                United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 12-2979
                         ___________________________

                         In re: Baycol Products Litigation

                             ------------------------------

                United States of America, ex rel Laurie Simpson

                             lllllllllllllllllllll Plaintiff

                                  Laurie Simpson

                  lllllllllllllllllllll Plaintiff Relator - Appellant

                                           v.

  Bayer Healthcare, doing business as Bayer Healthcare Pharmaceuticals; Bayer
         Pharmaceuticals Corporation; Bayer Corporation; Bayer A.G.

                     lllllllllllllllllllll Defendants - Appellees
                                      ____________

                   Appeal from United States District Court
                  for the District of Minnesota - Minneapolis
                                 ____________

                             Submitted: June 12, 2013
                              Filed: October 15, 2013
                                  ____________

Before LOKEN, BRIGHT, and BYE, Circuit Judges.
                           ____________

BRIGHT, Circuit Judge.
       Laurie Simpson appeals the dismissal of the qui tam action she brought against
Bayer Healthcare under the False Claims Act (FCA), 31 U.S.C. §§ 3729–3733.
Simpson alleged Bayer defrauded the United States government through its marketing
and sale of the cholesterol-lowering drug Baycol. She claimed Bayer fraudulently
caused the government to make reimbursements for Baycol prescriptions through
federal health insurance programs such as Medicare and Medicaid; she also claimed
Bayer fraudulently induced the Department of Defense (DoD) to enter into two
contracts for the purchase of Baycol. The district court dismissed Simpson's claims,
concluding she failed to plead fraud with the particularity required by Rule 9(b) of
the Federal Rules of Civil Procedure. We affirm the dismissal relating to federal
health insurance programs but reverse as to the DoD contract claims and remand for
further proceedings.

                                         I.

       In early 1998, Bayer began marketing Baycol to compete with other
cholesterol-lowering "cerivastatin" or "statin"1 drugs. Certain studies concluded
Baycol was less effective at lowering cholesterol than competing drugs when Baycol
was prescribed at the dosage initially approved by the Food and Drug Administration
(FDA). Bayer then sought and obtained approval from the FDA to sell Baycol at
higher dosage levels. Doctors began to report, however, that patients who were
prescribed Baycol developed rhabdomyolysis, a rare but serious muscle disorder in
which destroyed muscle cells release into the bloodstream. The likelihood of this
warned-about side effect appeared to increase when Baycol was prescribed at higher
doses, or in conjunction with gemfibrozil, another cholesterol-lowering drug. In July


      1
       Statins are a class of drugs which inhibit HMG-CoA reductase, an enzyme that
plays a central role in the production of cholesterol in the liver.


                                         -2-
2001, the FDA asked Bayer to address these concerns about Baycol. Bayer
voluntarily withdrew Baycol from the market in August 2001.

       Laurie Simpson worked at Bayer from 1998 through 2004 as a manager of
market research. While at Bayer, Simpson's work involved marketing Baycol. In
October 2006, relying in large part upon information to which she was privy during
her time at Bayer, Simpson filed a qui tam action against Bayer as a relator on behalf
of the government. She alleged Bayer knew about, but downplayed, the risks of
developing rhabdomyolysis through the use of Baycol. She also alleged Bayer
misrepresented Baycol's efficacy when compared to competing cholesterol-lowering
drugs sold by other manufacturers (such as Lipitor), and paid illegal kickbacks to
physicians to increase Bayer's share of the market for statin drugs.

       Part of Simpson's initial lawsuit was dismissed for lack of jurisdiction on the
grounds Simpson was not the original source of her allegations. See 31 U.S.C. §
3730(e)(4)(A) (indicating courts lack jurisdiction over an FCA claim unless the
relator is "an original source of the information"). Some of her allegations – those
involving payments the government made before October 2000 – were also dismissed
because they were barred by the FCA's six-year statute of limitations. The district
court initially dismissed the remainder of Simpson's suit without prejudice for failing
to plead fraud with particularity, but gave Simpson a chance to cure the deficiencies
by filing an amended complaint, which Simpson filed. This appeal concerns what
was left of Simpson's suit.

      In this second amended complaint (SAC), Simpson alleged Bayer defrauded
the government in two distinct respects. First, Simpson alleged Bayer fraudulently
caused the government to make reimbursements for Baycol prescriptions through
federal health insurance programs such as Medicare and Medicaid, asserting that "had
the Government known the full truth [about Baycol] it would not have paid the
[reimbursement] claims." SAC at ¶ 266; Appellant's App. at A-128. Simpson also

                                         -3-
alleged Bayer fraudulently induced the DoD to enter into two contracts for the
purchase of Baycol to be prescribed to members of the armed services by physicians
working at Military Treatment Facilities. We will first summarize Simpson's
allegations regarding the DoD contracts.

