JERRY E. SMITH, Circuit Judge:
The public disclosure bar of the False Claims Act ("FCA") deprives the district court of jurisdiction whenever qui tam relators bring a suit based on publically available information. The district court held that it lacked jurisdiction. Because the relator's action included no allegations specific to the defendants, but merely repeated a general description of fraud easily available in several government documents, we affirm.
Thomas Jamison operates a Durable Medical Equipment ("DME" or "DMEPOS") business that provides enteral nutrition products to nursing homes. Under Medicare Part B, such suppliers can obtain a supplier number that allows them to
Shortly thereafter, Jamison consulted government reports indicating that Beverly's scheme might be fraudulent. Specifically, he read the 2003 Special Advisory Bulletin, regarding "Contractual Joint Ventures," from the Health and Human Services Office of the Inspector General ("OIG"). That report provided an example of a fraudulent arrangement:
Under such an arrangement, the DME supplier allows the nursing home to keep a portion of the reimbursement from Medicare in return for a guarantee that the nursing home will buy all of its DME from that supplier. With a guaranteed customer, the supplier can charge more for its products, and Medicare will pay the extra cost. At the same time, the nursing home gets less expensive DME. Nonetheless, the arrangement is fraudulent, because the nursing home represents itself as a DME supplier but has merely created a shell company that in fact plays no part in the delivery of DME and that consequently cannot comply with the standards for DME suppliers. See 42 C.F.R. § 424.57(c).
In December 2004, Jamison filed a qui tam complaint under the FCA against McKesson and Beverly, alleging that they participated in such a fraudulent scheme.
While waiting for the government's decision on intervention, Jamison focused his continued investigations on Beverly and McKesson. He summarized his findings in a letter from his lawyer to the Department of Justice ("DoJ") in November 2005 indicating that Jamison had traveled to Beverly's headquarters and discovered that no entity named "Ceres" had a physical office there. He described further conversations with Beverly's employees through which he learned that McKesson "handles everything" for Beverly and that McKesson, not Ceres, received Beverly's DME orders, delivered the DME, and submitted the claims for reimbursement to Medicare using Ceres's supplier number.
In June 2006, Jamison filed his First Amended Complaint, which contained the same theories of fraud but included specific allegations against Beverly and McKesson.
"`[A] challenge under the FCA jurisdictional bar is necessarily intertwined with the merits' and is, therefore, properly treated as a motion for summary judgment." United States ex rel. Reagan v. E. Tex. Med. Ctr. Reg'l Healthcare Sys., 384 F.3d 168, 173 (5th Cir.2004) (citation omitted). We review a summary judgment de novo, applying the same standard as the district court. Id. Summary judgment will be granted if, viewing the evidence in the light most favorable to the non-moving party, there is no genuine dispute at to any material fact and the movant is entitled to judgment as a matter of law. Id. See FED.R.CIV.P. 56(a).
Before the 2010 amendments, the public disclosure provisions of the FCA provided that
31 U.S.C. § 3730(e)(4) (2006). We have distilled those provisions into a three-part test, asking "1) whether there has been a `public disclosure' of allegations or transactions, 2) whether the qui tam action is `based upon' such publicly disclosed allegations, and 3) if so, whether the relator is the `original source' of the information." Fed. Recovery Servs., Inc. v. United States, 72 F.3d 447, 450 (5th Cir.1995).
We need not follow the three steps rigidly, however. See, e.g., United States ex rel. Fried v. W. Indep. Sch. Dist., 527 F.3d 439, 442 (5th Cir.2008) (combining the first two steps). Indeed, combining the first two steps can be useful, because it allows the scope of the relator's action in step two to define the "allegations or transactions" that must be publicly disclosed in step one. That is, for the public-disclosure bar to apply, the publicly disclosed allegations or transactions need only be as broad and as detailed as those in the relator's complaint, because that is all that is needed for the action to be "based on" the publically disclosed allegations.
Consequently, we ask first whether Jamison's action was based upon public disclosures of allegations or transactions. Before we undertake that inquiry, however, there are two preliminary issues.
The first relates to the burden of proof. Typically, the party seeking to invoke federal jurisdiction bears the burden of demonstrating that jurisdiction is proper. Santos v. Reno, 228 F.3d 591, 594 (5th Cir.2000). In regard to the first two steps of the public disclosure bar under the FCA, however, that rule would require the relator to prove a negative: that there are no public disclosures of allegations or transactions upon which his action is based. We do not construe our precedent to require such an impossibility. Nonetheless, once the opposing party has identified public documents that could plausibly contain allegations or transactions upon which the relator's action is based, the relator bears the burden of demonstrating that they do not.
In the context of this summary judgment motion, that rule means that the defendants must first point to documents plausibly containing allegations or transactions on which Jamison's complaint is based. Then, to survive summary judgment, Jamison must produce evidence sufficient to show that there is a genuine issue of material fact as to whether his action was based on those public disclosures.
Second, before defining the scope of Jamison's action, we must decide which of his complaints is relevant to that issue. He contends that we should look to his first amended complaint, the last complaint before the government's intervention, as the most complete picture of his allegations. For support, he relies on Rockwell International Corp. v. United States, 549 U.S. 457,
"[T]he term `allegations' is not limited to the allegations of the original complaint." Id. at 473, 127 S.Ct. 1397 (emphasis added). The Court did not hold, however, that the original complaint is irrelevant to jurisdiction or that a relator need not establish jurisdiction from the moment he first files his action. Indeed, Rockwell did not speak to the question whether a relator can use an amended complaint to establish jurisdiction when the original complaint is lacking. Consequently, we fall back on the longstanding rule that the amendment process cannot "be used to create jurisdiction retroactively where it did not previously exist."
