On Aug. 7, 2014, the Eighth Circuit affirmed the dismissal of a qui tam False Claims Act suit, finding the alleged fraudulent acts alleged by the relator had already been publicly disclosed and the relator doctor was not an original source. See U.S. ex rel. Paulos v. Stryker Corp., Nos. 13–2509, 13–2647, — F.3d —- (8th Cir. Aug. 7, 2014).
Dr. Lonnie Paulos (an orthopedic surgeon and former consultant at Stryker) alleged that medical device makers Stryker Corp. and I-Flow Corp. violated the FCA by marketing their pain pumps to encourage the placement of pain pumps directly into patients’ joint spaces after orthopedic procedures, despite lack of testing and possible dangerous side effects. The District Court for the Western District of Missouri granted defendants’ motion to dismiss pursuant to 31 U.S.C. § 3730(e)(4)(A) because numerous media reports, FDA reports, and federal regulatory disclosures essentially revealed the allegations of fraudulent marketing forming the basis for Dr. Paulos’ claims and Dr. Paulos was not an “original source” of the information underlying his claims.
The Eighth Circuit first examined Paulos’ argument that the specific fraudulent acts at issue were not publicly disclosed and only appeared substantially similar to the public disclosures at the “highest level of generality.” The Circuit court found that there was no meaningful distinction between the public disclosures and Paulos’ claims and therefore concluded the district court did not err in finding a public disclosure sufficient to meet § 3730(e)(4)(A).
Having found this, the Circuit court considered whether Paulos’ claims could still survive dismissal because he was an “original source” under § 3730(e)(4)(B). Paulos based his “original source” argument on two claims: 1) that he was among the first to suspect and investigate a causal connection between pain pumps and a painful medical condition involving cartilage- loss called chondrolysis; and 2) he had independent knowledge relating to Stryker’s scienter in that he warned Stryker executives of a connection between the pain pumps and chondrolysis. The Eighth Circuit concluded that Paulos’ proposed independent knowledge could not be said to “materially add to the publicly disclosed allegations or transactions,” and he was therefore not an “original source.”
