Lawton Ex Rel. United States v. Takeda Pharmaceutical Co., 842 F.3d 125

Background

Lawton, a qui tam relator and former industry employee, sued Takeda and Eli Lilly under the federal False Claims Act (FCA) and analogous state laws, alleging a long-running off-label marketing and kickback scheme to promote Actos for prediabetes.
Complaint alleged Takeda funded and promoted pro-Actos studies (notably the ACT NOW study), compensated key opinion leaders, used a specialized sales force, and publicly marketed off-label uses to increase prescriptions.
Lawton alleged the campaign increased Actos sales and that public programs (Medicare/Medicaid and a Suffolk County NY plan) paid for off-label prescriptions, thereby causing submission of false claims for government reimbursement.
District court dismissed the Second Amended Complaint with prejudice for failure to plead fraud with particularity under Federal Rule of Civil Procedure 9(b).
On appeal, Lawton argued the pleadings were sufficient to show that third parties submitted false claims to federal and state programs; the First Circuit reviewed de novo and affirmed dismissal.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Lawton pled FCA fraud with Rule 9(b) particularity	Lawton argued detailed marketing, statistical sales increases, and examples of government-paid prescriptions support an inference that false claims were submitted	Defendants argued complaint lacked the required who, what, when, where, how: no identified claimants, claim amounts, dates, or connection between marketing and specific reimbursed claims	Dismissal affirmed: pleadings insufficient under Rule 9(b); aggregate data and general allegations do not show specific false claims or strengthen inference of fraud beyond possibility
Whether the more flexible pleading standard for inducement-based FCA claims was met	Lawton claimed statistical and program-level payment data satisfied the flexible standard for inducement cases	Defendants contended the allegations fell short of Duxbury-style specifics (providers, dates, amounts) needed to infer that inducement produced false claims	Held: flexible standard not met—complaint lacked provider identities, claim details, or aggregated claim amounts tied to fraudulent prescriptions
Whether New York state FCA claims were pled with particularity	Lawton pointed to 11 prescriptions for three Suffolk County members paid by the plan as an example of false state claims	Defendants noted complaint failed to identify prescribers, link the prescriptions to the alleged marketing/kickbacks, or clarify timing relative to the campaign	Held: state claims dismissed with prejudice for the same Rule 9(b) deficiencies
Whether to address public-disclosure bar	Lawton urged review; alternatively asked to preserve ability to proceed	Defendants raised public-disclosure bar as an additional defense	Court declined to reach public-disclosure bar because dismissal on Rule 9(b) grounds was dispositive

Key Cases Cited

Hochendoner v. Genzyme Corp., 823 F.3d 724 (1st Cir. 2016) (standard for reviewing dismissal)
United States ex rel. Gagne v. City of Worcester, 565 F.3d 40 (1st Cir. 2009) (de novo review of dismissal)
United States ex rel. Hutcheson v. Blackstone Med. Inc., 647 F.3d 377 (1st Cir. 2011) (pleading facts in the light most favorable to relator)
United States ex rel. Ge v. Takeda Pharm. Co., 737 F.3d 116 (1st Cir. 2013) (aggregate expenditure data insufficient under Rule 9(b))
United States ex rel. Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13 (1st Cir. 2009) (flexible standard for inducement claims when supporting specifics provided)
United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720 (1st Cir. 2007) (FCA liability requires false claim allegations with particularity)
United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220 (1st Cir. 2004) (examples of helpful particulars for FCA pleading)
Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (U.S. 2008) (overruling and statutory interpretation context referenced)