      A.     The DoD Contracts

        The DoD reached an initial agreement with Bayer for the purchase of Baycol
on October 1, 1999. The initial DoD contract called for Bayer to sell Baycol to the
military for an 18-month term in three different dosages (0.2 mg, 0.3 mg, and 0.4 mg)
at a price of $.30 per tablet. This initial contract had an estimated base value per year
of $11,505,000, and provided the military with an option to renew for two separate
one-year extensions. If the DoD exercised its option to renew, the per tablet price
would increase to $.31 per tablet the first year (for an estimated base value of
$11,888,500), and to $.32 per tablet the second year (for an estimated base value of
$12,272,000). Id. at ¶ 72; Appellant's App. at A-70.

      After entering into the initial contract with Bayer, the DoD became concerned
about the connection between rhabdomyolysis and Baycol, and contacted Bayer
regarding those concerns. Simpson alleged that on November 10, 1999, Casimir
Zygmunt, a Baycol representative at Bayer, responded to inquiries made by
Lieutenant Commander Richerson, the DoD's point of contact for the DoD Statin
Award Implementation Plan, about Baycol's safety with respect to the risk of
rhabdomyolysis. Simpson alleged Zygmunt told the DoD there is "[n]o evidence to
suggest Baycol causes more rhabdo then (sic) others – it is a class effect." Id. at ¶
107; Appellant's App. at A-77. Simpson alleged this was "a false statement because
Bayer did possess evidence at the time suggesting that Baycol did cause more
rhabdomyolysis than other statins." Id. (Emphasis in original).




                                          -4-
       Paragraphs 108 through 120 of the SAC further describe the contacts between
Bayer and the DoD over the latter's concern about the frequency or severity of
rhabdomyolysis associated with Baycol. For example, in a letter Bayer sent to the
DoD on December 3, 1999, Simpson alleges Bayer falsely stated "there are
insufficient data upon which to base a dose-response relationship" between the
frequency or severity of rhabdomyolysis and the use of Baycol. Id. at ¶ 112;
Appellant's App. at A-78. Simpson alleged this was a false statement because "Bayer
was aware at the time that there was in fact a dose-response relationship with Baycol's
adverse side-effects." Id.

       On January 20, 2001, the DoD renewed the original contract with Bayer and
extended the period of performance from February 20, 2001, through February 19,
2002, for an estimated dollar value of $11,888,500.2 Id. at ¶ 80; Appellant's App. at
A-71. In addition, on February 20, 2001, the DoD agreed to purchase a higher dosage
of Baycol from Bayer (0.8 mg tablet) under a Blanket Purchase Agreement (BPA).
Under the BPA, Bayer sold 0.8 mg tablets of Baycol to the military at a discounted
price of $15.00 for 30 tablets, and $45.00 for 90 tablets. Id. at ¶ 96; Appellant's App.
at A-74.

       Simpson alleged the January 2001 contract extension and the February 2001
BPA were fraudulently induced by the false statements Bayer made about Baycol's
effectiveness and connection to rhabdomyolysis. Simpson alleged that "[i]f the DoD
and other prescribers had known the truth (which DoD attempted to discover on
multiple occasions), then it is unlikely the DoD would have entered into the contract
with Bayer or would have extended the contract." Id. at ¶ 123; Appellant's App. at
A-82.


      2
      The contract extension slightly modified the terms of the original contract,
because the original contract was supposed to expire on March 31, 2001, not
February 20, 2001.

                                          -5-
       Finally, as relevant to the January 2001 contract extension and February 2001
BPA, Simpson alleged that "[a]ccording to the DoD PEC [Pharmacoeconomic
Center], there were approximately 400,000 Baycol prescriptions filled in MTFs
[Military Treatment Facilities] during the period commencing October 2000 to the
withdrawal of Baycol from the market [in August 2001]." Id. at ¶ 244; Appellant's
App. at A-123. Simpson also alleged that "[f]rom October 2000 through the time of
the withdrawal of Baycol from the market in August 2001, government agencies,
under various contracts with Bayer for the supply of Baycol, including the DoD . . .
paid Bayer at least $11,983,305.08 for their supplies of Baycol." Id. at ¶ 243. In
other words, Simpson alleged Baycol was used by members of the armed services
after Bayer allegedly fraudulently induced the DoD to enter into the January 2001
contract extension and February 2001 BPA, and further alleged the government made
payments to Bayer pursuant to the allegedly fraudulently induced DoD contracts.

