author: AGEE, Circuit Judge:

text:
    UNITED STATES of America EX REL. Patrick Gerard CARSON, Plaintiff-Appellant, and United States of America ex rel. Christine A. Ribik, Plaintiff, v. MANOR CARE, INCORPORATED, a/k/a HCR Manor Care, Inc., d/b/a HCR Manor Care; HCR Manor Care; Heartland Employment Services, LLC, Defendants-Appellees, and Manor Care—Fair Oaks of Fairfax VA, LLC, d/b/a ManorCare Health Services—Fair Oaks; Manor Care of Arlington VA, LLC, d/b/a ManorCare Health Services—Arlington; Manor Care of North Hills of Pittsburgh PA, LLC, a/k/a ManorCare Health Services—North Hills; Manor Care of Pottstown, PA, LLC, a/k/a ManorCare Health Services—Pottstown; Manor Care of Pottsville PA, LLC, a/k/a ManorCare Health Services—Pottsville; Manor Care of Sinking Spring PA, LLC, a/k/a ManorCare Health Services—Sinking Spring; Manor Care of Sunbury PA, LLC, a/k/a ManorCare Health Services—Sunbury; Manor Care of West Reading PA, LLC, a/k/a ManorCare Health Services—West Reading North; Manor Care of Whitehall Borough PA, LLC, a/k/a ManorCare Health Services—Whitehall Borough; Manor Care of Williamsport PA (South), LLC, a/k/a ManorCare Health Services—Williamsport South; Manor Care of Yardley PA, LLC, a/k/a ManorCare Health Services—Yardley; Manor Care of Yeadon PA, LLC, a/k/a ManorCare Health Services—Yeadon; Manor Care of York (North) Inc., a/k/a Manor Care—North, a/k/a ManorCare Health Services—York North; Manor Care of York (South) Inc., a/k/a Manor Care—South, a/k/a ManorCare Health Services—York South; Manor Care of Charleston, Inc., a/k/a HCR ManorCare Health Services—Charleston, a/k/a Manor Care, Incorporated; Manor Care of Columbia, Inc., a/k/a HCR Manor Care—Columbia, a/k/a Manor Care, Incorporated; Manor Care of Lexington, Inc., a/k/a Manor Care Nursing and Rehab Center, a/k/a Manor Care, Incorporated; Manor Care of Aberdeen SD, LLC, a/k/a ManorCare Health Services— Aberdeen; Manor Care of Tennessee, Inc.; Manor Care of Dallas TX, LLC, a/k/a ManorCare Health Services—Dallas; Manor Care of Forth Worth TX, LLC, a/k/a ManorCare Health Services—Fort Worth; Manor Care of Houston TX, LLC, a/k/a ManorCare Health Services—Houston, a/k/a ManorCare Health Services—Sharpview; Manor Care of North Richland Hills TX, LLC, a/k/a ManorCare Health Services—North Richland Hills; Manor Care of San Antonio TX, LLC; Manor Care of Webster TX, LLC; Manor Care of Alexandria VA, LLC; Manor Care of Imperial (Richmond VA), LLC; Manor Care of Stratford Hall (Richmond VA), LLC; Manor Care Health Services of Washington Inc.; Manor Care of Gig Harbor WA, LLC; Manor Care of Lynwood WA, LLC; Manor Care of Tacoma WA, LLC; Manor Care of Appleton WI, LLC; Manor Care of Fond du Lac WI, LLC; Manor Care of Green Bay WI (East), LLC; Manor Care of Kenosha WI, LLC; Manor Care of Pewaukee WI, LLC; Carlyle Group, a/k/a Carlyle—ManorCare; Carlyle MC Partners, L.P.; Carlyle Partners V MC, L.P.; ManorCare Health Services of Arizona, Inc.; Heather Manor Care Center, Inc., a/k/a Heather Manor Nursing and Rehab Center; Stella Manor Care Center, Inc.; Manor Care of California Inc.; Broadway Manor Care Center, Inc.; Carlyle Partners, LLC; Carlyle Group LLC; Desert Manor Care Center LP; Fredericka Manor Care Center, Inc.; Kingsley Manor Care Center, Inc.; Manor Care of Citrus Heights CA, LLC; Manor Care of Fountain Valley CA, LLC; Manor Care of Sunnyvale CA, LLC; Manor Care of Hemet CA, LLC; Man- or Care of Palm Desert CA, LLC; Manor Care Health Services—Tice Valley; Manor Care of Rancho Bernardo CA, LLC; Pine Manor Care Home, Inc.; Pleasant Manor Care Homes, Inc.; Walnut Manor Care Center, Inc.; Valencia Manor Care, Inc.; Villa Manor Care Center, Inc.; Ashley Manor Care Centers, Inc.; Berkley Manor Care Center, Inc.; CCF—Manor Care, LLC; Columbine Manor Care Center, Inc.; Grace Manor Care Center, a/k/a Burlington Nursing Home, LLC; HRC Manor Care Medical Services of Florida, Inc.; Laurel Manor Care Center, Inc.; Manor Care Health Services—Boulder, a/k/a ManorCare Health Services, Incorporated, f/k/a ManorCare Health Services of Colorado; Manor Care Health Services—Denver, a/k/a ManorCare Health Services, Incorporated; Valley Manor Care Center, Inc.; Wheatridge Manor Care Center; Pilgrim Manor Care Center, Inc.; Westfield Manor Care Center, Inc.; Manor Care Health Services—Pike Creek; Manor Care Health Services—Wilmington; Manor Care of Boca Raton, Inc., a/k/a Manor Care of Boca Raton FL, LLC; Manor Care of Boynton Beach, Inc., a/k/a ManorCare Services of Boynton Beach FL, LLC; Manor Care of Brevard, Inc.; Manor Care of Broward, Inc.; Manor Care—Carrollwood of Tampa FL, LLC, a/k/a ManorCare Health Services-Carrollwood of Tampa Florida; Manor Care of Delray Beach FL, LLC, a/k/a ManorCare Health Services—Delray; Manor Care of Dunedin FL, LLC; Manor Care of Fort Myers, Inc., a/k/a ManorCare Health Services of Fort Myers, Inc.; Manor Care—Lely Palms of Naples FL (SH), LLC; Manor Care of Palm Harbor FL, LLC, a/k/a ManorCare Health Services—Palm Harbor; Manor Care of Plantation, Inc., a/k/a ManorCare Health Services of Plantation, Inc.; Manor Care of Sarasota, Inc., a/k/a ManorCare Nursing Center of Sarasota FL, LLC; Manor Care of Venice FL, LLC; Manor Care of West Palm Beach FL, LLC, a/k/a Manor-Care Health Services—West Palm Beach; Manor Care of Winter Park FL, LLC, a/k/a ManorCare Health Services—Winter Park; Manor Care Health Services of Georgia, Inc.; GCI Valley Manor Care Health Center; Manor Care of Covington, LLC; Manor Care of Marietta GA, LLC, a/k/a ManorCare of Marietta Nursing and Rehab; Manor Care Rehabilitation Center of Decatur GA, LLC, a/k/a ManorCare Nursing and Rehab Center—Decatur, a/k/a ManorCare Health Services—Decatur; Manor Care of Arlington Heights IL, LLC, a/k/a ManorCare Health Services—Arlington Heights; Manor Care of Champaign IL, LLC, a/k/a ManorCare Health Services—Champaign; Manor Care of Elgin IL, LLC; Manor Care of Elk Grove Village IL, LLC, a/k/a Manor-Care Health Services—Elk Grove Village; Manor Care of Highland Park IL, LLC, a/k/a ManorCare of Highland Park; Manor Care of Hinsdale IL, LLC, a/k/a ManorCare of Hinsdale; Manor Care of Homewood IL, LLC, a/k/a ManorCare Health Services—Homewood; Manor Care of Kankakee IL, LLC, a/k/a ManorCare Health Services— Kankakee; Manor Care of Libertyville IL, LLC, a/k/a ManorCare Health Services—Liberty-ville; Manor Care of Naperville IL, LLC, a/k/a ManorCare Health Services—Naperville; Manor Care of Northbrook IL, LLC, a/k/a ManorCare Health Services—Northbrook; Manor Care of Oak Lawn (East) IL, LLC, a/k/a ManorCare Health Services—Oak Lawn East; Manor Care of Oak Lawn (West) IL, LLC; Manor Care Health Services—Skokie IL; Manor Care of Palos Heights (East) IL, LLC; Manor Care of Palos Heights (West) IL, LLC; Manor Care of Rolling Meadows IL, LLC; Manor Care of South Holland IL, LLC; Manor Care of Westmont IL, LLC; Manor Care of Wilmette IL, LLC; Rutledge Manor Care Home, Inc.; Manor Care—Anderson, Indiana; Manor Care of Prestwick Avon IL, LLC, a/k/a ManorCare Health Services—Prestwick; Manor Care Health Services—Summer Trace; Manor Care Health Services—Indy South; Manor Care