UNITED STATES OF AMERICA, ex rel. JEFFREY D. FELDSTEIN, M.D v. Organon, Inc.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 09-2341
_____________
UNITED STATES OF AMERICA, ex rel.
JEFFREY D. FELDSTEIN, M.D.,
v.
ORGANON, INC.; a corporation, and
SCHERING-PLOUGH, INC.; a corporation
Jeffrey D. Feldstein,
Appellant
On Appeal from the United States District Court
for the District of New Jersey
District Court No. 2-07-cv-02690
District Judge: The Honorable Dennis M. Cavanaugh
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
January 15, 2010
Before: SCIRICA, Chief Judge, SMITH, and COWEN, Circuit Judges
(Filed: February 2, 2010 )
OPINION

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Schering-Plough acquired Organon in 2007, which was several years after the1
fraud described in Feldstein’s complaint allegedly took place. According to Feldstein,
Schering-Plough succeeded to Organon’s liabilities and is jointly and severally liable with
Organon under the FCA.
2
SMITH, Circuit Judge.
Jeffrey D. Feldstein, M.D., brought this qui tam action under the False Claims Act
(“FCA”), 31 U.S.C. §§ 3729 et seq., against appellees Organon and Schering Plough,
claiming that Organon’s failure to disclose the harmful side effects of the pharmaceutical
drug Raplon resulted in the submission of false claims to Medicare and Medicaid. The1
District Court dismissed Feldstein’s complaint for lack of jurisdiction, and, in the
alternative, for failure to comply with the heightened pleading requirements of Rule 9(b)
of the Federal Rules of Civil Procedure. We will affirm.
I.
Because we write only for the parties, who are familiar with the record, we recount
only those facts which are essential to our decision. Organon developed, manufactured,
and sold Raplon, which was approved by the FDA on August 18, 1999. Raplon was a
neuromuscular blocking agent used during surgery and other medical procedures. After
Raplon entered the market, there were reports of episodes of an adverse side effect known
as bronchospasm, and in some cases a severe form of bronchospasm known as “cement
lung,” in patients who were treated with the drug. These conditions made breathing
difficult and led to severe injuries in certain patients, and in some cases, death. These
harmful side effects also spawned lawsuits against Organon, several of which alleged that

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Organon fraudulently concealed safety information about Raplon’s potential to cause
bronchospasm and cement lung, both before and after the FDA approved the drug.
Organon voluntarily withdrew Raplon from the market in March of 2001.
In May of 2000, Organon hired Feldstein to serve as its Associate Director of
Medical Services for Antithrombotics. His duties included assisting with the launch of
the anticoagulant drug Arixtra. A disagreement soon arose between Feldstein and his
superiors. Feldstein complained that Organon personnel were concealing instances of
bleeding associated with Arixtra, and that his supervisor, Dr. Jonathan Deutsch, attempted
to coerce Feldstein into disseminating false information about such bleeding. Organon
fired Feldstein in May of 2001.
During his tenure at Organon, Feldstein did not work on Raplon, nor was he
involved in obtaining FDA approval for the drug. He makes no claim that he was part of,
or personally observed, any fraud related to Raplon. Before he left Organon, however,
Feldstein voiced his concerns about Deutsch and Arixtra to Dr. Daniel Sack, Organon’s
Associate Director of Anesthesiology. Sack informed Feldstein that Raplon, with which
Deutsch was also involved, had caused multiple deaths since its approval. Sack then
showed Feldstein an email concerning Raplon that he had discovered on his laptop
computer. The email was written by Deutsch and sent to Dr. Deborah Shapse, Organon’s
Vice President of Medical Services. It predated Raplon’s FDA approval. In the email,
Deutsch described bronchospasm as “a potential problem that needed to be addressed
prior to launch” and stated that “Michael may be correct in not wanting to draw attention