      B.     Federal Health Insurance Reimbursements

       We next summarize Simpson's allegations regarding federal health insurance
reimbursements. Simpson's SAC focused on a number of aspects of the manner in
which Bayer generally marketed Baycol. Simpson alleged Bayer made false
statements about Baycol's efficacy in lowering cholesterol when it introduced the
drug into the general marketplace. Simpson further alleged Bayer misrepresented the
risks of adverse side effects associated with Baycol. Simpson also alleged Bayer used
illegal kickbacks to physicians to induce them to begin prescribing Baycol or to
increase their prescriptions of Baycol.

       Finally, as significant for purposes of this appeal, Simpson then alleged the
general manner in which Bayer marketed Baycol was causally connected to payments
the government made under Medicare, Medicaid, and the Federal Employees Health
Benefits Program (FEHBP) when individuals participating in those programs received
a prescription from a physician for Baycol, filled the prescription at a pharmacy, and

                                         -6-
the pharmacy or individual submitted the prescription to the government for
reimbursement through those federal health insurance programs. Simpson
specifically alleged "the Government purchased and/or reimbursed significant
quantities of Baycol when it would not otherwise have done so if Bayer had fully
disclosed the truth regarding the safety of its drug." Id. at ¶ 266; Appellant's App. at
A-128. Simpson further alleged "Bayer caused false claims to be submitted by
patients and organizations because physicians relied on Bayer's assertions when they
prescribed Bayer, thus causing false claims to be submitted to the Government[.]" Id.;
Appellent's App. at A-129. Finally, Simpson alleged "had the Government known
the full truth it would not have paid the claims." Id.

      C.     The Motion to Dismiss

       Bayer moved to dismiss Simpson's SAC under Rules 9(b) and 12(b)(6) of the
Federal Rules of Civil Procedure. Bayer contended in relevant part that Simpson's
allegations were deficient because she did not include representative examples of
false claims submitted for payment to the government. Bayer argued the particularity
requirements of Rule 9(b) require a relator to allege representative false claims in
order to survive a motion to dismiss, citing this court's decisions in United States ex
rel. Vigil v. Nelnet, Inc., 639 F.3d 791 (8th Cir. 2001); United States ex rel. Joshi v.
St. Luke's Hospital, 441 F.3d 552 (8th Cir. 2006); and United States v. ex rel. Roop
v. Hypoguard USA, Inc., 559 F.3d 818 (8th Cir. 2009). The district court agreed with
Bayer's arguments and granted the motion to dismiss. This timely appeal followed.

                                           II

      We apply de novo review to a district court's decision to dismiss a complaint
under Rules 9(b) or 12(b)(6) of the Federal Rules of Civil Procedure. Summerhill v.
Terminix, Inc., 637 F.3d 877, 880 (8th Cir. 2011).



                                          -7-
       Originally enacted in response to "unscrupulous Civil War defense
contractors," Minn. Ass'n of Nurse Anesthetists v. Allina Health Sys. Corp., 276 F.3d
1032, 1041 (8th Cir. 2002), the FCA serves a "specific function, protecting the federal
fisc by imposing severe penalties on those whose false or fraudulent claims cause the
government to pay money[.]" Vigil, 639 F.3d at 795–96. The Act allows private
individuals (i.e., relators) to bring a civil action in the name of the United States
against those who violate the Act's provisions. 31 U.S.C. § 3730(b)(1).

      The FCA "is not concerned with regulatory noncompliance," but with false or
fraudulent claims that cause the government to pay money. Vigil, 639 F.3d at 795-96.
As a result, the FCA carefully defines the conduct it prohibits. The Act's "core
provisions," id. at 796, make any person liable who "(1) knowingly presents, or
causes to be presented, [to a federal official] a false or fraudulent claim for payment
or approval," or "(2) knowingly makes, uses, or causes to be made or used, a false
record or statement to get a false or fraudulent claim paid or approved by the
Government." 31 U.S.C. § 3729(a)(1)–(2).3 The FCA defines "claim" to include "any
request or demand … for money or property which is made to a contractor, grantee,
or other recipient if" the United States either "provides any portion of the money or
property which is requested or demanded," or "will reimburse such [entity] for any
portion of the money or property which is requested or demanded." Id. § 3729(c).

       The FCA generally "attaches liability, not to the underlying fraudulent activity,
but to the claim for payment." Costner v. URS Consultants, Inc., 153 F.3d 667, 677
(8th Cir. 1998). Accordingly, the general elements of a case under the FCA are "that


      3
       Congress renumbered and amended § 3729(a) in response to the Supreme
Court's interpretation of § 3729(a)(2) in Allison Engine Co. v. United States ex rel.
Sanders, 553 U.S. 662, 665 (2008). See Fraud Enforcement and Recovery Act of
2009, Pub. L. No. 111–21, § 4(a)(1), 123 Stat. 1617, 1621–22. This amendment does
not apply retroactively to this case because none of the allegedly false claims here
were pending in 2008.