of Cedar Rapids IA, LLC, a/k/a Manor-Care Health Services—Cedar Rapids; Manor Care of Davenport IA, LLC, a/k/a ManorCare Health Services—Davenport; Manor Care of Dubuque IA, LLC, a/k/a ManorCare Health Services—Dubuque; Manor Care of Waterloo IA, LLC, a/k/a ManorCare Health Services—Waterloo; Manor Care of West Des Moines IA, LLC, a/k/a ManorCare Health Services—West Des Moines; Manor Care of Utica Ridge IA, LLC, a/k/a ManorCare Health Services—Utica Ridge; Greenwood ManorCare Center, Inc.; Linn ManorCare Center, Inc.; Northbrook ManorCare Center, Inc.; Tabor ManorCare Center Inc.; ManorCare Health Services of Kansas Inc.; Manor Care of Overland Park Kansas, LLC, a/k/a ManorCare Health Services—Overland Park; Manor Care of Wichita Kansas, LLC, a/k/a ManorCare Health Services—Wichita; ManorCare of Kentucky, Inc.; ManorCare of Mt. Holly, Inc.; Woodcrest Manor Care Center, Inc.; ManorCare of St. Matthews Manor, Inc.; ManorCare Health Services—Bethesda, a/k/a Manor Care of Bethesda MD, LLC, f/k/a Manor Care of Bethesda Inc.; ManorCare Health Services—Chevy Chase, a/k/a Manor Care of Chevy Chase MD, LLC; ManorCare Health Services—Dulaney, a/k/a Manor Care—Dulany MD, LLC; ManorCare Foundation Inc., a/k/a HCR ManorCare Foundation Inc.; ManorCare Health Services—Largo, a/k/a Manor Care of Largo MD, LLC, f/k/a Manor Care of Largo Inc.; ManorCare Health Services—Potomac, a/k/a Manor Care of Potomac MD, LLC; ManorCare Health Services—Roland Park, a/k/a Manor Care—Roland Park; Manor-Care Health Services—Rossville, a/k/a Manor Care—Rossville MD, LLC; ManorCare Health Services—Ruxton, a/k/a Manor Care Ruxton MD, LLC; ManorCare Health Services—Silver Spring, a/k/a Manor Care of Silver Spring MD, LLC; ManorCare Health Services—Towson, a/k/a Manor Care of Towson, LLC; ManorCare Health Services—Wheaton, a/k/a Manor Care of Wheaton MD, LLC; ManorCare Health Services—Woodbridge Valley; Arbor Manor Care Center, Inc.; Country Manor Care Center, Inc.; Manor-Care Nursing and Rehabilitation Center; Columbia Manor Care Center, Inc.; Grandview Manor Care Center, Inc.; Kirksville Manor Care Center, Inc.; Labelle Manor Care Center, Inc.; ManorCare Health Services—Florissant, a/k/a Manor Care of Florissant MO, LLC; ManorCare Health Services — Springfield, a/k/a Manor Care of Springfield MO, LLC; Redwood Manor Care Center, Inc.; ManorCare Health Services—Reno, a/k/a Manor Care of Reno NV, LLC; ManorCare Health Services—Wingfield Hills, a/k/a Manor Care of Wingfield Hills NV, LLC; Riverview Manor Care Center, Inc.; King Manor Care and Rehabilitation Center, Inc.; ManorCare Health Services—Cherry Hill, a/k/a Manor Care of Cherry Hill NJ, LLC; ManorCare Health Services—Mountainside; ManorCare Health Services—New Providence, a/k/a Manor Care of New Providence NJ, LLC; ManorCare Health Services—Voorhees, a/k/a Manor Care of Voorhees NJ, LLC; ManorCare Health Services—Washington Township, a/k/a Manor Care of Washington Township NJ, LLC; ManorCare Health Services—West Deptford, a/k/a Manor Care of West Deptford NJ, LLC; Stratford Manor Care and Rehabilitation Center, Inc.; ManorCare Health Services—Pinehurst, a/k/a Manor Care of Pinehurst, Inc., a/k/a Manor Care of Pinehurst NC, LLC; Manor Care of Fargo ND, LLC, a/k/a Manor-Care Health Services—Fargo; Manor Care of Minot ND, LCL, a/k/a Manor-Care Health Services—Minot; HRC ManorCare Properties, LLC; HRC Manor Care Foundation Inc.; Hillcrest Manor Care Center, Inc.; Manor Care of America, Inc.; Manor Care of Akron OH, LLC, a/k/a ManorCare Health Services—Akron; Manor Care — Belden Village of Canton OH, LLC, a/k/a ManorCare Health Services—Belden Village of Canton; ManorCare Health Services—Barberton; Manor Care of Centerville, Inc., a/k/a Heartland of Centerville, a/k/a HRC ManorCare—Centerville; Manor Care—Euclid Beach of Cleveland OH, LLC, a/k/a ManorCare Health Services—Euclid Beach; ManorCare Services—Lake Shore, a/k/a Manor Care at Lake Shore; Manor Care Mt. Airy, a/k/a Heartland of Mt. Airy; Manor Care of Mayfield Heights OH, LLC, a/k/a ManorCare Health Services—Mayfield Heights; Manor Care of North Olmstead OH, LLC, a/k/a ManorCare Health Services— North Olmstead; Manor Care of Parma OH, LLC, a/k/a ManorCare Health Services—Parma; Manor Care Properties, Inc.; ManorCare Health Services—Rocky River, a/k/a Manor Care of Rocky River OH, LLC; Manor Care at Sycamore Glenn; Manor Care of Westerville OH, LLC, a/k/a ManorCare Health Services—Westerville; Manor Care of Willoughby OH, LLC, a/k/a ManorCare Health Services—Willoughby; Oakhill Manor Care Center, Inc. Def; Pickaway Manor Care Center, Inc.; Manor Care of Midwest City OK, LLC, a/k/a ManorCare Health Services—Midwest City; Manor Care of Oklahoma City (Northwest), LLC, a/k/a ManorCare Health Services— Northwest; Manor Care of Oklahoma City (Southwest), LLC, a/k/a Manor-Care Health Services—Southwest; Manor Care of Tulsa OK, LLC, a/k/a ManorCare Health Services—Tulsa; Devon Manor Corporation, a/k/a Man- or Care at Devon; Manor Care of Allentown PA, LLC, a/k/a ManorCare Health Services—Allentown; Manor Care of Bethel Park PA, LLC, a/k/a ManorCare Health Services—Bethel Park; Manor Care of Bethlehem PA (2021), LLC, a/k/a ManorCare Health Services—Bethlehem (2021); Manor Care of Bethlehem PA (2029), LLC, a/k/a ManorCare Health Services—Bethlehem (2029); Manor Care of Camp Hill PA, LLC, a/k/a ManorCare Health Services—Camp Hill; Manor Care of Carlisle PA, LLC, a/k/a ManorCare Health Services—Carlisle; Manor Care of Chambersburg PA, LLC, a/k/a ManorCare Health Services—Chambersburg; Manor Park of Dallastown PA, LLC, a/k/a Manor-Care Health Services—Dallastown, a/k/a ManorCare Health Services—Camp Hill; Manor Care of Easton PA, LLC, a/k/a ManorCare Health Services—Easton; Manor Care of Elizabethtown, LLC, a/k/a ManorCare Health Services—Elizabethtown; Manor Care—Greentree of Pittsburgh PA, LLC, a/k/a ManorCare Health Services—Greentree; Manor Care Health Services—Harrisburg, a/k/a Manor Healthcare Corp.; Manor Care of Huntingdon Valley PA, LLC, a/k/a ManorCare Health Services—Huntington Valley; Manor Care of Jersey Shore PA, LLC, a/k/a ManorCare Health Services—Jersey Shore; Manor Care King of Prussia PA, LLC, a/k/a ManorCare Health Services—King of Prussia; Manor Care of Kingston PA, LLC, a/k/a ManorCare Health Services—Kingston; Manor Care—Kingston Court of York PA, LLC, a/k/a ManorCare Health Services—Kingston Court; Manor Care of Lancaster PA, LLC, a/k/a ManorCare Health Services—Lancaster; Manor Care Lansdale of Montgomery PA, LLC, a/k/a ManorCare Health Service—Lansdale; Manor Care of Laureldale PA, LLC, a/k/a ManorCare Health Services—Laureldale; Manor Care of Lebanon PA, LLC, a/k/a ManorCare Health Services—Lebanon; Manor Care of McMurray PA, LLC, a/k/a ManorCare Health Services—McMurray; Manor Care of Monroeville PA, LLC, a/k/a ManorCare Health Services—Monroeville; Manor Care of Platteville WI, LLC; Manor Care of Shawano (East) WI, LLC; Manor Care of Shawano (West) WI, LLC; HCR ManorCare, Defendants.
    No. 16-1035
    United States Court of Appeals, Fourth Circuit.
    Argued: December 7, 2016
    Decided: March 16, 2017

