Health Choice Alliance v. Eli Lilly
4f4th255
| 5th Cir. | 2021Background:
- Two relator entities (Health Choice Alliance and Health Choice Group) filed qui tam False Claims Act suits alleging Eli Lilly and Bayer violated the Anti‑Kickback Statute by providing pre‑prescription patient‑education services to induce prescriptions.
- The DOJ declined initial intervention after meetings but, about a year later, after additional investigation and exchanges with relators, notified its intent and then moved to dismiss the actions under 31 U.S.C. § 3730(c)(2)(A).
- Health Choice amended complaints, had a consolidated hearing before a magistrate judge, and was present with a potential witness (John Mininno) but declined to offer evidentiary testimony at that hearing.
- The magistrate judge recommended, and the district court adopted, dismissal of both cases; Health Choice appealed and challenged finality, the adequacy of the § 3730(c)(2)(A) "hearing," due‑process protections, and the substantive sufficiency of the government’s justification.
- The Fifth Circuit found it had appellate jurisdiction despite earlier without‑prejudice dismissals of some defendants; it construed "hearing" to require judicial involvement but held Health Choice received a hearing and that dismissal was not arbitrary and capricious.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Finality / appellate jurisdiction after prior voluntary dismissals | Prior without‑prejudice dismissals deprived district court order of finality | The later district‑court dismissal adjudicated all remaining parties and is final | Court held the later dismissal was final and appealable |
| Meaning of § 3730(c)(2)(A) "hearing" | "Hearing" requires an evidentiary hearing and meaningful judicial review | "Hearing" need not be a full evidentiary trial; it requires judicial involvement but not unlimited review | Court held "hearing" demands judicial involvement; the relator received a hearing |
| Procedural due process / need for evidentiary hearing | Relator has a protected interest; due process required an evidentiary hearing before dismissal | Relator had opportunity to present evidence but declined to do so; procedures satisfied due process | Court held no due‑process violation because relator had (and declined to use) the opportunity to present evidence |
| Standard and sufficiency of gov't motion to dismiss under § 3730(c)(2)(A) | Urged adoption of Sequoia Orange (rational‑relation) standard and said dismissal was arbitrary and capricious | Government urged unfettered‑discretion (Swift) or, alternatively, showed rational governmental purposes (costs, policy favoring patient education) | Assuming Sequoia Orange, court held government satisfied its burden (valid purposes and rational relation) and relator failed to show dismissal was fraudulent, arbitrary, or illegal |
Key Cases Cited
- Swift v. United States, 318 F.3d 250 (D.C. Cir. 2003) (advocates near‑unfettered executive discretion to dismiss qui tam suits)
- United States ex rel. Sequoia Orange Co. v. Baird‑Neece Packing Corp., 151 F.3d 1139 (9th Cir. 1998) (adopts rational‑relation test for government dismissals)
- Ridenour v. Kaiser‑Hill Co., 397 F.3d 925 (10th Cir. 2005) (applies Sequoia Orange rational‑relation standard)
- United States ex rel. CIMZNHCA v. UCB, Inc., 970 F.3d 835 (7th Cir. 2020) (declines to fully adopt either competing standard; frames dismissal analysis by analogy to Rule 41)
- Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000) (explains qui tam actions as partial assignment of government’s claim)
- United States ex rel. Eisenstein v. City of New York, 556 U.S. 928 (2009) (identifies the United States as the "real party in interest" in False Claims Act suits)
- United States ex rel. Spicer v. Westbrook, 751 F.3d 354 (5th Cir. 2014) (context on relator standing and False Claims Act procedure)