                                          -8-
(1) the defendant made a claim against the United States; (2) the claim was false or
fraudulent; and (3) the defendant knew the claim was false or fraudulent." United
States ex rel. Raynor v. Nat'l Rural Util. Coop. Fin. Corp., 690 F.3d 951, 955 (8th Cir.
2012).

       With these general principles in mind, we turn to the two distinct theories of
"false claims" Simpson alleged in her SAC – those involving the DoD contracts and
those involving government reimbursements under federal health insurance programs.

      A. The DoD Contracts

       Simpson's SAC alleged that Bayer fraudulently induced the DoD to enter into
the January 2001 contract extension, and the February 2001 BPA for 0.8 mg tablets
of Baycol, by making allegedly false representations about Baycol's safety with
respect to the risk of rhabdomyolysis.4

      In granting Bayer's motion to dismiss, the district court applied the same
analysis to both the allegations involving the fraudulently-induced DoD contracts and


      4
        Bayer argues Simpson's SAC did not plead a claim of fraudulent inducement
because she did not use the label "fraud-in-the inducement" in the complaint. We are
not concerned, however, with the labels a party attaches to a claim. Instead, we focus
on the substance of the underlying factual allegations. See Mut. Creamery Ins. Co.
v. Iowa Nat'l Mut. Ins. Co., 427 F.2d 504, 508 (8th Cir. 1970) ("[P]leadings must be
construed favorably to the pleader and judged by substance rather than form.");
Kutten v. Bank of Am., N.A., 530 F.3d 669, 670 (8th Cir. 2008) ("[W]e do not rely
on the names of the causes of action that the plaintiff alleges. Instead we look at the
substance of the allegations, based on a fair reading."); see also Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 555 (2007) (noting the importance of examining the
factual allegations when addressing a Rule 12(b)(6) motion to dismiss, rather than the
"labels and conclusions [or] formulaic recitation of the elements of a cause of
action").

                                          -9-
the allegations involving the federal health insurance reimbursements. In part, the
district court concluded Simpson's allegations were insufficient on both claims
because she did not tie her allegations of Bayer's fraud to specific fraudulent claims
for payment submitted to the government. The district court reasoned:

      [T]he fact that a patient covered by a federal or state funded health care
      program was prescribed Baycol to lower his/her cholesterol is not, in
      and of itself, false or fraudulent. . . . A claim under the FCA focuses on
      the claims, not the underlying fraudulent activity. Because there are no
      allegations in the SAC that a claim submitted to the government for
      payment for Baycol, was – in and of itself – fraudulent or false,
      [Simpson] has failed to sufficiently plead a claim under the FCA.

In re Baycol Prods. Litig., No. 08-5758, 2012 WL 5358333 at *6 (D. Minn. July 19,
2012). Contrary to the district court's reasoning, a claim alleging fraud in the
inducement of a government contract does focus on the false or fraudulent statements
which induced the government to enter into the contract at the outset. We therefore
conclude the district court's reasoning was incorrect as applied to Simpson's
allegations regarding the DoD contracts.

       The Supreme Court first recognized fraud-in-the-inducement as a viable theory
of FCA liability in 1943 in United States ex rel. Marcus v. Hess, 317 U.S. 537 (1943).
Hess involved claims submitted by government contractors who had engaged in
collusive bidding. The Supreme Court found FCA liability for each claim submitted
to the government under a contract so long as the original contract was obtained
through false statements or fraudulent conduct:

      This fraud did not spend itself with the execution of the contract. Its
      taint entered into every swollen estimate which was the basic cause for
      payment of every dollar paid by the [government]. . . . The initial
      fraudulent action and every step thereafter taken, pressed ever to the



                                        -10-
      ultimate goal—payment of government money to persons who had
      caused it to be defrauded.

Id. at 543-44.

       The legislative history of the FCA also supports the conclusion that fraud-in-
the-inducement is a recognized theory of liability under the Act. "Specifically, [in
amending the FCA in 1986,] Congress noted that, under FCA case law, 'each and
every claim submitted under a contract, loan guarantee, or other agreement which was
originally obtained by means of false statements or other corrupt or fraudulent
conduct, or in violation of any statute or applicable regulation, constitutes a false
claim.'" United States ex rel. Bettis v. Odebrecht Contractors of Cal., Inc., 393 F.3d
1321, 1326 (D.C. Cir. 2005) (quoting S. Rep. No. 99–345, at 9 (1986), reprinted in
1986 U.S.C.C.A.N. 5266, 5274).