      ARGUED: William Louis Hurlock, MUELLER LAW LLC, Montclair, New Jersey, for Appellant. James Christopher Martin, REED SMITH LLP, Pittsburgh, Pennsylvania, for Appellees. ON BRIEF: Christopher P. Furlong, MUELLER LAW LLC, Montclair, New Jersey; L. Kendall Satterfield, Robert Wilson, Rosa-lee B.C. Thomas, FINKELSTEIN, THOMPSON LLP, Washington, D.C., for Appellant. Eric A. Dubelier, Katherine J. Seikaly, Washington, D.C., Colin E. Wrab-ley, M. Patrick Yingling, REED SMITH LLP, Pittsburgh, Pennsylvania, for Appel-lees.

      Before SHEDD, AGEE, and DIAZ, Circuit Judges.
   AGEE, Circuit Judge:

Patrick Gerard Carson filed a qui tam suit on behalf of the United States and several states under the False Claims Act (“FCA”) and the state equivalents, claiming that his employer, HCR Manor Care, and related companies, Manor Care, Inc. and Heartland Employment Services, LLC, (collectively, “Manor Care”) were ov-erbilling the respective governments for medical services. Carson included a separate claim of retaliation in his complaint, alleging that his employment was terminated after he notified his employer of the alleged overbilling. The district court dismissed the complaint in its entirety under the FCA’s. first-to-file rule. For the reasons below, we .affirm in part and vacate and remand in part.

I.

In January 2009, Christine A. Ribik filed a qui tam suit under seal in the Eastern District of Virginia on behalf of the United States against Manor Care. As a former occupational therapist for Manor Care’s nursing facilities, Ribik alleged that she “witnessed therapists and other staff members commit numerous offenses in violation of Medicare regulations, which give rise to violations of the False Claims Act.” J.A. 49. The complaint alleged that Manor Care inflated its revenues through over-billing Medicare for “skilled physical therapy and rehabilitation” costs. J.A. 52. Ri-bik claimed that Manor Care regularly and fraudulently classified its patients as needing more physical therapy than necessary and instructed its physical therapists to spend more time than needed with the patients, resulting in higher Medicare payments. She also alleged that Manor Care sent some patients to physical or occupational therapy who did not need it at all and refused to discharge patients for whom physical therapy was no longer useful. Ribik amended her complaint in April 2011.

In September 2011, Carson filed a qui tam suit under seal in the Eastern District of Virginia on behalf of the United States and several individual states against Manor Care under the FCA and the state-equivalent statutes. The suit sought

to recover on behalf of the Government damages and civil penalties arising from false or fraudulent claims that Defendants submitted or caused to be submitted to federal Government-funded health insurance programs for skilled nursing facility stays and the therapies administered during those stays to Government-funded health insurance including, but not limited to, Medicare, Medicaid, TRI-CARE/CHAMPUS and FEHBP beneficiaries.

J.A. 132. Carson alleged that Manor Care had committed fraud upon the government through its billing practices, including “(a) Overbill[ing] for therapy services provided; (b) Bill[ing] for therapy services not provided; (c) Billing] non-skilled activities as skilled therapy; and (d) Billfing] for unreasonable, unnecessary and at times harmful therapy.” J.A. 132. The complaint also alleged that Manor Care spent more time than necessary with patients to increase billing and “postponed the discharge of patients for days and sometimes weeks longer than medically appropriate.” J.A. 133. Carson claimed that he witnessed these practices while working for Manor Care’s nursing facilities as a physical therapist assistant.

Carson also made a claim of retaliation under the FCA, alleging that his “employment with [Manor Care] was terminated in November of 2009 due to his repeated complaints about the fraudulent billing practices concerning patients associated with Government funded health programs including, but not limited to, Medicare and Medicaid.” J.A. 163. The complaint stated that Carson informed management, human resources, and the corporate office of the “continued billing fraud” in February 2007 and multiple times in 2009, with a final complaint to Manor Care’s corporate compliance office in November 2009. J.A. 164. He was fired less than a week later. Manor Care .stated that Carson’s employment “was terminated for changing a plan of care in violation of [state law],” given that “only a physical therapist may change a treatment goal within a plan of care.” J.A. 164. Carson was not a licensed physical therapist. However, Carson claimed this reason was merely pretext, especially since “the goal changed by [Carson] was approved by the physical therapist, consistent with the practice utilized by [Manor Care].” J.A. 164.

Carson filed an amended complaint with twenty-five causes of action in May 2015; the only change from the original complaint was to remove certain defendants. Claims one through eight were qui tam claims under the FCA, including a conspiracy claim. The ninth was an FCA retaliation claim. The remaining causes of action were brought under the various state FCA-equivalent statutes.

Ribik and Carson’s cases were consolidated in June 2012, and a third case was added in November 2014. The United States Government filed a notice of election to intervene in the consolidated case in December 2014, and its “Consolidated Complaint in Intervention” was filed in April 2015. In July 2015, Manor Care filed a motion to dismiss the Government’s complaint, arguing that the complaint failed to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) and was improperly pleaded under Federal Rule of Civil Procedure 9(b). The district court denied the motion.

Manor Care then filed a motion to dismiss Carson’s amended complaint. Among other arguments, Manor Care contended that the FCA and Michigan qui tam claims were barred by the first-to-file rule, and the FCA and all the state-equivalent qui tam claims, save the Wisconsin claim, were barred because they were based on public disclosure. Further, Manor Care argued that all claims failed because they were not “plausibly or sufficiently pleaded ... pursuant to Rules 12(b)(6) and 9(b).” J.A. 563. The district court granted the motion in December 2015 in a three-page order, concluding that Carson’s . complaint was “based upon the same material elements of alleged fraud” as Ribik’s complaint, and therefore the F.CA’s first-to-file rule barred all of Carson’s claims. J.A. 638. The court dismissed Carson’s complaint in its entirety for lack of subject matter jurisdiction. Carson filed a timely notice of appeal, and we have jurisdiction pursuant to 28 U.S.C. § 1291.

II.

The Court reviews a dismissal for lack of subject matter jurisdiction and questions of statutory interpretation de novo. Wu Tien Li-Shou v. United States, 777 F.3d 175, 179 (4th Cir.), cert. denied, — U.S. -, 136 S.Ct. 139, 193 L.Ed.2d 42 (2015) (subject matter jurisdiction); Tankersley v. Almand, 837 F.3d 390, 395 (4th Cir. 2016) (statutory interpretation). “We may affirm on any grounds supported by the record, notwithstanding the reasoning of the district court.” Tankersley, 837 F.3d at 395.

III.

Carson’s amended complaint alleged FCA qui tam claims, an FCA retaliation claim, and state fraud claims similar to an FCA qui tam claim. We address each in turn.

A.

A private, citizen may bring a civil action on behalf of the federal government for violation of the FCA. 31 U.S.C. § 3730(b). The FCÁ “eneourag[es] citizens to act as whistleblowers, [while] also seeking] to prevent parasitic lawsuits based on previously disclosed fraud.” United States ex rel. Carter v. Halliburton Co., 710 F.3d 171, 181 (4th Cir. 2013), aff'd in part, rev’d in part on other grounds sub nom. Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, — U.S. -, 135 S.Ct. 1970, 191 L.Ed.2d 899 (2015). The Government may intervene in the action or allow the person filing the suit, called a relator, to proceed. 31 U.S.C. § 3730(b)(4). If the Government intervenes, the relator “shall have the right to continue as a party to the action.” Id. § 3730(c)(1). Notably, “[w]hen a person brings an action under [the qui tam] subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” Id. § 3730(b)(5). The purpose of this restriction, known as the first-to-file rule, “is to provide incentives to relators to promptly alert the government to the essential facts of a fraudulent scheme,” United States ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111, 117 (1st Cir. 2014), while also keeping in mind the FCA’s goal of maintaining the “balance between encouraging citizens to report fraud and stifling parasitic lawsuits,” United States ex rel. LaCorte v. Wagner, 185 F.3d 188, 191 (4th Cir. 1999).

The Court applies the “material elements test” in determining whether a later-filed complaint is based on the facts underlying a previously-filed complaint. Carter, 710 F.3d at 182. The material elements tests bars a later suit “if it is based upon the same material elements of fraud as the earlier suit, even though the subsequent suit may incorporate somewhat different details.” Id.-, see also Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276, 1279 (10th Cir. 2004) (stating that the first-to-file rule applies when “a subsequent complaint raises the same or a related claim based in significant measure on the core fact or general conduct relied upon in the first qui tam action”). “[D]ifferences in specifics — such as geographic location or added facts — will not save a subsequent case.” Carter, 710 F.3d at 181. A belated “relator who merely adds details to a previously exposed fraud does not help reduce fraud or return funds to the federal fisc, because once the government knows the essential facts of a fraudulent scheme, it has enough information to discover related frauds.” United States ex rel. Branch Consultants v. Allstate Ins. Co., 560 F.3d 371, 378 (5th Cir. 2009). If a court finds that the particular action before it is barred by the first-to-file rule, the court lacks subject matter jurisdiction over the later-filed matter. Carter, 710 F.3d at 181. In that circumstance, the court must dismiss the action under Federal Rule of Civil Procedure 12(h)(3): “If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”

Carson argues that his “allegations go well beyond [Ribik’s] allegations and include improper conduct that is wholly additional to anything contained in any previously filed complaints.” Opening Br. 11. While he contends that the district court conducted only a “cursory review of the allegations generally,” Opening Br. 12, our review is not cursory, yet we arrive at the same result. Indeed, Carson’s claims are essentially the same as those found in Ribik’s complaint. The shared contention of both complaints is that Manor Care implemented a scheme of overbilling for medical and physical therapy costs in order to defraud the Government. A comparison of the two complaints reveals how similar they are. See United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112, 121 (D.C. Cir. 2015) (“Similarity is assessed by comparing the complaints side-by-side, and asking whether the later complaint alleges a fraudulent scheme the government already would be equipped to investigate based on the first complaint.”). Compare J.A. 118-24 (Ribik’s complaint), with J.A. 279-90 (Carson’s complaint).

