, Presiding

Argued and Submitted En Banc

March 17, 2015—San Francisco, California

2 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS

Filed July 7, 2015

Before: Sidney R. Thomas, Chief Judge and Stephen

Reinhardt, Alex Kozinski, Kim McLane Wardlaw, William

A. Fletcher, Ronald M. Gould, Marsha S. Berzon,

Consuelo M. Callahan, Carlos T. Bea, Sandra S. Ikuta and

N. Randy Smith, Circuit Judges.

Opinion by Judge Bea

SUMMARY*

False Claims Act

The en banc court reversed the district court’s dismissal

of consolidated civil qui tam suits brought on the

government’s behalf by Steven Hartpence and Geraldine

Godecke under the False Claims Act, alleging that plaintiffs’

former employer fraudulently claimed reimbursements from

Medicare.

The court held that there are two, and only two,

requirements in order for a whistleblower to be an “original

source” who may recover under the False Claims Act: (1)

Before filing the action, the whistleblower must voluntarily

inform the government of the facts which underlie the

allegations of the complaint; and (2) the whistleblower must

have direct and independent knowledge of the allegations

underlying the complaint. Abrogating earlier precedent,

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 3

Wang ex rel. United States v. FMC Corp., 975 F.2d 1412,

1418 (9th Cir. 1992), the court held that it does not matter

whether the whistleblower also played a role in the public

disclosure of the allegations that are part of his suit. The

court remanded for the district court to consider whether

plaintiffs qualified as original sources under the two-part test

announced in the opinion.

The court also held that the district court erred in its

application of the first-to-file bar, which provides that a

whistleblower must be the first to file an action seeking

reimbursement on behalf of the government based on the

fraudulent scheme. The panel concluded that Godecke’s

second and third claims were based on different material facts

than the claims contained in Hartpence’s earlier-filed

complaint. Thus, they were not precluded by the first-to-file

bar.

COUNSEL

Mark Irving Labaton (argued) and Oren Rosenthal, Isaacs

Friedberg & Labaton, Los Angeles, California; Michael A.

Hirst, Hirst Law Group, P.C., Davis, California; Patrick J.

O’Connell, Andrea Dawn Rose, and Jan Soifer, O’Connell &

Soifer LLP, Austin, Texas, for Plaintiffs-Appellants.

Gregory M. Luce (argued), Maya P. Florence, and Colin V.

Ram, Skadden, Arps, Slate, Meagher & Flom LLP,

Washington, D.C.; Matthew E. Sloan, Skadden, Arps, Slate,

Meagher & Flom LLP, Los Angeles, California, for

Defendants-Appellees.

4 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS

OPINION

BEA, Circuit Judge:

If a whistleblower informs the government that it has

been bilked by a provider of goods and services, and that

scheme is unmasked to the public, under what conditions can

that same whistleblower recover part of what the guilty

provider is forced to reimburse the government? We hold

today that there are two, and only two, requirements in order

for a whistleblower to be an “original source” who may

recover under the False Claims Act: (1) Before filing his

action, the whistleblower must voluntarily inform the

government of the facts which underlie the allegations of his

complaint; and (2) he must have direct and independent

knowledge of the allegations underlying his complaint.

Abrogating our earlier precedent, we conclude that it does not

matter whether he also played a role in the public disclosure

of the allegations that are part of his suit. We also hold that

the district court erred in its application of the rule that a

whistleblower must be the first to file an action seeking

reimbursement on behalf of the government based on the

fraudulent scheme.

OVERVIEW

The False Claims Act (“FCA”), 31 U.S.C. §§ 3729–3733,

prohibits knowingly submitting to the federal government a

false or fraudulent claim for payment.1 As one enforcement

1

The FCA was amended by the Patient Protection and Affordable Care

Act, Pub. L. No. 111-148, 124 Stat. 119 (2010). Although the

amendments altered the language we are called upon to interpret today,

they do not apply retroactively to actions, like these, which were pending

U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 5

mechanism, the FCA authorizes private parties, known as

“relators,” to bring civil qui tam suits on the government’s

behalf against entities who have allegedly defrauded the

government. 31 U.S.C. § 3730(b)(1). In these suits, the

relators seek reimbursement of the defrauded amounts on the

government’s behalf. Where, as here, the government

declines to intervene in the suit, the relator stands to receive

between 25% and 30% of any recovery. Id. § 3730(d)(2).