        Thus, when a relator alleges liability under a theory of fraud-in-the inducement,
claims for payment subsequently submitted under a contract initially induced by fraud
do not have to be false or fraudulent in and of themselves in order to state a cause of
action under the FCA. See, e.g., United States ex rel. Harrison v. Westinghouse
Savannah River Co., 176 F.3d 776, 788 (4th Cir. 1999) ("Contrary to the district
court's decision, in many of the [fraud-in-the-inducement] cases cited above the
claims that were submitted were not in and of themselves false. . . . False Claims Act
liability attached, however, because of the fraud surrounding the efforts to obtain the
contract or benefit status, or the payments thereunder."); see also Claire M. Sylvia,
The False Claims Act: Fraud Against the Government § 4:29 (April 2013) ("A
fraudulent effort to obtain a contract, sometimes called 'fraud in the inducement,' can
constitute a false or fraudulent claim for payment or approval.").

      Based upon our review of Simpson's allegations regarding the DoD contracts,
we conclude her complaint sufficiently "identif[ies] the 'who, what, where, when, and


                                          -11-
how' of the alleged fraud," Joshi, 441 F.3d at 556, to satisfy Rule 9(b)'s requirements
and survive a motion to dismiss under Rule 12(b)(6). Simpson's allegations identify
(1) the individuals involved in the exchange between Bayer and the DoD regarding
the DoD's concerns about Baycol's safety with respect to the risk of rhabdomyolysis
(i.e., Casimir Zygmunt for Bayer and Lieutenant Commander Richerson for the DoD);
(2) the alleged misrepresentations regarding whether Baycol causes more
rhabdomyolysis than other statins, and whether a relationship exists between
prescribing Baycol at higher dosages and the frequency or severity of
rhabdomyolysis; (3) the dates when the alleged misrepresentations were made (e.g.,
November 10, 1999 and December 3, 1999) and the manner in which the alleged
misrepresentations were made; and (4) the specific reasons why the representations
were alleged to be fraudulent (i.e., because Bayer allegedly possessed evidence to
know the representations were false at the time they were made).

       In addition, Simpson connected her allegations regarding the alleged fraud to
the January 2001 contract extension and the February 2001 BPA and alleged that "[i]f
the DoD and other prescribers had known the truth (which DoD attempted to discover
on multiple occasions), then it is unlikely the DoD would have entered into the
contract with Bayer or would have extended the contract." Finally, Simpson's
complaint alleges the government made payments to Bayer under the allegedly
fraudulently induced contracts, claiming there were approximately 400,000 Baycol
prescriptions filled in Military Treatment Facilities between October 2000 and the
withdrawal of Baycol from the market in August 2001, and the government paid
Bayer at least $11,983,305.08 for their supplies of Baycol during that same time
period.5

      5
      We note the temporal relationship between Simpson's allegations and the two
DoD contracts at issue is not a perfect fit. The SAC focused on the approximate ten-
month period between the running of the statute of limitations in October 2000 and
the withdrawal of Baycol from the market in August 2001, rather than the
approximate seven-month period between the effective dates of the two DoD

                                         -12-
      We fail to see how these allegations are insufficient to state a claim for relief
under a theory of fraud-in-the-inducement. We therefore reverse the district court
with respect to the allegations regarding the DoD contracts, and remand for further
proceedings consistent with this opinion.6

      B. The Federal Health Insurance Reimbursements

       Unlike the DoD contracts we have just discussed, there is no direct contractual
relationship between the government and Bayer with respect to Simpson's allegations
regarding reimbursements under federal health insurance programs. Thus, Simpson's
reimbursement claims do not involve an allegedly fraudulently-induced contract

contracts and the withdrawal of Baycol from the market. It would be unreasonable
to infer, however, that all 400,000 prescriptions described in the SAC were filled
prior to the effective dates of the two DoD contracts in early 2001, and that no
prescriptions were filled thereafter until the withdrawal of Baycol from the market in
August 2001. Likewise, it would be unreasonable to infer that all the government
payments Simpson alleges took place in the ten-month period between October 2000
and August 2001 were made prior to the effective dates of the two DoD contracts, and
that no funds were paid by the government after the contracts became effective.
Thus, the SAC still clearly alleges Baycol prescriptions were filled at Military
Treatment Facilities after the two contracts became effective, and that the government
made payments to Bayer pursuant to the contracts. The lack of a perfect fit between
the specific amounts alleged in the SAC and the effective dates of the DoD contracts
is not fatal to the question whether Simpson stated a claim for relief.
      6
         On appeal, Bayer urges us to affirm the district court's dismissal of the
allegations involving the DoD contracts on a number of alternative grounds that have
not yet been addressed by the district court. We believe it more prudent to allow the
district court to address those issues in the first instance. See, e.g., Lafarge North
Am., Inc. v. Discovery Grp. L.L.C., 574 F.3d 973, 986 fn.9 (8th Cir. 2009) ("Because
we believe it would be beneficial for the district court to address these issues in the
first instance, we decline to affirm on these alternative theories.").