We thus look to Jamison's original complaint to define the scope of his action and to determine whether it was based on public disclosures of allegations or transactions. That complaint described various fraudulent schemes only generally. For example, it alleged that "Defendants have entered into illegal joint ventures in order to obtain referrals and increase the amount of money paid to Defendants through Medicare Part B. Defendants are engaged in a variety of such illegal joint ventures, and they are created through a number of schemes." The complaint then described several possible schemes, but without alleging which defendants engaged in which schemes or what particular actions were fraudulent. At no point did the complaint include particular allegations against any defendant. Instead, it merely listed almost 450 nursing homes, DME suppliers, and their owners or employees, and it indicated generally that they participated in some of the schemes Jamison described.
Accordingly, we ask whether the "action" described in the complaint—general allegations of fraud combined with an undifferentiated list of defendants is "based upon" allegations or transactions in publically disclosed documents. The defendants point to ten documents that they say publicly disclosed Jamison's allegations.
The only public disclosure that names any of the defendants is the National Supplier Clearinghouse DME Supplier Directory, which is merely a list of companies with a DME supplier number and which includes an entry for CSMS. It does not indicate that any of the listed companies engaged in fraud.
Nonetheless, the public disclosures need not name particular defendants so long as they "alerted the government to the industry-wide nature of the fraud and enabled the government to readily identify wrongdoers through an investigation." In re Natural Gas Royalties, 562 F.3d 1032, 1039 (10th Cir.2009). For example, in Natural Gas Royalties, a Senate report indicated that drillers on federal lands were improperly measuring the extracted gas. The disclosures "named a significant percentage of industry participants as wrongdoers and indicated that others in the industry were very likely engaged in the same practices." Id. at 1042. Although the reports had not named all the defendants, they made it easy for the government to examine its royalty contracts to discover which drillers were using fraudulent measurement techniques. "[T]he public disclosures provided specific details about the fraudulent scheme and the types of actors involved in it" sufficient to "set the government on the trail of the fraud" and ensure that the government will not "need to comb through myriad transactions performed by various types of entities in search of potential fraud." Id. at 1042-43.
The decision in Cooper v. Blue Cross & Blue Shield of Florida, Inc., 19 F.3d 562 (11th Cir.1994), however, cautions against applying the reasoning behind Natural Gas Royalties too broadly. In Cooper,
Id. at 566 (citations omitted).
By applying Cooper's guidance, we see that the defendants' documents, considered alone, likely are not sufficient publically to disclose allegations specific to Beverly and McKesson. The DME Medicare supplier industry
One of the documents, the 1996 OIG report on Enteral Nutrient Payments in Nursing Homes, zeros in on a somewhat smaller industry—enteral nutrient providers—by indicating that most nursing homes pay too much for enteral nutrition. That report does not identify fraud as a possible cause of the high prices, however, so there is no reason to assume that the joint-venture schemes identified in the other reports are any more common among suppliers of enteral nutrients. It thus would have been exceedingly difficult for the government to identify, from the public disclosures, which particular suppliers or nursing homes were committing fraud.
As indicated above, however, we are not examining the public disclosures in the abstract but rather are comparing them to the allegations in Jamison's original complaint. As we have said, that complaint
There is one piece of information that the original complaint provides that cannot be found in the public disclosures: the identification of the defendants. Because the original complaint names almost 450 defendants, however, even that identification may have failed to provide any new information. Rather than gathering evidence and zeroing in on particular perpetrators, Jamison appears merely to have listed a large cross-section of possible defendants.
The arbitrariness of Jamison's selection of defendants is indicated by the fruits of his suit. After a lengthy investigation, the government chose to intervene against only the seven defendants named in this appeal, out of the almost 450 defendants. The cases against the others presumably lacked merit, which would be consistent with the inference that Jamison selected them arbitrarily.
Jamison points to no evidence that would cause us to question that conclusion. At his deposition, his attorney repeatedly objected whenever Jamison was asked to explain how he chose the defendants, on the ground that the qui tam complaint was sealed to protect the identity of the other defendants. We thus have no evidence about how Jamison made the selection.
Consequently, we move to step three, under which the district court had jurisdiction over the action only if Jamison was "an original source of the information" supporting his allegations. 31 U.S.C. § 3730(e)(4)(A) (2006).
In light of our observation that Jamison's complaint merely listed a large group of possible defendants, without identifying specific allegations about any particular one, it is obvious that he was not a "direct" or "independent" source of any of the "information on which the allegations are based." Indeed, "the information on which the allegations are based" includes merely the general description of the fraud and an arbitrary list of many of the DME suppliers and nursing home operators in Mississippi. Consequently, Jamison is not at original source of the allegations in his complaint.
In sum, the FCA public disclosure bar applies, and the district court lacked jurisdiction. The judgment of dismissal is AFFIRMED.
Those statements are too vague and general, however, to provide useful information about how Jamison identified the defendants.
Jamison also knew that before filing his complaint, Beverly had a subsidiary with its own DME supplier number. After identifying Beverly as a possible defendant, however, that information was easily available from public sources. In any event, although a nursing home possessing a DME supplier number is a possible indicator of fraud, that is by no means conclusive. Jamison's identification of Beverly's DME supplier subsidiary thus is not sufficient to show that his investigation usefully identified perpetrators of joint-venture fraud.