However, the FCA also includes several provisions that

deprive federal courts of subject-matter jurisdiction over

certain qui tam actions. These cases concern two such

provisions, the “public disclosure” bar and the “first-to-file”

bar. The public disclosure bar precludes qui tam suits where

there has been a public disclosure of the fraud, unless the

relator qualifies as an “original source” of the information.

Id. § 3730(e)(4). The first-to-file bar precludes civil actions

based on complaints which allege the same material facts as

an earlier-filed civil complaint. Id. § 3730(b)(5); United

States ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181,

1188–90 (9th Cir. 2001).

In these consolidated qui tam cases, Steven Hartpence and

Geraldine Godecke (“Relators”) allege their former employer

fraudulently claimed reimbursements from Medicare. After

these allegations of Medicare fraud were publicly disclosed,

Relators each informed the government of the alleged fraud

and then filed separate complaints in district court. Under the

at the time the statute was amended. Graham Cnty. Soil & Water

Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280, 283 n.1

(2010). We analyze these cases under the pre-2010 version of the FCA.

Unless otherwise specified, all references to the FCA are to the pre-2010

version.

6 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS

public disclosure bar, the district court lacked jurisdiction

over these actions unless Relators qualified as “original

sources” under the FCA. 31 U.S.C. § 3730(e)(4). Relying on

our existing precedent, the district court held that neither

Relator qualified as an original source, because neither had a

“hand in the public disclosure” of the fraud, a requirement we

announced in Wang ex rel. United States v. FMC Corp.,

975 F.2d 1412, 1418 (9th Cir. 1992). The district court

further held that Godecke’s complaint was also barred by the

first-to-file bar, because her complaint alleged the same

material elements of fraud as the complaint Hartpence had

filed six months earlier. After a careful review of the

statutory text, we overrule Wang as wrongly decided, and we

remand for the district court to consider whether Relators

qualify as original sources under the two-part test we

announce today. Second, we hold that the district court erred

in finding Godecke’s action barred by the first-to-file bar,

because some of Godecke’s claims are materially distinct

from Hartpence’s claims.

I. The FCA

The FCA authorizes whistleblowing private citizens to

file suit after discovering that the federal government has

been defrauded. Schindler Elevator Corp. v. United States ex

rel. Kirk, 131 S. Ct. 1885, 1889 (2011). As originally

enacted, the FCA allowed a relator to bring a qui tam action

even if he discovered the fraud merely by reading information

already in the public domain. See Wilson, 559 U.S. at

293–94. In 1943, Congress amended the FCA to bar such

“parasitic” lawsuits by precluding actions based on

information already in the government’s possession. Id. at

294.

U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 7

The 1943 amendments had the curious effect of barring

a plaintiff from bringing a qui tam action based on

information already in the government’s possession even

where the plaintiff himself was the source of the

government’s knowledge. See, e.g., United States ex rel. Wis.

Dept. of Health & Soc. Servs. v. Dean, 729 F.2d 1100 (7th

Cir. 1984). In 1986, Congress overhauled the FCA with a

series of key amendments. See Wilson, 559 U.S. at 294.

Among other things, Congress jettisoned the “government

knowledge” bar to suit in favor of a new condition, the

“public disclosure” bar. This was an effort to strike the

proper “balance between encouraging private persons to root

out fraud and stifling parasitic lawsuits.” Id. at 295. The

public disclosure bar deprives district courts of jurisdiction

over any action “based upon the public disclosure of

allegations or transactions” concerning the alleged fraud,

“unless . . . the person bringing the action is an original

source of the information.” 31 U.S.C. § 3730(e)(4)(A). The

FCA provides that, to be an “original source,” a relator must

(1) have “direct and independent knowledge” of information

supporting his claims, and (2) “provide[] the information to

the Government before filing an action.” Id. § 3730(e)(4)(B).

In Wang, persuaded by the Second Circuit’s interpretation

and our own review of the legislative history of the 1986

amendments, we held that a relator must meet a third

requirement to qualify as an original source: he must have

“had a hand in the public disclosure of allegations that are a

part of [his] suit.” 975 F.2d at 1418.