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to bronchospasm.” Feldstein claims that “Michael” was Michael Novinsky, Organon’s
Vice President of Marketing. He describes this email as a “smoking gun” because he
claims that it proves that Organon knew of the respiratory dangers posed by Raplon
before it was approved, but failed to disclose those dangers to the FDA and otherwise
attempted to withhold safety information about Raplon from the medical community.
Later, Feldstein reviewed Organon’s submissions to the FDA concerning Raplon
and concluded that Organon had inadequately disclosed Raplon’s risk of serious adverse
events (SAEs). He also spoke with Robert Plona, Organon’s former Brand Manager for
Anesthetics. Plona had been involved with Raplon marketing efforts, and he supplied
Feldstein with more details about events referenced in the “smoking gun” email.
Feldstein’s conversation with Plona reinforced his belief that the email from Sack to
Shapse was evidence of fraud.
In April of 2002, Feldstein filed a qui tam complaint against Organon pursuant to
the FCA. After the government declined to intervene in June of 2006, see 31 U.S.C. §
3730(b)(4)(B), Feldstein filed an amended, one-count complaint in the United States
District Court for the District of New Jersey on April 14, 2008. The complaint alleged
that Organon concealed the respiratory dangers of Raplon and contended that Raplon’s
regulatory approval was “invalid” because it was obtained through fraud on the FDA.
The consequence of this fraud, Feldstein alleged, was that hospitals, physicians and
patients submitted “false claims” to Medicare and Medicaid, because those programs
“would not have reimbursed . . . for the use of Raplon had [they] known that the FDA

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The same standard applies to the District Court’s dismissal for failure to comply2
with Rule 9(b), see In re Westinghouse Securities Litigation, 90 F.3d 696, 706 (3d Cir.
1996), but as we explain, we need not reach the District Court’s dismissal on that ground.
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approved Raplon without the benefit of adequate disclosures” regarding Raplon’s
potential for harmful side effects.
The District Court dismissed Feldstein’s complaint for lack of jurisdiction because
it concluded that Feldstein’s claim was foreclosed by the FCA’s public disclosure bar.
See 31 U.S.C. § 3730(e)(4)(A). As an alternative holding, the District Court concluded
that Feldstein’s “false claims” allegations were generalized and speculative, and thus
dismissed the complaint for failure to comply with Rule 9(b).
Feldstein filed this timely appeal. Jurisdiction in this court arises under 28 U.S.C.
§ 1291. We exercise plenary review of the District Court’s dismissal under Rule
12(b)(1). United States ex rel Paranich v. Sorgnard, 396 F.3d 326, 331 (3d Cir. 2005).2
II.
The FCA’s public disclosure bar provides that “[n]o court shall have jurisdiction”
over a qui tam action brought by a private plaintiff if that action is “based upon the public
disclosure of allegations or transactions in a criminal, civil, or administrative hearing,”
certain government reports, or “the news media, unless the person bringing the action is
an original source of the information.” 31 U.S.C. § 3730(e)(4)(A). In other words, if
Feldstein’s complaint is “based upon” allegations that were previously disclosed in
certain qualifying public sources, his claim is barred unless he is an original source of
those allegations. The list of qualifying sources includes certain government reports and