Ribik claimed that she “observed various fraudulent and improper practices related to billing and provision of Medicare related benefits.” J.A. 119. Her complaint stated that Manor Care “classified various patients in high and ultra high RUG classifications, even when their physical condition did not warrant the need for such extensive services.” J.A. 119.- Ribik alleged that Manor Care “encouraged their physical therapy staff to maximize the number of minutes that they would spend with a patient during a reference period (the period of time used to determine a RUG level),” resulting in physical, occupational, and speech therapy continuing beyond what the patients needed. J.A. 119. She claimed that Manor Care “submitted billing to Medicare for patients who simply did not require skilled physical or occupational therapy” and “failed to discharge patients who were ready for discharge to outpatient services, so they could bill Medicare for skilled therapy that was no longer necessary.” J.A. 120. The complaint stated that Ribik observed Manor Care employees “co-treating occupational therapy patients with a physical therapist, yet reporting the time separately to increase costs to Medicare.” J.A. 121. Further, she alleged that Manor Care had practices of “billing treatment time even when 'patients were not engaged in treatment but were asleep, walking to treatment, toileting, or because of'dementia, were actively resisting care,” “falsely stating that treatments were performed when in fact a patient had not been given treatment,” and “billing for services which were not medical [sic] necessary or appropriate for patients, including use of peg boards and pumpkin carving.” J.A. 121-22. Also, Ribik claimed that Manor Care instructed its employees to “plae[e] patients, who could independently ambulate in excess of 150 feet and perform their acts of daily living in skilled therapy programs when they did not qualify for or require such services.” J.A. 122. She maintained that Manor Care employees “would pull patients from the general nursing home who were not eligible for physical therapy,” particularly “individuals with advanced Alzheimer’s disease or dementia,” in order to bill for unneeded services. J.A. 123. Finally, Ribik alleged that Manor Care “encouraged and assented to these [illegal] activities by providing incentives and bonuses to those Directors at [Manor Care’s] facilities who had the highest utilization rates.” J.A. 124.

Much like Ribik, Carson claimed that Manor Care “utilized improper billing practices and methodologies to present or cause to be presented false claims to the Government for payments under the Government-funded health insurance programs.” J.A. 279. He alleged that Manor Care instructed its staff to “indiscriminately shift minutes amongst the three therapy disciplines (physical, occupational and speech), to capture all prescribed minutes from patients from Government funded health programs,” so that Manor Care’s facilities “would not lose a high RUG category.” J.A. 281. The Carson complaint also stated that Manor Care’s employees would “often continue to treat patients who have already attained their treatment goals and/or patients whose treatment goals are clearly unattainable,” that “[m]ost patients at the Facility who receive physical therapy also receive occupational therapy, regardless of medical need,” and that Manor Care “often delay[ed] the discharge of patients from the Facility for days and sometimes weeks longer than medically necessary,” all in order to increase billing. J.A. 285, 288. Carson alleged that “co-treatment sessions were double-billed” and that Manor Care employees “routinely bill[ed] for therapy that was refused by the patient and/or not even attempted by the Staff Member,” made claims for patients “not actively engaged [in] therapy,” and billed for various non-skilled services and “activities designed to motivate and entertain the patients,” such as “singing Christmas carols.” J.A. 282-84. In addition, he maintained that Manor Care employees provided excessive therapy “to Alzheimer’s patients and patients suffering from other forms of dementia.” J.A. 285. Finally, Carson alleged that Manor Care employees were rewarded with “free lunch” for reaching a “corporate goal” of utilizing certain treatments. J.A. 286.

It is clear that Carson’s allegations are materially similar to those found in Ribik’s complaint. He attempts to distinguish his complaint by arguing that he is the sole relator to argue that Manor Care “improperly increased their billings to Government-funded health programs” by “consistently administering modalities like electric stimulation, diathermy, and ultra sound to inappropriate patients.” Opening Br. 12. While Carson maintains that these “modalities” somehow constitute schemes different from those alleged in Ribik’s complaint, those treatments fall under Ri-bik’s general claim that Manor Care billed the Government for unnecessary treatment. The allegations in Ribik’s earlier-filed complaint “provide the government with enough knowledge of essential facts of the scheme to discover related fraud.” See Carter, 710 F.3d at 182. Neither Carson’s factual additions nor the fact that his experience took place in Pennsylvania, as opposed to Ribik’s experience in Virginia, saves him from the first-to-file bar. See id. at 181. Carson “has not managed to avoid § 3730(b)(5)’s first-to-file bar simply by alleging additional facts relating to how [Manor Care overbilled the Government], even though some of those specific allegations were not mentioned in [Ribik’s] complaint.” See Grynberg, 390 F.3d at 1280; see also Branch Consultants, 560 F.3d at 378 (“Any construction of § 3730(b)(5) that focused on the details of the later-filed action would allow an infinite number of copycat qui tam actions to proceed so long as the relator in each case alleged one additional instance of the previously exposed fraud.”).

Alternatively, and even assuming Carson’s complaint contains substantially the same claims as Ribik’s, he argues that his complaint should not be dismissed because the district court consolidated his claims with Ribik’s. Because the Government intervened in the consolidated action, Carson argues that his claims survive application of the first-to-file bar. While a novel argument, it has no merit. The FCA does not make an exception to the first-to-file rule for consolidated complaints. The first-to-file rule is “an absolute, unambiguous exception-free rule.” Carter, 710 F.3d at 18Í. The statute is clear: “[w]hen a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5) (emphasis added). The statute does not read that “no person other than the Government may intervene or bring a related action based on the facts underlying the pending action unless that person’s case is consolidated with the earlier-filed case.” Carson has not directed the Court to any authority supporting his unique position, which contravenes the plain language of the statute. See United States ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227, 237 (3d Cir. 1998) (stating that “Merena filed his complaint before any of the other consolidated relators, and ... § 3730(b)(5) therefore- would bar any claims in the [other] complaints [consolidated with Merena’s] that repeat Merena’s allegations”); see also United States ex rel. McLain v. Fluor Enters., Inc., Nos. 06-11229, 09-4191, 2014 WL 1796693 (E.D. La. May 6, 2014) (dismissing individual claims after consolidation because of the first-to-file rule); United States ex rel. Simpson v. Bayer Corp., No. 05-3895(JLL), 2012 WL 3600302 (D.N.J. Aug. 21, 2012) (same); United States ex rel. Denenea v. Allstate Ins. Co., No. 07-2795, 2011 WL 231780 (E.D. La. Jan. 24, 2011) (same). Carson’s alternative argument fails under the plain language of the FCA.

Accordingly, the district court properly determined that it lacked subject matter jurisdiction over Carson’s qui tam action under the FCA.

B.

While the foregoing resolves the jurisdictional issue as to the substantive FCA qui tam claims, Carson separately pleads a cause of action for retaliation in the termination of his employment. The FCA prohibits employers from retaliating against any employee “because of lawful acts done by the employee ... in furtherance of an action under this section or other efforts to stop 1 or more violations of this subchapter.” 31 U.S.C. § 3730(h)(1). The district court dismissed Carson’s retaliation claim on the same' ground that it dismissed the FCA qui tam claims: the fírst-to-fíle rule. However, the fírst-to-fíle rule has no relation to a claim for retaliation.

We interpret a statute by looking to its text and structure. See T-Mobile S., LLC v. City of Roswell, — U.S. -, 135 S.Ct. 808, 815, 190 L.Ed.2d 679 (2015) (analyzing the Telecommunications Act by focusing on “the statutory text and structure, and the concepts that Congress imported into the statutory framework”); Raplee v. United States, 842 F.3d 328, 332 (4th Cir. 2016) (“When construing a statute, we start with its text.”). A plain reading of the FCA reveals that the fírst-to-fíle rule is subsumed under, and therefore limited to, the “actions by private persons” provision of § 3730(b). By contrast, the retaliation action is contained within a separate subsection, § 3730(h), and is not tied back to subsection (b) or incorporated by reference. Application of the fírst-to-fíle rule is contained solely within the “actions by private persons” of § 3730(b) and thus only applies to claims covered by that subsection. Under the plain language of the statute, § 3730(h) stands independently to subsection (b) and deals with an entirely different subject matter: retaliatory acts as opposed to false claims.

Considered from another perspective, assuming there is a sufficient basis to sustain an FCA fraud underlying a plaintiffs claims, those claims in effect belong to the Government. In contrast, the retaliatory claim is personal to the plaintiff, and the Government has no interest or right to that claim. See Brooks v. United States, 383 F.3d 521, 524-25 (6th Cir. 2004) (noting that § 3730(h) provides a cause of action for the recovery of “personal injury damages”); see also Smith v. Clark/Smoot/Russell, 796 F.3d 424, 433 (4th Cir. 2015) (instructing that, for a retaliation claim, “a plaintiff must allege that (1) he engaged in protected activity, (2) the employer knew about the activity, and (3) the employer took adverse action against him as a result” (emphasis added)).

