126 F.4th 94
1st Cir.2025Background
- Humana, a health insurer and Medicare Part C/D sponsor, sued Biogen (drug manufacturer) and ACS (specialty pharmacy) alleging fraudulent schemes involving three Biogen MS drugs.
- Humana claimed Biogen seeded the market by providing free MS drugs, then funneled patients to Medicare, indirectly funding copays through third-party patient-assistance programs.
- ACS allegedly aided Biogen by steering patients and acting as an informational intermediary to facilitate the alleged scheme.
- Humana argued that as a result, it covered more prescriptions than it otherwise would have, due to false certifications by defendants about compliance with federal law.
- The district court dismissed the case, holding Humana: (1) lacked civil RICO standing (under indirect purchaser doctrine), and (2) failed to plead fraud with particularity (Rule 9(b)).
- On appeal, the First Circuit affirmed on the Rule 9(b) ground and upheld the denial of leave to amend due to undue delay and futility.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Rule 9(b) fraud particularity | Pleadings and Exhibit A sufficiently allege specific fraudulent actions/claims | Allegations are conclusory and lack necessary detail | Sided with Defendants: Complaint lacked particularity |
| Implied certification under Escobar | Claims need not specify explicit misstatements; implied certifications suffice | No specific misrepresentation or misleading half-truths alleged | Sided with Defendants: Escobar not satisfied |
| Leave to amend after dismissal | Delay excused by discovery and defendants’ control of facts | Plaintiffs had necessary info; amendment would be futile/untimely | Sided with Defendants: No abuse of discretion |
| RICO standing and indirect purchaser | Humana had RICO standing regardless of indirect purchaser rule | Indirect purchaser rule bars RICO standing | Did not reach issue; affirmed on Rule 9(b) ground |
Key Cases Cited
- Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (defining RICO elements)
- Illinois Brick Co. v. Illinois, 431 U.S. 720 (establishing indirect purchaser rule in antitrust)
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176 (implied certification in FCA context)
- Feinstein v. Resolution Trust Corp., 942 F.2d 34 (affirming need for fraud pleadings' specificity)
- Ahmed v. Rosenblatt, 118 F.3d 886 (Rule 9(b) applies to RICO wire/mail fraud)