State v. Apotex Corp.
2012 UT 36
Utah2012Background
- Utah sued 17 pharma companies for UFCA violations and fraudulent misrepresentation over inflated drug pricing used in Medicaid reimbursements.
- District court dismissed the Second Amended Complaint for lack of Rule 9(b) particularity, failure to plead elements under Rule 12(b)(6), and time-barred pre-April 30, 2006 UFCA claims.
- State amended its complaint; defendants argued continued lack of specificity and that pre-2007 claims were time-barred before amended law.
- Court previously required granular, per-defendant details; State argued for relaxed Rule 9(b) standard given a widespread, long-running scheme.
- Utah Supreme Court adopts a flexible Rule 9(b) standard for widespread schemes, allowing leave to amend; also addresses statute of limitations retroactivity and Boehringer Ingelheim (BIC) focus.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Rule 9(b) applicability to UFCA claims | State argues 9(b) applies but should be relaxed for widespread scheme | Defendants contend 9(b) strict; need specific drug/defendant details | Rule 9(b) applies; relaxed standard adopted for widespread schemes plus leave to amend |
| Sufficiency of Second Amended Complaint under Rule 12(b)(6) | State pled elements of UFCA and fraudulent misrepresentation | District court found failure to plead essential elements | Court erred; claims pleaded with sufficient specificity under revised standard; error remanded for amendment |
| Statute of limitations for UFCA claims | Amended UFCA extends and retroactively applies limitations | Retroactive extension cannot revive time-barred pre-April 30, 2006 claims; restitution argument preserved but not reached | One-year pre-amendment limitation applies to pre-2006 claims; retroactivity cannot revive expired claims; remand on amendment issues limited to BIC |
| Boehringer Ingelheim Corp. (BIC) viability as defendant | BIC should be properly named and responsible for its drugs | BIC subsidiaries and lack of drug-specific identification defeat claims | Second Amended Complaint fails to identify BIC drugs or proper corporate responsibility; affirm dismissal as to BIC |
Key Cases Cited
- U.S. ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir. 2009) (flexible Rule 9(b) for widespread fraud schemes in FCA context)
- U.S. ex rel. Gagne v. City of Worcester, 565 F.3d 40 (1st Cir. 2009) (standard for pleading fraud: time/place/content and relayed by who)
- In re Pharm. Indus. Average Wholesale Price Litig., 807 F.Supp.2d 208 (D. Mass. 2011) (considerations of reliable indicia to infer submission of false claims)
- Williams v. State Farm Ins. Co., 656 P.2d 966 (Utah 1982) (recognition that Rule 9(b) applies to fraud claims beyond common-law fraud)
- Totten v. Bombardier Corp., 286 F.3d 542 (D.C. Cir. 2002) (False claims pleading standards under FCA context)