It would not make sense to allow only the person who wins the race to the courthouse on the qui tarn claim to have a cause of action for retaliation rather than the victim of that retaliation. Because qui tarn suits are initially filed under seal, plaintiffs are often unaware upon filing their suit that it may have been preempted by another suit. See 31 U.S.C. § 3730(b)(2) (requiring a qui tarn complaint to “be filed in camera, [and] remain under seal for at least 60 days”). Application of the first-to-file rule to § 3730(h) claims would have the effect of causing plaintiffs to hesitate to report fraud to their employers and the Government because, if another suit has already been filed, they will not have any recourse for retaliatory actions by their employers. This is contrary to the purpose of the FCA to encourage private citizens to act as whistleblowers when they suspect fraudulent Government claims. See Mann v. Heckler & Koch Def., Inc., 630 F.3d 338, 349 (4th Cir. 2010) (stating that “[t]he purpose of the FCA is to prevent fraud against the United States” and “the purpose of its anti-retaliation provision is to protect those employees who take actions to uncover fraud”); see also S. Rep. No. 99-345, at 34 (1986) (recognizing that “few individuals will expose fraud if they fear their disclosures will lead to harassment, demotion, loss of employment, or any other form of retaliation” and therefore the FCA “seeks to halt companies and individuals from using the threat of economic retaliation to silence whistleblowers, as well as assure those who may be considering exposing fraud that they are legally protected from retaliatory acts”).

To its credit, Manor Care does not defend the district court’s decision to dismiss Carson’s retaliation claim under the first-to-file rule. Rather, Manor Care argues that we should affirm the trial court’s decision on other grounds. We decline to consider those other grounds as they were never addressed by the district court, which should have that opportunity in the first instance. Therefore, we vacate the district court’s dismissal of Carson’s FCA retaliation claim and remand for further proceedings. In doing so, we express no view on the merits of the other grounds raised by Manor Care regarding Carson’s retaliation claim.

C.

Finally, the district court also dismissed the state fraud claims on the basis of the federal first-to-file rule. The district court did not support its decision with any discussion or authority to establish that any of the states apply the FCA first-to-file rule, or its equivalent, to that state’s statute. As with the FCA retaliation claim, Manor Care does not attempt to defend the district court’s dismissal of the state claims pursuant to the federal first-to-file rule. Rather, Manor Care offers alternative grounds for affirming the district court. Again, we decline to consider those grounds on appeal as they were not addressed by the district court, which should have that opportunity in the first instance, and we express no view on the merits of those arguments. Therefore, we vacate the district court’s judgment as to the state claims and remand those claims to the district court for further proceedings.

IV.

We therefore affirm the district court’s dismissal of Carson’s qui tarn action under the FCA for lack of subject matter jurisdiction, but vacate and remand that part of the judgment concerning Carson’s retaliation and state fraud claims.

AFFIRMED IN PART AND VACATED AND REMANDED IN PART

      . The plethora of companies in this case's caption, excluding those defined above as "Manor Care,” and listed only as “defendants,” were defendants only in Ribik’s ’suit and thus not a part of this appeal.

      . The states include: California, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, Maryland, Michigan, Nevada, New Jersey, North Carolina, Oklahoma, Texas, Virginia, and Wisconsin.

      . This case was filed by Marie Slough in the Eastern District of Michigan on behalf of the United States in August 2010. The parties did not provide her complaint in the joint appendix. Because we find that Carson's complaint was preempted by Ribik's complaint, it is unnecessary to discuss Slough’s complaint.

      . We have omitted internal quotation marks, alterations, and citations here and throughout this opinion, unless otherwise noted.

      . Patients covered by Medicare are classified into resource utilization groups, or RUGs, based on their treatment needs.

      . Carson also argues that the district court erred by refusing to allow him to amend his complaint upon dismissal. We review the district court’s decision to deny leave to amend for abuse of discretion. See Drager v. PLIVA USA, Inc., 741 F.3d 470, 474 (4th Cir. 2014). Carson requested to amend the complaint only in his response to Manor Care's motion to dismiss. Despite being put on notice of the deficiencies in his complaint by Manor Care’s motion, Carson only argued that “all of the Defendants’ arguments, if viable, appear to be curable largely through scriveners’ additions.” J.A. 618. He did not properly file a motion to amend under Federal Rule of Civil Procedure 15 or submit a proposed amended complaint. Therefore, the district court did not abuse its discretion in denying leave to amend. See Drager, 741 F.3d at 474 (holding that, "[rjegardless of the merits of the desired amendment, a district court does not abuse its discretion by declining to grant a motion that was never properly made”); see also Rollins v. Wackenhut Servs., Inc., 703 F.3d 122, 130 (D.C. Cir. 2012) (holding that "a bare request in an opposition to a motion to dismiss— without any indication of the particular grounds on which amendment is sought— does not constitute a motion within the contemplation of Rule 15(a)”).

        In regards to the merits, the district court did not explicitly address Carson's request. Ordinarily, ''[w]hile the grant or denial of an opportunity to amend is within the discretion of the District Court, an outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely abuse of that discretion and inconsistent with the spirit of the Federal Rules.” David v. Alphin, 704 F.3d 327, 343 (4th Cir. 2013). That said, “a district court’s failure to articulate its reasons for denying leave to amend does not amount to an abuse of discretion so long as its reasons are apparent.” Matrix Capital Mgmt. Fund, LP v. BearingPoint, Inc., 576 F.3d 172, 194 (4th Cir. 2009). Furthermore, "when a complaint is incurable'through amendment, dismissal is properly rendered with prejudice and without leave to amend.” McLean v. United States, 566 F.3d 391, 400 (4th Cir. 2009). Carson made no proffer to the district court, nor to this Court, of how his complaint could be amended to overcome the first-to-file bar. See Drager, 741 F.3d at 474; see also Rollins, 703 F.3d at 131 (rejecting a similar argument by noting, in relevant part, that "on appeal [appellant] has not identified any alleged facts to cure the deficiencies in her complaint”). Thus, any amendment would be futile. See United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008) (stating that “a district court may deny leave if amending the complaint would be futile”). Carson’s argument is without merit.

      . Manor Care does argue that Michigan has a first-to-file bar that operates analogously to the federal rule. Because the district court did not address this argument, we decline to affirm the dismissal of the Michigan claim based on this alternative ground, which can be considered by the district court in the first instance upon remand.

      . Because we remand the FCA retaliation claim, the district court may continue to exercise supplemental jurisdiction over the state claims as it so determines in its discretion. See 28 U.S.C. § 1367.


source: Caselaw Access Project

author: NIEMEYER, Circuit Judge:

license: Public Domain

text:
    Jatinder SHARMA; Haymarket Fast Foods, Inc., Plaintiffs-Appellants, v. USA INTERNATIONAL, LLC; Khalil Ahmad; Mahrah Butt, Defendants-Appellees.
    No. 15-2188
    United States Court of Appeals, Fourth Circuit.
    Argued: January 25, 2017
    Decided: March 17, 2017

      ARGUED: John Chapman Petersen, SUROVELL ISAACS PETERSEN & LEVY PLC, Fairfax, Virginia, for Appellants. ON BRIEF: Stephen P. Pierce, SU-ROVELL ISAACS PETERSEN & LEVY PLC, Fairfax, Virginia, for Appellants. Jeffrey S. Poretz, MILES & STOCK-BRIDGE P.C., Tysons Corner, Virginia, for Appellees.
    Before NIEMEYER, TRAXLER, and WYNN, Circuit Judges.
   NIEMEYER, Circuit Judge:

In October 2013, Jatinder Sharma purchased from Khalil Ahmad and Mahrah Butt two restaurant franchises — a Checkers and an Auntie Anne’s — which were located in a Wal-Mart store in Gainesville, Virginia. He paid $600,000 for the restaurants, a price negotiated and based on a multiple of the gross sales of the restaurants. When, after closing, the restaurants’ sales only achieved 60 percent of what had been represented, Sharma uncovered evidence leading him to believe that the sales figures supplied by Ahmad had been manipulated to falsely increase them. Sharma commenced this action for fraud and conspiracy, seeking as damages the difference between the price he paid and the actual value of the restaurants based on a multiple of the restaurants’ actual sales.

The district court granted the defendants summary judgment, concluding that the plaintiffs had not introduced adequate evidence of their damages, particularly of the actual value of the restaurants at the time of the sale. We conclude, however, that the plaintiffs presented sufficient evidence to create a dispute of material fact as to the amount of their damages. Accordingly, we vacate and remand for further proceedings.

I

Ahmad and Butt were partners in USA International, LLC, the entity that owned and operated the Checkers and Auntie Anne’s restaurants. Through their accountant, Sharma learned that Ahmad and Butt were interested in selling the restaurants, and he became interested in purchasing them when the accountant told him that the restaurants were generating high sales figures.

During negotiations, Sharma was provided USA International’s 2012 tax returns and financial statements prepared by the accountant indicating that the restaurants’ combined sales for November and December 2012 were approximately $75,000 per month. Ahmad later provided Sharma with additional financial statements for January and February 2013 showing somewhat lower sales, but he explained that sales were typically lower during that time of the year and assured Sharma that they would increase as the year went on.

The accountant prepared a conditional asset purchase agreement, which the parties executed in March 2013. This preliminary agreement specified a purchase price of $720,000 and made the sale of the restaurants contingent on the stores’ reaching $90,000 in combined monthly sales during the two months prior to settlement. After executing the agreement, Ahmad provided Sharma with two further financial statements prepared by his accountant. One statement covered the period from January through March 2013 and showed average monthly sales of $59,416, and the other covered April 2013 and showed sales of $75,712.