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the news media. See id. It also includes allegations contained in civil complaints. United
States ex rel. Stinson, Lyons, Gerlin & Bustamante P.A. v. Prudential Ins. Co., 944 F.2d
1149, 1157 (3d Cir. 1991).
A. Feldstein’s Claim Was “Based Upon” Publicly Disclosed Allegations
A “qui tam action is ‘based upon’ a qualifying disclosure if the disclosure sets out
either the allegations advanced in the qui tam action or all of the essential elements of the
qui tam action’s claims.” United States ex rel Mistick PBT v. Hous. Auth. of City of
Pittsburgh, 186 F.3d 376, 388 (3d Cir. 1999) (emphasis added). “To be ‘based upon’ the
publicly revealed allegations or transactions,” the allegations in the relator’s complaint
need not be “actually derived from” the publicly disclosed allegations. United States ex
rel. Atkinson v. Pa. Shipbldg. Co., 473 F.3d 506, 519 (3d Cir. 2007). Rather, they “need
only be ‘supported by’ or ‘substantially similar to’ the disclosed allegations and
transactions.” Id. Substantial similarity exists where there is “substantial identity”
between the publicly disclosed allegations and the allegations in the relator’s complaint.
United States ex rel. Poteet v. Medtronic, Inc., 552 F.3d 503, 514 (6th Cir. 2009).
We conclude that the allegations in Feldstein’s complaint are substantially similar
to allegations that were publicly disclosed in earlier Raplon-related personal injury
lawsuits against Organon. The central premise of Feldstein’s false claims theory is the
allegation that Organon concealed the harmful side effects of Raplon, both before and
after its FDA approval. For example, Feldstein alleged that Organon:
• “[F]ailed to disclose to the FDA instances and the severity of the SAEs associated
with Raplon both before and after obtaining FDA approval”;

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• “[N]ever advised doctors or patients of the potential for SAEs in any labeling or
package insert and never had a treatment protocol in place prior to or even after
launch”;
• “[N]ever informed the FDA, hospitals, physicians or patients that Raplon posed a
serious threat to public health and safety” before it withdrew the drug from the
market;
• “[K]nowingly misrepresented and/or concealed relevant information from the FDA
in order to obtain, and subsequently retain, regulatory approval for Raplon”; and
• “[K]nowingly failed to warn hospitals, physicians and patients of the dangers
posed by Raplon” from August 1999 through March 2001.
Substantially similar allegations of concealment of the harmful side effects of
Raplon–specifically its potential to cause bronchospasm and cement lung–were asserted
in the complaint filed in Rogers v. Organon, Inc., No. 190698B, in Texas state court in
February of 2002. The complaint in Rogers alleged that Raplon “causes and contributes
to severe and disabling medical conditions including severe bronchospasm which can
result in death or ‘cement lung’” and that “[p]rior to marketing Raplon, . . . Organon
knew or should have known that Raplon could cause death or cement lung as a result of
severe bronchospasm.” It further alleged that Organon failed “to ascertain and report the
existence, nature, and extent of the risk of severe bronchospasm posed by Raplon”; failed
to “give an adequate, meaningful warning regarding the significant risk of bronchospasm
and/or cement lung related dysfunctions of Raplon”; and “[r]ecklessly, falsely, and/or
deceptively represented or knowingly omitted, suppressed, or concealed facts of such
materiality regarding the safety and efficacy of Raplon from prescribing physicians and
the consuming public.” At a minimum, there is “substantial identity” between these

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Several of our cases use the following algebraic representation to explain the3
public disclosure bar:
If X + Y = Z, Z represents the allegation of fraud and X and Y
represent its essential elements. In order to disclose the fraudulent
transaction publicly, the combination of X and Y must be revealed,
from which readers or listeners may infer Z, i.e., the conclusion that
fraud has been committed. To draw an inference of fraud, both a
misrepresented [X] and a true [Y] state of facts must be publicly
disclosed. So, if either Z (fraud) or both X (misrepresented facts)
and Y (true facts) are disclosed by way of a listed source, then a
relator is barred from bringing suit under § 3730(e)(4)(A) unless he
is an original source.
Atkinson, 473 F.3d at 519 (emphasis added, internal citations and alterations omitted).
Our conclusion, stated in these terms, is that the “Z” (fraud) component of the equation
was publicly disclosed before Feldstein filed his complaint. Therefore, we need not
analyze the X and Y components.
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allegations and the allegations of fraud in Feldstein’s complaint. Poteet, 552 F.3d at 514.3
Feldstein contends that his allegations are not “based upon” the allegations in
Rogers because that complaint sounded in negligence, failure to warn, and breach of
warranty, and made no reference to Medicare, Medicaid, or false claims. This distinction
is unavailing. Feldstein’s identification of one specific legal consequence of the alleged
fraud–the possible submission of false claims to Medicare and Medicaid–does not change
the substantially similar nature of the underlying allegations of fraud and concealment in
each action. See United States ex rel. Findley v. FPC-Boron Employees’ Club, 105 F.3d
675, 688 (D.C. Cir. 1997) (noting that a “relator’s ability to recognize the legal
consequences of a publicly disclosed fraudulent transaction does not alter the fact that the
material elements of the violation already have been publicly disclosed”); Kennard v.