                                         -13-
where claims for payment subsequently submitted under a government contract
initially induced by fraud do not have to be false or fraudulent in and of themselves
in order to state a cause of action under the FCA. Instead, Simpson alleged Bayer's
misleading marketing scheme caused third parties to submit false claims to the
government. See 31 U.S.C. § 3729(a)(1)(A) (extending FCA liability to any person
who "causes to be presented, [to a federal official] a false or fraudulent claim for
payment or approval") (emphasis added); see also United States v. Hawley, 619 F.3d
886, 892 (8th Cir. 2010) (noting a claim under the FCA "need not be made directly
to the government; it may include a request or demand that was originally made to a
contractor, grantee, or other recipient of federal funds and then forwarded to the
Government") (internal quotation marks and citation omitted); Claire M. Sylvia, The
False Claims Act: Fraud Against the Government § 4:2 (April 2013) ("Subsection
(a)(1)(A) imposes liability not only on a person who 'presents' a false or fraudulent
claim, but also on a person who causes another to present a false or fraudulent
claim.").

      With respect to these reimbursement claims, the district court noted Simpson's
SAC failed to identify any specific false claims submitted by Bayer to the government
and explained that cases "decided by the Eighth Circuit post-Joshi reaffirm this
Court's previous finding that particularized allegations of representative false claims
are required to properly assert a claim under the FCA." In re Baycol, 2012 WL
5358333 at *5.

       The district court also compared Simpson's SAC to the complaint found
deficient in Roop, 559 F.3d 818. As explained by the district court, Roop involved
a relator who alleged a defendant's manufacture and sale of defective glucose
monitors and test strips caused the government to pay fraudulent reimbursement
claims under Medicare. We held the relator failed to state a claim under the FCA for
a number of reasons, including the circumstance that the relator "failed to . . . identify
specific false or fraudulent Medicare reimbursement claims by Hypoguard

                                          -14-
distributors[.]" Roop, 559 F.3d at 824. Roop affirmed the district court's dismissal
of the complaint because the relator merely conclusorily alleged the government
would not have paid Medicare reimbursement claims if they had known of the defects
in the glucose monitors and test strips. Id. at 825.

      The district court said Simpson's SAC was similarly deficient because she
merely "asserts that had the government known of Bayer's misrepresentations and
omissions concerning the risks associated with Baycol, the government would not
have paid any claims submitted under . . . federal and state health insurance
programs." In re Baycol, 2012 WL 5358333 at *6. The district court reasoned that
Simpson failed to make any allegations connecting a government decision to pay
Baycol to any alleged fraud because the mere "fact that a patient covered by a federal
or state funded health care program was prescribed Baycol to lower his/her
cholesterol is not, in and of itself, false or fraudulent." Id. The district court
concluded "[b]ecause there are no allegations in the SAC that a claim submitted to the
government for payment for Baycol, was – in and of itself – fraudulent or false,
Relator has failed to sufficiently plead a claim under the FCA." Id.

       With respect to Simpson's federal health insurance reimbursement claims, we
agree with the district court that the pleadings in Simpson's SAC were inadequate to
state a cause of action under the FCA because she did not include at least some
representative examples of false claims with respect to Bayer's alleged scheme
involving federal health insurance reimbursements, or show how any particular
reimbursement claim was fraudulent in and of itself.

      In Vigil, we said "[w]ithout sufficient allegations of materially false claims, an
FCA complaint fails to state a claim on which relief may be granted." 639 F.3d at
796. As relevant to the issue of pleading representative false claims, we later stated
with even more clarity in Joshi that a relator must "plead some representative
examples [of false claims] within the statute of limitations." 441 F.3d at 560. Joshi

                                         -15-
found persuasive the reasoning of the Eleventh Circuit in Corsello v. Lincare, Inc.,
428 F.3d 1008 (11th Cir. 2005). That case related to an underlying fraudulent scheme
where certain health care corporations were allegedly submitting false Medicare
claims to the government by falsifying certificates of medical necessity or billing for
unnecessary or nonexistent treatment. Similar to Simpson, the relator in Corsello
relied upon his allegations of the underlying scheme to argue false claims must have
been submitted to the government, but did not include allegations of specific false
claims actually submitted to the government for payment. The Eleventh Circuit
dismissed the relator's complaint for failure to plead fraud with the particularity
required by Rule 9(b). Id. at 1013-14. Applying the same reasoning to the relator's
allegations in Joshi, we concluded a relator could not rely merely upon allegations of
the underlying scheme to argue all claims submitted for payment to the government
pursuant to the scheme were fraudulent because "all the nurse anesthetists' work was
illegal" and thus "every invoice for nurse anesthetist work was fraudulent[.]" Joshi,
441 F.3d at 556. Instead, we said

      to satisfy Rule 9(b)'s particularity requirement and to enable St. Luke's
      and Dr. Bashiti to respond specifically to Dr. Joshi's allegations, Dr.
      Joshi must provide some representative examples of their alleged
      fraudulent conduct, specifying the time, place, and content of their acts
      and the identity of the actors. Dr. Joshi's complaint is void of a single,
      specific instance of fraud, much less any representative examples. Thus,
      the district court properly dismissed Dr. Joshi's complaint for failure to
      comply with Rule 9(b).