In April 2013, Sharma met with Checkers’ corporate officials to obtain approval of the transfer of the franchise. During that meeting, Checkers’ officials told Shar-ma that, based on the restaurants’ profitability, a purchase price of $720,000 was too high.

Following this meeting with Checkers, Sharma reopened negotiations with Ahmad and the two agreed to a lower sales price of $600,000. In the final purchase agreement that was executed in May 2013, the monthly sales contingency was deleted and the $600,000 sales price was allocated between the two restaurants — $350,000 for the Checkers and $250,000 for the Auntie Anne’s.

In preparation for Closing, Sharma formed Haymarket Fast Foods, Inc., to take title to the restaurants and submitted a loan application to his bank for a portion of the purchase price. In his application, he indicated, based on the financials submitted by Ahmad, that the restaurants had an average monthly gross sales of $67,083.62 for the eight months ending in August 2013. The closing took place on October 14, 2013.

Shortly after Sharma took over the operation of, the restaurants, he noticed that his sales figures were only about 60 percent of the sales figures he had been given by Ahmad. Seeking to investigate the reason for the slow sales, he asked employees at two of his food vendors whether his supply orders in the first weeks of operation were different from those of USA International. Both vendors indicated that Sharma’s purchases were “in line” with prior purchases that had been made by USA International, and this was confirmed by USA International’s earlier food purchase orders issued to the vendors. This fact provided Sharma a “red alert” because, in his view, the restaurants simply could not generate the amount of sales that Ahmad had reported without having purchased more food supplies. He began to suspect that the defendants had somehow inflated their sales numbers and reported those inflated sales numbers in the income statements that had been supplied to him.

Pursuing the matter further, Sharma reviewed his cash registers’ transaction histories and observed that, on several occasions, many sales in high dollar amounts were processed in quick succession. These sales were all rung up while Mahrah Butt — one of the partners of USA International and manager of the Checkers restaurant — was logged into the cash register. In addition, employees who had worked at Checkers before Sharma took over told Sharma that Butt had “many times” and on many different days rung up sales that no customer had placed and had directed employees not to make sandwiches even though receipts for them had been printed.

Sharma also conducted an analysis of the Bank of America accounts into which USA International had deposited its proceeds, both from credit card transactions and cash. Those deposits were substantially lower than the amounts represented in the sales records provided to Sharma. For example, for the period from May 2013 to July 2013, the bank account statements showed deposits from credit card transactions and cash in the total amount of $170,316.84. The reported sales figures for that period, however, indicated that the total sales were $222,722.39, an apparent overstatement of over $52,000.

Sharma and Haymarket commenced this fraud action in December 2013 in Virginia state court, naming USA International, Ahmad, and Butt as defendants, and the defendants removed the action to federal court. In their complaint, the plaintiffs alleged that, by inflating sales figures and lying about those figures during negotiations, the defendants fraudulently induced Sharma to pay $600,000 “for a business that [was] worth far less.” The complaint-also asserted a claim for conspiracy to commit fraud. The plaintiffs sought compensatory and punitive damages.

After discovery, the defendants filed a motion for summary judgment, contending that the plaintiffs could not establish their damages with reasonable certainty and that, in any event, the plaintiffs presented insufficient evidence of their reliance on and the materiality of the alleged misrepresentations.

In considering the motion, the district court concluded that the plaintiffs had presented sufficient evidence to show that the defendants made false representations of material fact with the intent to mislead the plaintiffs about the value of the restaurants and that the plaintiffs reasonably relied on those representations. The court nonetheless concluded that the plaintiffs had failed to submit sufficient evidence to allow a factfinder “to estimate with reasonable certainty the amount of damages plaintiffs sustained.”

While the court assumed that the sales price of $600,000 adequately evidenced the restaurants’ bargained-for value, it found insufficient evidence of the restaurants’ actual value at the time of the sale, which the plaintiffs had claimed was $360,000. Specifically, the court rejected the two methods proposed by the plaintiffs to reach the actual value that they claimed, which were (1) multiplying the restaurants’ weekly sales by 36, or (2) multiplying the restaurants’ monthly earnings before interest, tax, depreciation, and amortization (“EBITDA”) by 48. As the court explained:

Plaintiffs’ methods of calculation, as explained in their answers to interrogatories and in Sharma’s deposition testimony, do not conform to any of the generally accepted methods of business valuation, nor has plaintiff offered sufficient evidence that their methods are independently reliable.

Because damages are a necessary element of a fraud claim under Virginia law, the court granted the defendants summary judgment on the fraud claim. It also granted the defendants summary judgment on the conspiracy claim, finding no record evidence suggesting “a meeting of the minds” between Ahmad and Butt.

From the district court’s judgment dated July 2, 2015, the plaintiffs filed this appeal, challenging only the district court’s conclusion that they had presented insufficient evidence of their damages to support a fraud claim under Virginia law.

II

The plaintiffs contend that the evidence they submitted for consideration by the court in deciding the defendants’ motion for summary judgment would support a reasonable jury’s finding of damages with reasonable certainty. They assert that they provided two acceptable methods of calculating the actual value of the restaurants at the time of the sale — (1) by multiplying weekly gross sales by 36, or (2) by multiplying monthly EBITDA by 48. They argue that these are the same methods “that led the parties to the $600,000 sales figure” and, indeed, are “not just relevant to, but determinative of, the ‘actual value’ at the time of the closing.”

The defendants contend, however, that the plaintiffs’ valuation methods fall within none of the “three accepted methods for valuing a business: the income approach, the market approach, and the asset-based approach.” Instead, they argue, the plaintiffs’ value is based upon “nothing more than speculation.”

In our view, the plaintiffs have submitted sufficient evidence of their damages based on a well-accepted income approach to permit a jury to find with reasonable certainty the damages that they suffered. Thus, we conclude that the district court erred in granting the defendants summary judgment on this basis.

Under Virginia law, to establish a fraud claim, a plaintiff must prove “by clear and convincing evidence: (1) a fálse representation, (2) of a material fact, (3) made intentionally and knowingly, (4) with intent to mislead, (5) reliance by the party misled, and (6) resulting damage to the party misled.” Evaluation Research Corp. v. Alequin, 247 Va. 143, 439 S.E.2d 387, 390 (1994). And in this case, the district court found that the plaintiffs had advanced sufficient evidence to survive summary judgment as to all of those elements except the element of damages. It is therefore only to this element that we turn.

While Virginia law does not require a plaintiff to prove his damages with “absolute certainty,” he must provide sufficient evidence for a factfinder to make “an intelligent and probable estimate of the amount of the damages or loss sustained.” Holz v. Coates Motor Co., 206 Va. 894, 147 S.E.2d 152, 155 (1966). And when a transaction involves a transfer of goods or property, the proper measure of damages is “the difference between the actual value of the property at the time the contract was made and the value that the property would have possessed had the representation been true,” Prospect Dev. Co. v. Bershader, 258 Va. 75, 515 S.E.2d 291, 300 (1999) (emphasis added), the latter often called the bargained-for value.

Applying this formula, the district court accepted, for the sake of argument, that the parties’ sales price of $600,000 provided sufficient evidence of the restaurants’ bargained-for value. We conclude that the district court’s assumption was correct. In analogous cases, Virginia courts have treated a sales price as sufficient evidence of the bargained-for value. See, e.g., Holz, 147 S.E.2d at 155 (in a breach-of-warranty claim, automobile’s sales price established value if parts had not been defective); Gertler v. Bowling, 202 Va. 213, 116 S.E.2d 268, 270 (1960) (similar). While there may be circumstances where a court should question whether a sales price represents the legitimately bargained-for value of goods, here there is ample evidence that the parties negotiated at arms’ length to reach the sales price of $600,000. Shar-ma’s unrebutted testimony shows that Ahmad initially sought $750,000 for the restaurants but that Sharma, based on the sales data provided, offered only $700,000. The parties settled on the sales price of $720,000, as included in their preliminary agreement, and then they subsequently negotiated the price down to $600,000, as included in their final agreement. A reasonable factfinder could accordingly conclude that this final sales price reasonably represented the bargained-for value of the two restaurants, which reflected a multiple of the purportedly misrepresented sales data contained in tax documents and income statements that were central to the negotiations.

The parties’ negotiation of the sales price based on a multiple of the restaurants’ sales figures, however, is also informative as to the actual value of the restaurants at the time of sale, which the plaintiffs estimate based on actual sales figures. Taking the record in the light most favorable to the plaintiffs, as is required when ruling on a motion for summary judgment, the parties’ negotiations presumed that the appropriate, industry-standard multiple for valuing such a business was 36 times weekly sales. Sharma testified to this specifically, stating that, during negotiations over the purchase price, Ahmad “mentioned this was the formula that is ... industry standard, that weekly sales [were] multiplied by 36.” While Ahmad later denied that he relied on such a formula when he valued the restaurants, he nonetheless admitted that the negotiated sales price was based on the restaurants’ ability “to do $60,000 to $70,000 a month in sales.” Using a multiplier of 36, Ahmad’s reported sales figures would lead to a sales price of somewhere between $540,000 and $630,000, a range that approximates the final sales price of $600,000.

