1st Circuit Rules Relator’s Discovery Initially May be Limited to Particularized Allegations


In U.S. ex rel. Duxbury v. Ortho Biotech Products, 719 F.3d 31 (1st Cir. 2013),  the Court of Appeals for the First Circuit affirmed the district court’s decision to deny relator’s requests for discovery of defendant’s practices throughout the nation and over a seven year period when relator had failed during prior discovery to uncover any evidence of the misconduct that she alleged with particularity in the complaint – – misconduct that involved only the Western region of the United States and a two year period.

Allegations and Procedural History

Relator Mark Duxbury, who was employed as an oncology sales representative by Ortho Biotech between 1992 and 1998, alleged in his 2003 qui tam action that the defendant, among other things, had paid kickbacks throughout the United States in connection with the marketing of its anemia drug Procrit from 1992 through the filing of the complaint. Based on knowledge and information he obtained when working for the defendant in 1997 and 1998, he alleged examples of eight, institutional health care providers located in the Western United States who allegedly submitted claims that were false because they were tainted by kickbacks. The United States declined to intervene in 2005.

The district court dismissed the foregoing claims under Fed. R. Civ. Pr. Rule 9(b) and, in the alternative, dismissed all claims except for the specific allegations regarding the Western institutional providers pursuant to the “public disclosure bar.” The Court of Appeals reversed, ruling that the relator’s claims concerning the Western providers met the requirements of Rule 9(b) and could proceed into litigation.

On remand, Duxbury’s spouse, who was substituted as the relator following Duxbury’s death, sought discovery concerning the defendant’s nationwide practices with regard to kickbacks paid to promote Procrit; she also sought discovery during the period between 1997 and 2003, i.e., concerning the five years after her husband had left the company.  The district court permitted discovery only concerning the defendant’s practices during 1997 and 1998 and only with regard to the specific Western institutional providers identified in the complaint.  After this discovery, the relator stipulated that she failed to uncover any evidence of kickback activity and the district court denied further discovery and dismissed relator’s claims on summary judgment.

Court’s Ruling

Applying the “abuse of discretion” standard to the lower court’s ruling on discovery, the Court of Appeals held that “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 Duxbury’s termination or that it was ‘nationwide in scope.’”  719 F.3d at 39.  The court held that the district court’s decision to limit discovery to those allegations pled with particularity was consistent with the court’s “considerable latitude” in assessing the proper limits to discovery.  Id. Key to the Court of Appeal’s decision was the fact that the relator admitted that her discovery efforts had uncovered neither evidence supporting the allegations she pled with particularity nor evidence of nationwide misconduct.   Id.