The 1986 amendments implemented another jurisdictional

bar, the first-to-file bar, which prohibits anyone other than the

government from intervening or bringing “a related action

based on the facts underlying [a] pending action.” 31 U.S.C.

§ 3730(b)(5). The first-to-file bar prohibits later-filed actions

8 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS

“‘based on’ the same material facts” as an earlier action.

Lujan, 243 F.3d at 1190. Unlike the public disclosure bar, the

first-to-file bar is “exception-free.” Id. at 1187.

II. The Complaints

Kinetic Concepts, Inc. and KCI USA, Inc. (collectively,

“Defendants” or “KCI”) manufacture medical devices to

speed the healing of wounds, using various technological

innovations. One such innovation is Vacuum Assisted

Closure (“V.A.C.”) Therapy. V.A.C. devices perform

negative-pressure wound therapy (“NPWT”), which promotes

healing by applying sub-atmospheric pressure to the site of a

wound. Since 2000, the Medicare program has covered

NPWT devices as “durable medical equipment.” As the

district court explained:

The coverage criteria for NPWT devices

are found in Local Coverage Determinations

(“LCDs”), which are issued by private claims

processing contractors known as Durable

Medical Equipment Medicare Administrative

Contractors (“DME MACs”). There are four

separate DME MACs that serve the United

States. Because the DME MACs are

organized regionally, each DME MAC issues

its own LCD for its respective region of the

country. In the case of NPWT, the four

regional DME MACs have issued separate,

but nearly identical, LCDs.

When a supplier of NPWT therapy, such

as KCI, submits a claim for reimbursement to

Medicare, the claim is initially reviewed by

U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 9

one of the DME MACs in a process known as

“initial determination.” If the DME MAC

concludes that a particular claim satisfies its

payment criteria, the DME MAC may

reimburse the claim. If the DME MAC denies

reimbursement of a claim the supplier may

appeal that denial through a statutorily

authorized administrative appeals process

administered by the Secretary of the U.S.

Department of Health and Human Services.

United States ex rel. Hartpence v. Kinetic Concepts, Inc., No.

CV 08-1885-GHK, 2012 WL 11977661, at *1 (C.D. Cal. Jan.

30, 2012) (citations omitted).

During the course of their employment by Defendants,

Hartpence and Godecke allegedly discovered that KCI

engaged in fraudulent conduct by submitting claims to

Medicare that did not comply with the DME MACs’ local

coverage determinations. The substance of the fraud they

claim KCI perpetrated was laid out in their respective district

court complaints. Hartpence, who served as KCI’s Senior

Vice President of Business Systems until July 2007, filed his

initial complaint in district court on March 20, 2008. As

relevant here, his operative complaint2 alleges that KCI

violated the FCA by knowingly misusing what is known as

the “KX modifier.” This is a billing code that certified

(allegedly falsely) to Medicare’s automated processing

system that KCI had “records to show that [the] V.A.C. claim

2

Relators each amended their original complaints. For purposes of

determining jurisdiction, we look to the allegations in the amended

complaints. Rockwell Int’l Corp. v. United States, 549 U.S. 457, 473–74

(2007).

10 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS

billed for met all . . . criteria, and that Medicare did not need

to look for additional data.” Hartpence alleges that KCI

improperly submitted claims with the KX modifier: (1) when

there was no wound improvement in the previous month;

(2) for the treatment of wounds for which V.A.C. therapy was

neither reasonable nor necessary; (3) when the required

wound measurement documentation was absent; (4) for

wounds that had been improving even without V.A.C.

therapy; (5) falsely claiming that there had been wound

improvement when in fact there was none; and (6) for

treatment of wounds that were too small to require V.A.C.

therapy. Moreover, Hartpence claims that KCI committed a

separate FCA violation by retaining overpayments it obtained

as a result of these schemes.

Godecke, who served as KCI’s Director of Medicare Cash

and Collections until October 2007, filed her initial complaint

on September 29, 2008, six months after Hartpence’s filing.

