On June 12, 2013, the First Circuit in United States ex rel. Duxbury v. Ortho Biotech Products, L.P., No. 12-2141, held that the district court properly limited discovery on the relator’s FCA claims to only those time periods and regions of the country as to which relator could be considered an “original source.”
Relator, a former employee of manufacturer Ortho Biotech Products, based his FCA claims in part on allegations that OBP delivered kickbacks to doctors in various forms to induce prescriptions of OBP’s anemia drug, Procrit. In 2007, the District of Massachusetts dismissed the kickback-related allegations for failure to plead fraud with sufficient particularity. The First Circuit reversed that decision, finding that the complaint properly set forth allegations of kickbacks that resulted in false claims by eight healthcare providers in the western U.S. between 1992 and 1998. The Court then remanded the case to the district court for consideration of discovery and statute of limitations issues.
On remand, Judge Zobel found that the temporal scope of discovery properly was limited to a roughly seven month period in late 1997 and early 1998. The district court reasoned that claims accruing prior to this time frame were barred by the FCA’s statute of limitations, and claims arising afterwards fell outside the scope of the court’s subject matter jurisdiction, because relator could not be an “original source” of claims arising after his termination. Additionally, the court limited relator’s discovery to the facts arising in the western United States because he only had “direct and independent knowledge” of OBP’s activities there. At the close of discovery, the parties stipulated that relator had not identified and did not possess any admissible evidence to support his remaining claims. OBP moved for summary judgment, which the district court granted.
Relator appealed, contending that the district court erroneously had applied the “original source” rule in determining the scope of its subject matter jurisdiction. Without reaching the merits of the district court’s subject matter jurisdiction, the First Circuit held that the limitations imposed by the district court were well within its “broad discretion in managing discovery.” Specifically, the First Circuit found the district court was not required to “expand the scope of discovery based upon the amended complaint’s bald assertions that the purported kickback scheme continued after [relator’s] termination or was ‘nationwide’ in scope.” Accordingly, the Court found that relator’s claims “evaporated” with the failure to uncover any admissible evidence to support the allegations in the complaint by the close of discovery, and upheld the grant of summary judgment for the defendant.
A copy of the First Circuit’s opinion can be found here.