The record also shows that the negotiations conducted after the first preliminary agreement was executed in March 2013 but before the final agreement was executed in .May 2013 focused on the restaurants’ sales figures. Indeed, the first agreement was conditioned on the monthly sales figures reaching a certain level, and thereafter Ahmad provided Sharma with several additional financial statements showing the restaurants’ sales from February to August, seeking to demonstrate that the average monthly sales were in the range of $60,000 to $70,000 per month, as he had initially represented.

Indeed, pervading the entire narrative of these negotiations was an almost singular focus on the restaurants’ weekly or monthly sales. Ahmad’s accountant triggered Sharma’s interest in the business based on the restaurants’ sales; Ahmad continued to persuade Sharma to purchase the business based on the restaurants’ sales figures; the parties’ negotiating positions were justified by sales figures; and indeed Sharma’s conclusion that he had been defrauded was shown by demonstrating cooked sales figures. Thus, when the actual sales figures, which were roughly the same before and after the closing, turned out to be only 60 percent of the sales figures represented in the financial statements, Sharma multiplied his actual weekly sales of approximately $10,000 by 36 to establish the actual value of $360,000 at the time of the purchase, claiming damages as the difference between the two figures.

To be sure, the 36 multiplier used to capitalize earnings in this case could be challenged at trial, as could any capitalization rate used to value a business with a stabilized flow of income. But the question before us is not whether 36 is the correct sales multiplier. Rather, the question is whether the plaintiffs provided enough evidence for a factfinder to make “an intelligent and probable estimate” of the restaurants’ actual value. Holz, 147 S.E.2d at 155.

The district court had before it the evidence that we have pointed to, as well as the plaintiffs’ answers to interrogatories, which explained the two valuation methods they used to calculate the restaurants’ actual value at the time of the purchase:

Mr. Sharma was told by defendant Ahmad that the formula he used for calculating the business worth was to take average weekly sales and multiply that figure by 36. Using that formula and an average weekly sales figure of $10,000.00 lead to a valuation of the business presently of $360,000.00.
Another way Mr. Sharma and Haymark-et have valued the business is to analyze the Earnings Before Interest, Tax, Depreciation, and Amortization (“EBIT-DA”). The profit and loss statements previously provided in discovery show an average EBITDA for the businesses of $7369 per month. Using a conservative four- year return on investment (as opposed to a more aggressive three year approach), the EBITDA is multiplied by 48. This formula values the business at $353,731.00.

Thus, using- defendant Ahmad’s formula, which was also the purported industry formula — a 36 multiplier of gross weekly sales — Sharma estimated that the restaurants’ actual value at the time of the closing was between $353,731 and $360,000. He states that he utilized the more conservative figure of $360,000.

We conclude that, at a minimum, the record supports the plaintiffs’ multiplying their weekly sales by 36 to determine the actual value of the restaurants at the time of the purchase. This method is a “capitalization rate method, which ‘determines the value of an income producing property by first determining the stabilized net operating income ... and then [multiplying] by a capitalization rate.’ ” Robinson v. Worley, No. 15-2346, 849 F.3d 577, 2017 WL 775854 (4th Cir. 2017) (alterations in original) (quoting Laconia Savings Bank v. River Valley Fitness One, L.P., 2003 WL 252111, at *1 (Bankr. D.N.H. 2003)). And the use of a capitalization rate method here is wholly appropriate, as the restaurant franchises “earn[ed] a steady steam of income” before and after the sale. Id.

In support of their argument that the plaintiffs’ evidence of damages is insufficient, the defendants direct us to several Virginia cases. For instance, they rely on Patel v. Anand, L.L.C., 264 Va. 81, 564 S.E.2d 140 (2002), where the seller of a ground lease had misrepresented that the lease had clear title. The buyer sued for fraud and sought “the difference in the value of the ground lease that it bargained for and the value of the ground lease that it actually received.” Id. at 143. The Supreme Court of Virginia overturned the lower court’s award of compensatory damages, finding that the plaintiff did not adequately prove the harm caused by the fraud. Id. 143-44. Patel’s, rejection of the plaintiffs evidence seems to have been motivated by the total absence of evidence regarding the actual value of the ground lease with defective title, as the plaintiff had shown only “the amount it paid for the ground lease, $900,000, and the amount of offers that prospective purchasers made for the ground lease” before the misrepresentation was discovered. Id. at 143. That evidence, while relevant to the lease’s bargained-for value, simply could not establish the lease’s actual value, as it did not account for the fact that a lease with defective title retains some value because the defect may be cleared.

Also, the district court relied on Holz, 147 S.E.2d 152, to find an inadequate showing of damages. But Holz similarly does not support the defendants’ position. There, the plaintiff submitted no evidence of a defective automobile’s market value and sought as damages the full price that he paid for the car, arguing that, because the car was valueless to him, it had no market value. Understandably, the court rejected that argument because it was clear that the car had at least some resale value. See also Wharton, Aldhizer & Weaver v. Savin Corp., 232 Va. 375, 350 S.E.2d 635, 636 (1986) (rejecting, as insufficient evidence of a copier’s actual value, the testimony of two partners declaring that the machine had “no value to our firm”).

Here, unlike the circumstances in the cases cited by the defendants, the plaintiffs have attempted to estimate with reasonable precision the actual value of the restaurants at the time they purchased them, using the widely accepted income-based approach with a capitalization multiplier that Ahmad purportedly stated was the industry standard and that the parties allegedly used to agree on the $600,000 purchase price. While the defendants are free to question whether, as a factual matter, 36 is an appropriate capitalization multiplier, it does not follow that the plaintiffs’ selection of that number is so unsubstantiated that it fails as a matter of law.

In short, the plaintiffs have introduced sufficient evidence of their damages to create a material dispute of fact. Accordingly, we vacate the district court’s judgment entered in favor of the defendants and remand for further proceedings on the plaintiffs’ fraud claim.

VACATED AND REMANDED


author: BARBARA MILANO KEENAN, Circuit Judge:

text:
    Mia MASON, individually, and on behalf of all others similarly situated, Plaintiff-Appellant, v. MACHINE ZONE, INC., a Delaware corporation, Defendant-Appellee.
    No. 15-2469
    United States Court of Appeals, Fourth Circuit.
    Argued: January 24, 2017
    Decided: March 17, 2017

      ARGUED: Alexander Glenn Tievsky, EDELSON PC, Chicago, Illinois, for Appellant. Michael Anthony Berta, Jr., ARNOLD & PORTER LLP, San Francisco, California, for Appellee. ON BRIEF: Ryan D. Andrews, Roger Perlstadt, EDELSON PC, Chicago, Illinois, for Appellant. Sean Morris, Los Angeles, California, Allyson Himelfarb, ARNOLD & PORTER LLP, Washington, D.C., for Appellee.
    Before AGEE, KEENAN, and THACKER, Circuit Judges.
   BARBARA MILANO KEENAN, Circuit Judge:

Mia Mason, a Maryland resident, filed a class action complaint against Machine Zone, Inc. (Machine Zone), the developer of a mobile video game entitled “Game of War: Fire Age” (Game of War), pursuant to Federal Rule of Civil Procedure 23(b)(3). In her complaint, Mason asserted a claim under Maryland’s gambling loss recovery statute (the Loss Recovery Statute), Md. Code Ann., Crim. Law § 12-110. According to Mason, she and thousands of similarly situated individuals lost money participating in an unlawful “gaming device,” a component of Game of War that allows players to “spin” a virtual wheel to win virtual prizes for use within that video game. Mason sought recovery of alleged gambling losses that she claims she and each member of the putative class incurred as a result of “spinning” the virtual wheel. She also asserted claims on her own behalf and for the alleged class under the California Penal Code, and the California Unfair Competition Law (UCL), Cal. Bus. & Prof. Code §§ 17200, et seq., as well as a common law claim of unjust enrichment.

The district court dismissed Mason'scomplaint under Federal Rule of Civil Procedure 12(b)(6). The court concluded that Mason did not “lose money” when she “spun” the virtual wheel and that, therefore, she had failed to state a claim under the Loss Recovery Statute. The court similarly dismissed Mason’s claims under the California Penal Code and the UCL, as well as her claim of unjust enrichment. Mason appeals only from the court’s dismissal of her claim under the Loss Recovery Statute. Upon our review, we affirm the district court’s judgment.

I.

Machine Zone developed and operates Game of War, a popular video game that can be “downloaded” without charge on various mobile devices. Game of War is a game of strategy in which players build virtual towns and armies, and “battle” each other in “real time” in a virtual world. Players train their virtual armies, build their “empires,” and join in alliances with other players, in an attempt to “conquer” the virtual world. While no payment is required to play Game of War, individuals engaged in playing the game can purchase virtual “gold,” at prices ranging from $4.99 for 1,200 pieces of virtual gold, to $99.99 for 20,000 pieces of virtual gold. Players can use the virtual gold they have accumulated “to improve their virtual towns” and to progress more quickly in the game.

Players also can use their virtual gold to obtain virtual “chips” for use during one facet of the game called the Game of War casino (virtual casino, or Game of War casino). The virtual casino is a game of chance in which players can use their virtual chips for an opportunity to obtain virtual prizes for use within Game of War, by “spinning” a virtual wheel. When a player interacts with the virtual casino for the first time, she is entitled to one free spin of the virtual wheel. However, after the player uses her first free spin, she must use at least 5,000 virtual chips for each additional spin. If a player does not have enough virtual chips to spin the virtual wheel, the player must use virtual gold to obtain additional virtual chips.