Her operative complaint alleges first that KCI violated the

FCA by knowingly misusing the KX modifier in submitting

claims for a full month of V.A.C. therapy, even when the

therapy that had been stopped and restarted within the same

month.3 As a separate violation, Godecke alleges that KCI

ignored the requirement to receive correct and completed

Detailed Written Orders (“DWOs”) before delivering supplies

and beginning therapy.4 Third, Godecke alleges that KCI

3

Under this practice, “KCI would bill for patients who started V.A.C.

therapy on day 1, stopped on day 3 and started again on day 28. KCI

would bill for an entire month of service and then would continue to bill

for subsequent months.”

4

Suppliers of durable medical equipment must obtain DWOs from a

patient/beneficiary’s treating physician before dispensing supplies for

which they seek reimbursement from Medicare. See CMS Manual

U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 11

improperly retained overpayments it received as a result of

these two schemes. In addition to her qui tam claims,

Godecke added a retaliation claim that is not at issue on this

appeal.

III. Procedural History

Both complaints were initially filed under seal to allow

the government time to review the complaints and decide

whether to intervene. See 31 U.S.C. § 3730(b)(2). The

complaints were unsealed after the government declined to

intervene in each case. Defendants then filed a motion to

dismiss the complaints for lack of jurisdiction under Federal

Rule of Civil Procedure 12(b)(1), asserting that (1) the

allegations of Medicare fraud had been publicly disclosed,

implicating the public disclosure jurisdictional bar, and

(2) Relators did not qualify as original sources. The district

court granted the Rule 12(b)(1) motions in each case.5 The

district court held that (1) there had been public disclosures

of KCI’s alleged V.A.C.-related Medicare fraud in the form

of a 2007 federal audit report and at least one decision by an

Administrative Law Judge (“ALJ”), and (2) Relators failed to

System, Pub. 100-08, Medicare Program Integrity Manual, Ch. 5,

§ 5.2.3.1.

5

Defendants also filed motions to dismiss the complaints for failure to

state a claim under Federal Rule of Civil Procedure 12(b)(6) in each case.

Because it granted the Rule 12(b)(1) motions, the court denied the Rule

12(b)(6) motions as moot, except as to Godecke’s retaliation claim, which

was beyond the scope of the Rule 12(b)(1) motion. United States ex rel.

Godecke v. Kinetic Concepts, Inc., No. CV 08-6403-GHK, 2012 WL

11979268, at *10–15 (C.D. Cal. Jan. 30, 2012). The district court denied

Defendants’ Rule 12(b)(6) motion on the merits as to Godecke’s

retaliation claim, and that ruling is not at issue on appeal.

12 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS

qualify as “original sources” because they had not shown that

they had a hand in those public disclosures. Hartpence, 2012

WL 11977661, at *3–8; Godecke, 2012 WL 11979268, at

*3–8. The district court further held that, even if Godecke’s

qui tam claims were not barred by the public disclosure bar,

her claims would be barred by the first-to-file bar, because

they were no more than a “slight[] . . . variation[]” on

Hartpence’s earlier-filed claims. Godecke, 2012 WL

11979268, at *9. The district court did not address the other

two elements of the original source exception (whether proper

pre-filing disclosure had been made by Hartpence and

Godecke to the federal government and whether Hartpence

and Godecke had direct and independent knowledge of KCI’s

fraud).

On appeal, Relators do not challenge the district court’s

determination that the 2007 federal audit report and at least

one ALJ decision constitute “public disclosures” under the

FCA. Rather, they contend that the district court erred when

it determined that neither Relator qualified under the original

source exception because neither had a “hand in the public

disclosure,” Wang, 975 F.2d at 1418. They argue that the

hand-in-the-public-disclosure rule is “found nowhere in the

statutory language.” Godecke further argues that her claims

are not precluded by the first-to-file bar, because they are

sufficiently distinct from the claims asserted by Hartpence.

The original three-judge panel sua sponte called for this case

to be heard en banc to review Wang’s continued validity.

U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 13

DISCUSSION

I. Jurisdiction and Standard of Review

We have jurisdiction under 28 U.S.C. § 1291. We review

de novo the district court’s interpretation of the FCA and its

decision to dismiss for lack of subject-matter jurisdiction.

Lujan, 243 F.3d at 1186. Where the district court relied on

findings of fact to draw its conclusions about subject-matter

jurisdiction, we review those factual findings for clear error.

Id.

