381 F. Supp. 3d 647
D.S.C.2019Background
- Relator Jon Vitale, a former MiMedx sales rep (2014–2017), brought a qui tam False Claims Act (FCA) suit alleging MiMedx funneled payments through the Patient Access Network (PAN) to induce purchases of its FDA-regulated products EpiFix and EpiFix Micronized.
- Alleged scheme: sales reps identified patients eligible for PAN copay assistance; MiMedx timed/conditioned donations to PAN correlated to these applications so PAN funds effectively paid Medicare copays/coinsurance for MiMedx products.
- Relator alleges violations of the Anti‑Kickback Statute (AKS) that resulted in per se false claims under the FCA (presentment to Medicare); he also asserted claims tied to the Federal Employees Health Benefits Program (FEHBP).
- Defendant moved to dismiss under Rules 9(b) and 12(b)(6) for failure to plead fraud with particularity and invoked the FCA public‑disclosure bar; the United States declined to intervene and filed a statement of interest limited to pleading issues.
- The Court dismissed Relator’s FEHBP-based claims (AKS does not apply to FEHBP) but denied dismissal of the remainder: it held the complaint adequately pleaded an AKS‑based FCA claim and that the public‑disclosure bar did not bar the suit (or alternatively Relator was an original source).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of AKS to FEHBP claims | Vitale alleged AKS violations caused false claims to FEHBP | MiMedx argued AKS does not cover FEHBP | Court: FEHBP claims dismissed — AKS does not apply to FEHBP |
| FCA §3729(a)(1)(B) (false statements/records) | Vitale relied on per se AKS violation causing Medicare payments; thus false claims/records | MiMedx argued no false statements/records were made or used | Court: Denied dismissal — because an AKS violation leading to federal payment is a per se FCA violation, claim survives |
| Public‑disclosure bar (31 U.S.C. §3730(e)(4)) | Vitale: prior public disclosures (Montecalvo) did not disclose the specific PAN‑filtering scheme; Vitale is an original source with independent, material info and provided it to Gov't | MiMedx: Montecalvo disclosed substantially the same allegations and its relator was the Government's agent | Court: Denied dismissal — Montecalvo not substantially the same; alternatively Vitale is an original source |
| Pleading sufficiency under Rules 9(b) and 12(b)(6) and leave to amend | Vitale contended allegations (scheme, who/what/when/where/how pattern) meet particularity and plausibility; sought leave to amend if needed | MiMedx argued allegations lack the specificity required by Rule 9(b) and fail to plead presentment or material false records | Court: Denied dismissal — complaint plausibly and with sufficient particularity alleges scheme that would necessarily lead to submission of false claims; request for leave to amend denied for failure to proffer a proposed amended complaint |
Key Cases Cited
- Lutz v. United States, 853 F.3d 131 (4th Cir. 2017) (AKS violation resulting in federal payment is a per se false claim under the FCA)
- Grant v. United Airlines, Inc., 912 F.3d 190 (4th Cir. 2018) (pleading presentment: particularized allegations or a pattern of conduct that necessarily led to false claims)
- Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451 (4th Cir. 2013) (Rule 9(b) particularity standards for FCA fraud claims)
- Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370 (4th Cir. 2008) (description of the who, what, when, where, and how required in fraud pleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleadings under Rule 8)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard and courts need not accept legal conclusions as true)
- Triple Canopy, Inc. v. United States, 775 F.3d 628 (4th Cir. 2015) (broad construction of FCA's false or fraudulent claim language)