United States ex rel. Garcia v. Novartis AG
91 F. Supp. 3d 87
D. Mass.2015Background
- Two qui tam relators (Garcia and Kelly), former sales reps for Genentech and Novartis, alleged nationwide off‑label marketing, kickbacks, upcoding and other schemes to induce prescriptions of Xolair, causing false claims to government health programs.
- Garcia filed the first action in 2006; Kelly (who had been a co‑plaintiff but voluntarily dismissed herself in 2011) filed a separate complaint in 2012. Fauci previously filed and later voluntarily dismissed his suit.
- The government and most named states declined to intervene. The defendants moved to dismiss on multiple grounds: first‑to‑file rule, public disclosure bar, failure to plead fraud with particularity under Fed. R. Civ. P. 9(b), failure to state conspiracy/reverse‑false‑claims, and service issues.
- The court found jurisdiction existed for Garcia’s and Kelly’s actions but held the complaints failed Rule 9(b) as to FCA § 3729(a)(1) and (2) claims because neither relator alleged any specific false claim(s) submitted for government payment or produced reliable indicia that false claims were actually submitted.
- The court rejected the public‑disclosure bar (and held relators qualified as original sources), and declined to apply the first‑to‑file bar to Kelly’s separate 2012 filing given her earlier dismissal and court orders permitting a new filing.
- The court dismissed the federal FCA claims with prejudice as to the relators (but without prejudice to the United States and states), declined supplemental jurisdiction over state qui tam claims (dismissed without prejudice), and denied further leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| First‑to‑file bar (31 U.S.C. § 3730(b)(5)) as to Kelly’s 2012 action | Kelly argued she originally alerted the government in 2006 and the 2012 suit was permitted after she voluntarily dismissed herself; the later suit is not parasitic. | Defendants argued Kelly’s second suit duplicates the 2006 Garcia filing and is barred by the first‑to‑file rule. | Court declined to apply the first‑to‑file bar to Kelly given her prior voluntary dismissal, government notice in 2006, and court authorization to file a new action. |
| Public‑disclosure bar (31 U.S.C. § 3730(e)(4)) | Relators contended their complaints contained firsthand, detailed information and they were original sources who gave pre‑filing disclosures to the government. | Defendants argued prior public employment suits (Rediehs, Fauci) already disclosed the essential facts and thus barred these qui tam suits. | Court found prior public suits did not disclose the essential elements as to the scheme (especially regarding Novartis) and that relators were original sources who had direct, independent knowledge and had informed the government pre‑suit. |
| Rule 9(b) particularity for FCA §§ 3729(a)(1) and (2) (failure to plead false claims) | Relators asserted detailed marketing practices, emails, slide decks, FDA report and disclosure statements sufficed to show a scheme and provided reliable indicia that false claims were submitted. | Defendants argued allegations were conclusory and lacked any example of an actual false claim submitted to Medicare/Medicaid or other federal payor; thus no strong inference false claims were presented. | Court held the complaints failed Rule 9(b): relators did not identify any specific false claim(s), physicians who submitted claims for reimbursement, or reliable indicia that false claims were presented; dismissal with prejudice as to relators. |
| Leave to amend | Relators requested leave to amend, citing voluminous disclosures and that complaints were only recently unsealed/attacked. | Defendants urged denial given the relators’ multiple prior complaints/amendments and inability to cure deficiencies. | Court denied leave to amend as futile given repeated opportunities and persistent failure to meet Rule 9(b); dismissed with prejudice as to relators. |
Key Cases Cited
- United States ex rel. Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13 (1st Cir. 2009) (explains heightened Rule 9(b) standards for FCA claims and requirements for pleading fraudulent scheme and indicia of false claim submission)
- United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720 (1st Cir. 2007) (requires that allegations of false records/statements under FCA § 3729(a)(2) must allege actual falsity and connection to a claim)
- United States ex rel. Wilson v. Bristol‑Myers Squibb, Inc., 750 F.3d 111 (1st Cir. 2014) (articulates the "essential facts" test and purpose of the first‑to‑file rule in qui tam litigation)