When a player spins the virtual wheel, an “animated light” rotates around the wheel and, after a few seconds, the light stops on a picture of a virtual prize. The virtual prizes include virtual “resources” such as “wood” or “stone,” which players can use to advance their position in the game, as well as additional virtual chips or virtual gold. Virtual prizes also sometimes include an opportunity to play another game of chance within Game of War. For example, one virtual ■ prize available from the virtual wheel is an opportunity for the player to select one of three virtual “treasure chests.” The selected chest reveals either virtual chips, gold, or other resources.

Players who spin the virtual wheel have no control over the outcome of the spin and, thus, no skill on the part of the player influences what virtual prize the player will receive. Instead, the outcome of any given spin is determined by the factors that Machine Zone has programmed into the computer software governing the virtual casino. Machine Zone has “programmed the odds” of the virtual wheel to make it more likely that a player will receive “basic items,” such as virtual resources, rather than virtual treasure chests, gold, and chips.

A player who accumulates a substantial number of the most coveted virtual prizes, such as virtual gold, can list her Game of War account for sale on a “secondary market.” The number and desirability of virtual prizes a player has acquired influence the cash value of the player’s account on the secondary market. Players sell their accounts on eBay, Facebook, and other websites for hundreds, and sometimes thousands, of dollars. However, under Machine Zone’s terms of service governing the use of Game of War, “Virtual Currency and Virtual Goods may never be redeemed for ‘real world’ money, goods or other items of monetary value from Machine Zone or any other person.”

Mason began playing Game of War on her mobile device in early 2014. After using complimentary virtual chips for a chance to win a virtual prize at the Game of War casino, Mason began purchasing virtual gold in order to obtain more chips to continue interacting with the casino function. Between early 2014 and January 2015, Mason paid over $100 to participate in the virtual casino.

In seeking damages under the Loss Recovery Statute, Mason alleged that she lost money playing an unlawful “gaming device,” namely, the Game of War casino, and sought “full disgorgement and restitution of any money [Machine Zone] has won” from Mason and from other Maryland residents who have lost money playing in the virtual casino. The district court concluded that Mason had failed to state a claim under the Loss Recovery Statute because “she did not lose money” in the virtual casino. The court similarly rejected Mason’s assertion that her complaint stated claims under the California Penal Code, the UCL, and the theory of unjust enrichment. The court accordingly dismissed Mason’s complaint in its entirety.

II.

Mason argues that the district court erred in dismissing pursuant to Rule 12(b)(6) her claim under the Loss Recovery Statute. She contends that she lost money while playing in the virtual casino, which she asserts is an unlawful “gaming device” within the meaning of the Loss Recovery Statute. Mason maintains that she lost money in the virtual casino because, after paying money to “spin” the virtual wheel, she “ Von’ prizes that were worth less than the amount of money she spent to spin the wheel.” Therefore, according to Mason, she is entitled to recover the difference between the amount of money she paid to spin the virtual wheel, and the monetary value of the virtual prizes she won. We disagree with Mason’s arguments.

We review de novo the district court’s dismissal of the complaint under Rule 12(b)(6), accepting Mason’s well-pleaded allegations as true and drawing all reasonable inferences in her favor. See Belmora LLC v. Bayer Consumer Care AG, 819 F.3d 697, 705 (4th Cir. 2016). Under Maryland’s Loss Recovery Statute, “[a] person who loses money at a [prohibited] gaming device ... may recover the money as if it were a common debt.” Md. Code Ann., Crim. Law § 12410(a). A “gaming device” is defined as “a game or device at which money or any other thing or consideration of value is bet, wagered, or gambled,” and includes a “wheel of fortune.” Id. § 12-101(d)(1)(ii), (d)(2).

As directed by the Maryland legislature, our review of a claim under the Loss Recovery Statute requires us to interpret Maryland’s gambling statutes in a manner that “give[s] validity not only to the word, but to the spirit of the law.” F.A.C.E. Trading, Inc. v. Todd, 393 Md. 364, 903 A.2d 348, 355 (2006) (quoting Gaither v. Cate, 156 Md. 254, 144 A. 239, 240 (1929)) (citing Md. Code Ann., Crim. Law § 12-113). Thus, we must construe liberally the Maryland statutes addressing various gambling activities to prevent the unlawful conduct that the Maryland legislature intended to proscribe. Id. at 356 (citation omitted).

For purposes of this appeal, we assume, without deciding, that the virtual casino is a prohibited “gaming device.” See Md. Code Ann., Crim. Law § 12401(d). We agree with the district court’s conclusion that Mason did not “lose[] money” when participating in the virtual casino and that, therefore, she failed to satisfy a required element for stating a claim under the Loss Recovery Statute. See id. § 12-110(a).

Initially, we observe that the requirement in the Loss Recovery Statute that a person “lose[] money” suggests that a claim cognizable under the Statute also involves a winner of the money that Mason seeks to recover. See Cates v. State, 21 Md.App. 363, 320 A.2d 75, 80 (1974) (noting that predecessor to Loss Recovery Statute encompassed a public policy “not to help one who loses at gambling; but to discourage illegal gambling by putting the winner on notice that the courts will ... force him to disgorge his winnings”). However, if Mason received in the virtual casino “resources” of lesser “value” than virtual gold, as she claims she did, Machine Zone did not win money as a result. Nor did Machine Zone lose money if Mason “spun” the virtual wheel and received any particular prize. Indeed, Machine Zone retained the money that Mason paid to obtain virtual gold regardless of the outcome of Mason’s spin of the virtual wheel.

Instead of losing money in the virtual casino, Mason paid money to obtain virtual gold, which she later used to- accrue virtual chips, all while playing Game of War on her mobile device. Later, when Mason participated in the. virtual casino, she used only virtual chips, which are not redeemable for money. Thus, when Mason “spun” the virtual wheel, there was no money at stake. Rather, as a result of that action, she only could receive either virtual gold, which she concedes does not amount to money, or she could receive other virtual resources that likewise were not money or redeemable for money. Accordingly, based on the manner in which the Game of War casino operates, Mason could not have lost or won money as a result of her participation in that virtual activity.

While we must liberally construe Maryland’s statutes relating to gambling, see Md. Code Ann., Crim. Law § 12-113; F.A.C.E. Trading, 903 A.2d at 355, we nevertheless are required to interpret unambiguous statutory provisions in accordance with their plainly expressed language, Stoddard v. State, 395 Md. 653, 911. A.2d 1245, 1249-50 (2006) (citations omitted). The statutory term “money,” as employed in the Loss Recovery Statute, is unambiguous and does not encompass virtual resources available and used only within Game of War. See Money, Black’s Law Dictionary (10th ed. 2014) (defining “money” as “[t]he medium of exchange authorized by a government as part of its currency,” and “[a]ssets that can be easily converted to cash”). Such a construction would improperly expand the reach of the Loss Recovery Statute. See Kramer v. Bally’s Park Place, Inc., 311 Md. 387, 535 A.2d 466, 469 (1988) (noting that the Loss Recovery Statute provides “a civil remedy that allows the gambler to recover any money lost”). Compare Md. Code Ann., Crim. Law § 12-110, with id. § 12-101(d)(1)(h) (referring to “money or any other thing or consideration of value” in defining “gaming device”). Therefore, we hold that there is no basis in the text of the Loss Recovery Statute for applying the term “money” -to include virtual gold and other virtual resources that Mason received while interacting with the Game of War casino.

Our conclusion is not affected by Mason’s contention that because Game of War participants can sell their accounts in a “secondary market,” “money” is at stake when a player “spins” the virtual wheel in the virtual casino. Virtual gold and virtual chips are not sold on the secondary market and, therefore, are not equivalent to money. Instead, players sell in the secondary market their entire accounts, which include .their levels of advancement in the game. Also, notably absent from Mason’s complaint is any allegation that she ever attempted to sell her own account or any virtual objects on the secondary market. Thus, we reject Mason’s contention that the existence of a secondary market shows that she lost money as a result of her participation in the virtual casino.

Accordingly, we hold that the district court correctly concluded that Mason did not “lose[ ] money” within the meaning of the Loss Recovery Statute as a result of her participation in the Game of War casino. See Md. Code Ann., Crim. Law § 12-110. Therefore, as the district court ultimately held, Mason failed to state a claim under Maryland’s Loss Recovery Statute.

III.

For these reasons, we affirm the district court’s judgment.

AFFIRMED

      . "Virtual” is defined as "not physically existing as such but made by software to appear to do so.” Virtual, New Oxford American Dictionary (3d ed. 2010).

      . Because the district court dismissed the complaint under Rule 12(b)(6), we recount the facts as alleged in the complaint. See Harbourt v. PPE Casino Resorts Md., LLC, 820 F.3d 655, 658 (4th Cir. 2016). We also may consider documents attached as exhibits to the complaint, as well as any documents attached to the motion to dismiss, so long as those documents were integral to the complaint and are authentic. Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 164, 166 (4th Cir. 2016).

      . Additionally, as noted above, any attempt to sell virtual items on a secondary market is a violation of Machine Zone’s terms of service, which prohibit people who play Game of War from redeeming “Virtual Currency and Virtual Goods ... for 'real world’ money, goods or other items of monetary value from ... any other person.”