II. Analysis

A. Original Source Exception

The public disclosure bar and original source exception

that govern these lawsuits read, in full:

(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 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

14 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS

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)(A)–(B).

We previously interpreted the requirements of the original

source exception in Wang, 975 F.2d 1412. There, we

affirmed the dismissal of a suit brought by an engineer

against his former employer under the FCA. Because the

relator’s suit was based on allegations already in the public

domain, which triggered the public disclosure bar in

31 U.S.C. § 3730(e)(4)(A), jurisdiction turned on whether the

relator was an “original source.” In Wang, we adopted a

three-part test to determine whether a plaintiff is an original

source: (1) he must have direct and independent knowledge

of the information on which his allegations are based; (2) he

must have voluntarily provided that information to the

government before filing his lawsuit; and (3) he must have

“had a hand in the public disclosure of allegations that are a

part of [his] suit.” 975 F.2d at 1417–18. Although the first

two requirements parallel the statutory language, we inferred

the third requirement from the FCA’s legislative history,

which suggested to us that the “information” referenced in the

phrase “original source of the information,” 31 U.S.C.

§ 3730(e)(4)(A), meant the information underlying the

publicly disclosed allegations that triggered the public

disclosure bar, rather than the information which underlay the

plaintiff’s complaint. Id. at 1418–20. We were also

persuaded by the Second Circuit’s similar interpretation of

the original source exception in United States ex rel. Dick v.

Long Island Lighting Co., 912 F.2d 13 (2d Cir. 1990). In

U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 15

Dick, the Second Circuit concluded that, to qualify as an

original source, a relator “must have directly or indirectly

been a source to the entity that publicly disclosed the

allegations on which a suit is based.” Id. at 16. We then

found that Wang did not qualify as an original source,

because he did not have “a hand in the public disclosure of

[the] allegations” of fraud. Wang, 975 F.2d at 1418.

Wang has been the law of this circuit for 23 years. As an

en banc court, however, we have the authority—and, indeed,

the obligation—to review whether Wang was correctly

decided. See Hart v. Massanari, 266 F.3d 1155, 1171 (9th

Cir. 2001) (“Once a panel resolves an issue in a precedential

opinion, the matter is deemed resolved, unless overruled by

the court itself sitting en banc, or by the Supreme Court.”).

We note that many of our sister circuits have declined to

adopt Wang’s third prong—the hand-in-the-public-disclosure

requirement—finding that it impermissibly grafts onto the

statute a requirement nowhere to be found in the statute’s

text. See, e.g., Minn. Ass’n of Nurse Anesthetists v. Allina

Health Sys. Corp., 276 F.3d 1032, 1048 n.11 (8th Cir. 2002)

(finding that the rule we announced in Wang “has no basis in

the statutory language and we therefore decline to adopt it”);

United States ex rel. Siller v. Becton Dickinson & Co.,

21 F.3d 1339, 1355 (4th Cir. 1994) (“Accordingly, we hold

that a qui tam plaintiff need not be a source to the entity that

publicly disclosed the allegations on which the qui tam action

is based in order to be an original source[. . . .]”). Today, we

join our sister circuits; after reviewing the statutory text, we

conclude that Wang’s hand-in-the-public-disclosure

requirement has no textual basis, and we give it a respectful

burial.

16 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS

In construing the provisions of a statute, we begin by

looking at the language of the statute to determine whether it

has a plain meaning. BedRoc Ltd. v. United States, 541 U.S.

176, 183 (2004). “The preeminent canon of statutory

interpretation requires us to presume that the legislature says

in a statute what it means and means in a statute what it says

there. Thus, our inquiry begins with the statutory text, and

ends there as well if the [statute’s] text is unambiguous.” Id.

Where the statute’s language is plain, we do not consider “the

legislative history or any other extrinsic material.” Kwai Fun

Wong v. Beebe, 732 F.3d 1030, 1042 (9th Cir. 2013) (en

banc) (internal quotation marks omitted).

On its face, the original source exception has two, and

only two, requirements. An original source is “an individual

who [1] has direct and independent knowledge of the

information on which the allegations are based and [2] has

voluntarily provided the information to the Government

before filing an action . . . based on the information.”

