96 F.4th 145
2d Cir.2024Background
- Adam Hart, a former McKesson employee, brought a qui tam action under the federal False Claims Act (FCA) and similar state statutes against McKesson Corp., alleging the company provided free business management tools to health providers to induce drug purchases, violating the federal Anti-Kickback Statute (AKS) and analogous state laws.
- McKesson’s Open Market Division allegedly offered these tools for free only to customers who committed to purchase drugs primarily from McKesson; such arrangements allegedly increased provider and McKesson profits but at higher insurer costs.
- Hart asserted McKesson’s actions violated the AKS because the tools constituted improper remuneration intended to induce purchases reimbursed by government healthcare programs.
- The district court dismissed the federal claims for failure to plead with particularity that McKesson acted “willfully” under the AKS—meaning with knowledge that its conduct was unlawful.
- The district court also dismissed the state law claims, reasoning they were premised solely on violation of the federal AKS.
- On appeal, the Second Circuit affirmed the dismissal of the federal claims but vacated and remanded the dismissal of state claims, finding the latter not solely dependent on the federal AKS.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meaning of “willfully” under the AKS | Willfulness can be shown by intent to provide value, aware of AKS | Willfulness requires actual knowledge that conduct is unlawful | Willfully means knowledge that conduct is unlawful, but not necessarily AKS-specific |
| Sufficiency of Hart’s factual allegations of willfulness | McKesson was aware of AKS, and employees raised compliance concerns | No facts plausibly allege McKesson knew its conduct was unlawful | Hart’s allegations insufficient to plausibly plead McKesson acted willfully |
| State law claims dependent on AKS violations | State claims based on both federal and analogous state AKS violations | All state claims rest solely on federal AKS violation | State claims not solely premised on federal AKS, so dismissal was erroneous |
| Pleading standard under FCA and Rule 9(b) | Allegations sufficient; asserted state laws and facts in complaint | Complaint lacks particularity and facts as required by Rule 9(b) | Hart met minimum pleading for state claims; adequacy for specifics remanded |
Key Cases Cited
- Bryan v. United States, 524 U.S. 184 (1998) (sets out meaning of "willfully" as acting with knowledge that conduct is unlawful)
- Cheek v. United States, 498 U.S. 192 (1991) (discusses ignorance of law no defense, but complex statutes may require knowledge)
- Morissette v. United States, 342 U.S. 246 (1952) (criminal liability requires a "vicious will")
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard on a motion to dismiss)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaint sufficiency)
- Spies v. United States, 317 U.S. 492 (1943) (context-dependent meaning of "willfully")