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Comstock Res., Inc., 363 F.3d 1039 (10th Cir. 2004) (same); A-1 Ambulance Serv., Inc. v.
California, 202 F.3d 1238, 1245 (9th Cir. 2000) (noting that the “mere fact that [the
relator’s] own expertise . . . enabled it to formulate its novel legal theory of fraud is
irrelevant to the question of whether the material transactions giving rise to the alleged
fraud were already disclosed in the public domain in the first place”).
The allegations of fraud in Feldstein’s complaint are substantially similar to
allegations that were publicly disclosed in the Rogers complaint. Therefore, the District
Court correctly held that the allegations in Feldstein’s complaint were “based upon” those
publicly disclosed allegations for purposes of the public disclosure bar.
B. Feldstein Was Not an “Original Source”
Because Feldstein’s allegations were “based upon” public disclosures, the District
Court lacked jurisdiction over his claim unless he was an “original source” of the
allegations in his complaint. To qualify as an “original source,” the private plaintiff must
have “direct and independent knowledge of the information on which the allegations are
based and . . . voluntarily provide[] the information to the Government before filing” the
action. 31 U.S.C. § 3730(e)(4)(B). “Direct” knowledge means knowledge that is
“immediate” and “marked by absence of an intervening agency[.]” Stinson, 944 F.2d at
1160. The “independent” knowledge requirement means that “knowledge of the fraud
cannot be merely dependent on a public disclosure.” Paranich, 396 F.3d at 336.
We conclude that Feldstein lacked “direct” knowledge of Organon’s alleged fraud.
To be direct, Feldstein’s knowledge must have arisen from his “own efforts, . . . not by

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the labors of others, and . . . [must not be] derivative of the information of others.” Id.
(quoting United States ex rel Hafter v. Spectrum Emergency Care, Inc., 190 F.3d 1156,
1162 (10th Cir. 1999)). It is undisputed that Feldstein was not involved in the FDA
approval process for Raplon; he could not have been, for Raplon’s FDA approval
predated Feldstein’s employment with Organon. Once employed by Organon, Feldstein
did no work related to Raplon. He describes no fraud concerning Raplon that he
personally witnessed or in which he participated. His knowledge concerning Organon’s
alleged fraud was acquired through “intervening agenc[ies],” see Stinson, 944 F.2d at
1160, such as his receipt of the “smoking gun” email from Dr. Sack and his conversation
with Plona. This is not the kind of “immediate,” first-hand knowledge required by our
precedents. Id. Accordingly, we conclude that Feldstein lacked “direct and independent
knowledge of [Organon’s] allegedly fraudulent statements” concerning Raplon, and thus
was not an original source. See Mistick, 186 F.3d at 389.
Feldstein’s FCA claim is based on publicly disclosed allegations and Feldstein was
not an original source of those allegations. Therefore, the public disclosure bar of 31
U.S.C. § 3730(e)(4)(A) forecloses his claim.
III.
Because the public disclosure bar applies, we conclude that the District Court
lacked jurisdiction over Feldstein’s claim. On that basis, we will affirm the District
Court’s judgment. We do not reach the District Court’s alternative holding that
Feldstein’s complaint failed to satisfy the heightened pleading requirements of Rule 9(b).

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