Id. at 557. (Emphasis in original).

       Finally, in Roop we dealt with allegations similar to the fraudulent scheme
alleged by Simpson because the case involved a defendant who – by manufacturing
and marketing a defective medical product – allegedly caused third parties to submit
false Medicare reimbursement claims to the government. 559 F.3d at 820. Again, we


                                         -16-
held that allegations regarding the underlying scheme were insufficient to state a
claim for relief without pleading representative examples of some false
reimbursement claims submitted to the government:

         The proposed First Amended Complaint did not plead with
      particularity the details of any false Medicare reimbursement claim
      presented to, or paid by, the United States or its agent. Nor did it allege
      with particularity how any product defect or failure to submit MDR7
      reports to the FDA was material to—that is, 'capable of influencing'
      —the government's decisions to pay countless unidentified Medicare
      reimbursement claims submitted by Hypoguard distributors. The
      conclusory allegation that unidentified government agents 'would not
      have reimbursed through Medicare individuals submitting claims [for
      Hypoguard systems] if [they] had known of the defects and failure to
      comply with the rules and regulations of the FDA' does not comply with
      Rule 9(b).

Id. at 824-25 (internal citations omitted).

       We conclude this case is controlled by our decisions in Joshi and Roop.
Simpson alleged that all federal health insurance reimbursement claims submitted by
third parties to the government for Baycol prescriptions were false or fraudulent
because of the misleading and deceptive manner in which Bayer marketed Baycol.
She did not, however, plead at least some representative examples of actual
reimbursement claims submitted to the government pursuant to the underlying
allegedly fraudulent marketing scheme, or establish how such reimbursement claims
were false in and of themselves. Instead, she relied upon a general allegation that the
government would not have paid any of the reimbursement claims submitted under
the federal health insurance programs had it known of Bayer's underlying allegedly
fraudulent marketing scheme. We conclude this allegation is indistinguishable, for


      7
          Medical Device Reporting.

                                         -17-
all material purposes, from the allegation we found lacking in Roop. We therefore
affirm the district court with respect to the allegations involving federal health
insurance reimbursement claims.8

                                          III

      We affirm the district court's dismissal of the claims relating to the federal
health insurance reimbursements. We reverse the district court's dismissal of the
claims involving the DoD contracts, and remand this case for further proceedings
consistent with this opinion.

LOKEN, Circuit Judge, concurring in part and dissenting in part.

       I concur in the court’s cogent description of this dispute and its procedural
history. I join Part II.B. of its opinion, which affirms the dismissal of relator’s FCA
claims relating to federal health insurance reimbursements. In Part II.A., I agree with
the conclusions that relator sufficiently pleaded fraud in the inducement of the 2001
DoD contracts, and that fraud in the inducement is “a viable theory of FCA liability”
established by the Supreme Court’s decision in United States ex rel. Marcus v. Hess,
317 U.S. 537 (1943). But in my view, the court ends the analysis in Part II.A.
prematurely, failing to take into account that this particular fraud-in-the-inducement
claim suffers from the same Rule 9(b) inadequacy as the FCA complaint in United

      8
        Simpson also appeals the district court's refusal to give her another chance to
amend her complaint to state an actionable claim with respect to the federal health
insurance reimbursement claims. We conclude the district court did not abuse its
discretion in denying the request, because Simpson failed to provide the district court
with a copy of her proposed third amended complaint, as required by Local Rule 15.1
of the District of Minnesota. See Drobnak v. Andersen Corp., 561 F.3d 778, 787 (8th
Cir. 2009) (concluding a district court does not abuse its discretion when it denies
leave to amend where a plaintiff does not comply with Local Rule 15.1 of the District
of Minnesota).

                                         -18-
States ex rel. Joshi v. St. Luke’s Hospital, Inc. -- the implicit allegation “that ‘every’
claim submitted by [Bayer] was fraudulent lacks sufficient ‘indicia of reliability.’”
441 F.3d 552, 557 (8th Cir.), cert. denied, 127 S. Ct. 189 (2006). Accordingly, I
respectfully dissent from the decision to reverse the district court’s dismissal of the
DoD contract claims.