31 U.S.C. § 3730(e)(4)(B). As Appellee’s counsel

forthrightly admitted at oral argument, this text contains no

requirement that the relator have had a hand in the public

disclosure of the fraud. Nor do we detect any ambiguity

about the existence of such a requirement that might prompt

us to examine extrinsic material. See Kwai Fun Wong,

732 F.3d at 1042. Thus, we hold that where an FCA claim

has been publicly disclosed before a relator filed his

complaint, the relator may bring a qui tam suit if he can show

that (1) he has direct and independent knowledge of the

information on which the allegations in his court-filed

complaint are based and (2) he has voluntarily provided the

information to the Government before filing his civil action.

31 U.S.C. § 3730(e)(4)(B). He need not have played any role

in making the disclosure public.

U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 17

The Supreme Court’s decision in Rockwell International

Corp. v. United States lends further support to our

interpretation.6 In Rockwell, the Court asked: “[D]oes the

phrase ‘information on which the allegations are based’ [in

31 U.S.C. § 3730(e)(4)(B)] refer to the information on which

the relator’s allegations are based or the information on

which the publicly disclosed allegations that triggered the

public-disclosure bar are based?” Rockwell, 549 U.S. at 470.

The Court concluded that “the ‘information’ to which

subparagraph (B) speaks is the information upon which the

relators’ allegations are based. . . . Surely the information one

would expect a relator to ‘provide to the Government before

filing an action . . . based on the information’ is the

information underlying the relator’s claims.” Id. at 470–71.

This excerpt from Rockwell stands in serious tension with

the hand-in-the-public disclosure requirement this court

adopted in Wang. In Wang, we surmised that the term

“information” in 31 U.S.C. § 3730(e)(4)(A) refers to the

information underlying the publicly disclosed allegations, not

the information underlying the relator’s complaint. 975 F.2d

at 1418–20. Given the Supreme Court’s teaching in Rockwell

that “information” in 31 U.S.C. § 3730(e)(4)(B) refers to the

6

Relators argue at length that Rockwell abrogated Wang. Other courts

have concluded that Rockwell demands relators to meet two, and only two,

requirements to qualify as original sources. See, e.g., United States ex rel.

Davis v. District of Columbia, 679 F.3d 832 (D.C. Cir. 2012); United

States v. Huron Consulting Grp., 843 F. Supp. 2d 464 (S.D.N.Y. 2012),

aff’d, 567 F. App’x 44 (2d Cir. 2014) (unpublished). We continued to

treat Wang as the law of this circuit even after Rockwell. See United

States ex rel. Meyer v. Horizon Health Corp., 565 F.3d 1195, 1202 (9th

Cir. 2009). We need not decide today whether Rockwell abrogated Wang,

because we overrule Wang as wrongly decided. We also overrule Meyer

to the extent that it reaffirmed the test we announced in Wang.

18 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS

information underlying the relator’s complaint, Wang’s

premise is viable only if the same word, “information,”

means something different in the two subsections. We

decline to countenance an interpretation of a single word so

divorced from its statutory surroundings. See

Montero-Martinez v. Ashcroft, 277 F.3d 1137, 1142 (9th Cir.

2002) (noting that, where Congress uses the same word

multiple times in the same statute, we presume it has “the

same meaning each time Congress uses it”). We also note

that Rockwell strongly favors an interpretation that imports

the same meaning to the word “information” in both

subsections. See Rockwell, 549 U.S. at 472 (suggesting that

the word “information” in 31 U.S.C. § 3730(e)(4)(A) and

31 U.S.C. § 3730(e)(4)(B) are “one and the same, viz.,

information underlying the allegations of the relator’s

action”). And, Rockwell makes clear that Congress did not

intend “to link original-source status to information

underlying the public disclosure.” Id.

We pause to address Appellee’s argument that our

interpretation is inconsistent with an overarching goal of the

False Claims Act—to encourage private citizens to uncover

fraud, not simply to report it. See, e.g., Wilson, 559 U.S. at

295. But the FCA also aims to incentivize persons with first-

hand knowledge of fraud to report it to the government and to

prosecute cases against the offending entities, in a sense

acting as private Attorneys General. We think it entirely

reasonable that Congress sought to reward those who assume

responsibility for prosecuting, on the government’s behalf,

fraud claims about which they have direct and independent

knowledge, even if they were not in the chain that caused the

public disclosure of the fraud. Yet even if we thought that

Congress struck the wrong balance, whom to reward and

what actions to incentivize are considerations for Congress,

U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 19

when enacting the Act, not for the judiciary. Indeed, if

Congress’s plain words like those contained in 31 U.S.C.

§ 3730(e)(4) are to have any effect at all, they surely cannot

give way to whatever broad goals we, as the judiciary, might

prefer.

We conclude that Wang impermissibly drew on language

from 31 U.S.C. § 3730(e)(4)(A) to read a nonexistent, extra-

textual third requirement into § 3730(e)(4)(B). We overrule

it as wrongly decided. In this case, the district court

concluded that neither Relator qualified as an “original

source” on the sole basis of the hand-in-the-public-disclosure

requirement that we now repudiate. The district court did not

consider whether Relators met the first (and now the only)

two requirements of the original source test: that they have

direct and independent knowledge of the information on

which their allegations are based and that they voluntarily

provide that information to the Government before filing suit.

We remand so that the district court may make this

determination in the first instance.

B. First-to-File Bar

The district court concluded that, even if Relators

qualified as original sources, Godecke’s claims would be

precluded by the first-to-file bar. Godecke, 2012 WL

11979268, at *9. Because this is a legal determination that

did not rest on factual findings, we review de novo. See

Campbell v. Redding Med. Ctr., 421 F.3d 817, 820 (9th Cir.

2005).

On appeal, Godecke does not contest the district court’s

conclusion that her first qui tam claim is precluded by the

first-to-file bar; it overlaps with Hartpence’s claims, which all

20 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS

relate to misuse of the KX modifier. Godecke points out,

however, that her second and third claims relate to violations

of a different Medicare program requirement—the

requirement that a supplier receive Detailed Written Orders

before delivering a V.A.C. pressure wound pump. Godecke

argues that she is the first to file on the claims addressing the

lack of DWOs and the resulting receipt of improper

overpayments. We agree.

The first-to-file bar provides: “When a person brings an

action under this subsection, no person other than the

Government may intervene or bring a related action based on

the facts underlying the pending action.” 31 U.S.C.

§ 3730(b)(5). We treat the first-to-file bar as jurisdictional.

Lujan, 243 F.3d at 1186–87. We have clarified that the facts

underlying the later-filed complaint need not be “identical” to

those underlying the earlier-filed complaint for the later

complaint to be barred. Id. at 1183. We reasoned:

Limiting § 3730(b)(5) to only bar actions with

identical facts would be contrary to the plain

language and legislative intent: (1) using a

narrow jurisdictional bar, such as an identical

facts test, would decrease incentives to

promptly bring qui tam actions; (2) multiple

relators would expect a recovery for the same

conduct, thereby decreasing the total amount

each relator would potentially receive and

incentives to bring the suit; and (3) a narrow

identical facts bar would encourage piggyback

claims, which would have no additional

benefit for the government . . .

U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 21

Id. at 1189. We reiterated that the first-to-file bar, enacted as

part of the 1986 amendments, has two purposes: “to promote

incentives for whistle-blowing insiders and prevent

opportunistic successive plaintiffs.” Id. at 1187.

Lujan has been our principal opportunity to explore the

contours of the first-to-file bar. In Lujan, relators William

Schumer and Linda Lujan filed separate qui tam actions

against Hughes Aircraft alleging fraudulent use of

“commonality agreements.” Id. at 1183.7 Hughes used these

agreements to allocate costs among four defense contracts.

Id. at 1185–86. The contracts included the “B2 contract,”

which involved the development of an airplane radar system.

Id. at 1185. Schumer’s complaint alleged that Hughes used

the commonality agreements “to misbid, misallocate, and

mischarge costs among the four contracts.” Id. at 1886.

Schumer claimed, for example, “that Hughes charged the

development of a radar signal processor to the F15 contract

but then also charged these development costs to the F14,

F18, and B2 contracts.” Id. Lujan alleged that “Hughes

routinely mischarged costs associated with the design and

development of various B2 radar system contracts.” Id.

Thus, Lujan’s claims related to misconduct within the B2

radar contracts, rather than across all four defense contracts.