       It is hornbook law that, to warrant recovery of damages for fraud in the
inducement, “it must appear, not only that injury has been suffered, but that the fraud
complained of was the proximate cause of the injury.” Boatmen’s Nat’l Co. v. M. W.
Elkins & Co., 63 F.2d 214, 216-17 (8th Cir. 1933) (applying federal law and
affirming a directed verdict for defendant on this ground). In the typical dispute
between private parties, a well-pleaded claim of fraud in the inducement needs no
specific allegation of injury; the fraudulently induced contract is itself harm likely
entitling the plaintiff at least to the remedy of rescission. But FCA claims are not
typical disputes. As the court recognizes, the FCA “generally attaches liability, not
to the underlying fraudulent activity, but to the claim for payment.” Supra p.8
(quotation omitted). In my view, when the underlying fraud is fraud in the
inducement, this necessarily requires plaintiff to plead some nexus between the fraud
that induced the contract, and the subsequent claims for payment under the contract.
This is not unlike the need to plausibly allege that a false certification of compliance
with the requirements of a government program was material to the government’s
decision to pay a particular claim. See United States ex rel. Vigil v. Nelnet, Inc., 639
F.3d 791, 799-800 (8th Cir. 2011); United States ex rel. Wilkins v. United Health
Group, Inc., 659 F.3d 295, 308-11 (3d Cir. 2011).

       The court ends its truncated analysis of this factor with the Supreme Court’s
ruling in Hess that the “taint [of fraudulent inducement] entered into every swollen
estimate which was the basic cause for payment of every dollar paid.” Supra p.10,
quoting 317 U.S. at 543. But in Hess, the fraud was undisclosed collusive bidding,
a fraud the very purpose of which was to ensure that the government paid inflated

                                          -19-
claims submitted under the fraudulently induced contract. Likewise, in the few
published cases that have upheld fraud-in-the-inducement FCA claims, the fraud
ensured that the government would pay inflated claims, or would otherwise not
receive the financial benefit of its bargain. See United States ex rel. Longhi v.
Lithium Power Tech., Inc., 575 F.3d 458, 473 (5th Cir. 2009) (the government’s
benefit of the bargain, “to award money to eligible deserving small businesses . . .
was lost as a result of the Defendant’s fraud” in inducing the grants), cert. denied, 130
S. Ct. 2092 (2010); Harrison v. Westinghouse Savannah River Co., 176 F.3d 776,
791-94 (4th Cir. 1999) (fraud that allegedly induced paying more to a subcontractor
survived Rule 12(b)(6) dismissal); Murray & Sorenson, Inc. v. United States, 207
F.2d 119, 123 (1st Cir. 1953) (fraud “increasing the price which the government
eventually has to pay”).

       By contrast, the fraud in the inducement alleged by Simpson -- failing to
disclose a known risk to patients prescribed Baycol -- did not necessarily have the
effect of increasing the amounts paid for reimbursement of claims submitted under
the DoD contracts. The only damage allegation relating to the DoD contracts in
Simpson’s 92-page Second Amended Complaint was that “the Government paid
money to Bayer for a drug that it would not have purchased had it known the full
truth.” But that was harm resulting from the underlying fraud, not a plausible
allegation that the government was harmed by paying false claims under the DoD
contracts. With or without the contracts at issue, DoD physicians would have
prescribed statin drugs to military personnel who needed to lower their cholesterol.
There is no allegation that DoD paid more for Baycol than it would have paid for a
different statin. There is no allegation that the government paid damages to DoD
patients who were prescribed Baycol and developed rhabdomyolysis. For this reason,
Simpson failed to state a plausible FCA claim simply by alleging fraud in the
inducement. To plead this alleged fraud with the particularity Rule 9(b) requires, she
needed to allege specific harm resulting from specific false claims submitted under
the fraudulently induced DoD contracts. “[A]llegations of product defects and

                                          -20-
consumer injury” do not cure deficiencies in an FCA complaint. United States ex rel.
Roop v. Hypoguard USA, Inc., 559 F.3d 818, 824 (8th Cir. 2009).

        An FCA relator such as Simpson has Article III standing only because
Congress in the FCA partially assigned the government’s damage claim for the
“injury in fact” allegedly suffered when it pays a false claim. Vermont Agency of
Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 773 & n.4 (2000). Here,
Simpson alleged no injury in fact to the government, only that Bayer improperly
benefitted from fraudulently inducing the DoD contracts. If true, that undoubtedly
caused “injury to [the government’s] sovereignty arising from violation of its laws.”
Id. at 771. But a claim for that injury lies beyond what the government assigned to
Simpson in the FCA. Accord United States ex rel. Willard v. Humana Health Plan,
Inc., 336 F.3d 375, 386 (5th Cir. 2003) (“[T]he government must suffer an injury in
fact for there to be standing.”). Accordingly, I would affirm dismissal of her DoD
contract claims.
                        ______________________________




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