Id. We held that the district court did not err when it

determined that Lujan’s and Schumer’s claims were based on

the same material facts. Id. at 1190; see also Hughes

Aircraft, 162 F.3d at 1033 (“The Schumer and Lujan

allegations both involve cost-sharing transactions among and

7

These are contracts that “permit each program using a common

component to share in some portion of its development and production

costs.” United States ex rel. Lujan v. Hughes Aircraft Co., 162 F.3d 1027,

1032 (9th Cir. 1998).

22 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS

within the radar system programs on four aircraft. The two

claims involve the same . . . agreements and the same radar

program contracts.”).

Relying on Lujan, the district court concluded that

Godecke’s and Hartpence’s complaints involved the same

“material elements.” Godecke, 2012 WL 11979268, at *8.

It noted that the complaints named the same defendants, arose

out of the same time period, involved KCI’s billing practices

for the same therapy device, alleged incorrect use of the same

billing codes (the KX modifier), shared “100 nearly identical

paragraphs,” and were drafted by the same counsel. Id. The

district court reasoned that “the two qui tam actions alleged

. . . slightly different variations of false billing for claims

submitted for VAC Therapy devices.” Id. at *9. Thus, it

concluded, “Godecke’s later-filed action provided the

Government no additional benefit.” Id.

We disagree with both the premise and the conclusion.

First, we think that Godecke’s complaint is more than a slight

variation on Hartpence’s complaint. Godecke’s second claim

involves different underlying facts. Whereas Hartpence’s

claims all allege knowing misuse of the KX modifier,

Godecke’s second claim is based on facts which show KCI’s

violation of a different Medicare program requirement—the

requirement that a provider receive Detailed Written Orders

for the V.A.C. device before beginning to treat patients with

the device. While Lujan declined to distinguish between

claims that a defense contractor had improperly allocated

funds among four government contracts, on the one hand, and

within one of those contracts on the other—noting that both

claims centered on the same commonality agreements—here

the claims are based on different material facts. The rules

governing use of KX modifiers and DWOs were disseminated

U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS 23

at different times, in different publications, and are plainly

treated as separate regulations under the program.

We further disagree that Godecke’s action provided no

additional benefit to the government. Unaided by Godecke’s

complaint, the government may have never discovered that

KCI, in addition allegedly to misusing the KX coding system,

was allegedly submitting V.A.C. claims before receiving

DWOs. The two alleged frauds are materially different: the

KX fraud allegations are based on government payment for

devices which were used, but unnecessary for treatment,

while the DWOs fraud allegations are based on the

government paying for devices that were never used at all.

The alleged frauds, in short, exist completely independent of

one another. Nor can we agree that dismissal of Godecke’s

claims would, as the district court found, necessarily serve the

dual purposes of the first-to-file bar: “to promote incentives

for whistle-blowing insiders and prevent opportunistic

successive plaintiffs.” Lujan, 243 F.3d at 1187. First,

although it is true that increasing the class of potential qui

tam claimants reduces the potential incentive for any

individual plaintiff to bring suit, see id. at 1189, allowing

claims for related but distinct fraud claims encourages

broader investigation and increases the total potential for

recovery. Second, dismissal of Godecke’s claim does not

serve to discourage opportunistic “piggyback claims, which

would have no additional benefit for the government.” Id.

Godecke provided information about a different form of

fraud, and without that information the government might not

have investigated beyond KCI’s fraudulent coding practices.

We conclude that Godecke’s second and third claims are

based on different material facts than the claims contained in

Hartpence’s earlier-filed complaint. Thus, they are not

24 U.S. EX REL. HARTPENCE V. KINETIC CONCEPTS

precluded by the first-to-file bar. The district court erred in

holding otherwise.8

CONCLUSION

For the foregoing reasons, we overrule Wang’s addition

of a hand-in-the-public-disclosure requirement to the original

source exception, because the requirement has no basis in the

statutory text. We also find that the district court erred in

holding that the second and third counts in Godecke’s

complaint were barred by the first-to-file bar. We

REVERSE the decision of the district court and REMAND

for further proceedings consistent with this opinion.

8

Nor are we persuaded that the degree of consistency between the two

complaints compels the conclusion that they allege the same material

facts. For example, that the complaints name the same defendants and

were drafted by the same counsel says little about whether the facts

underlying their fraud claims overlap.