United States Ex Rel. Westmoreland v. Amgen, Inc., 812 F. Supp. 2d 39

Background

Relator sues Amgen, INN and ASD under the False Claims Act for allegedly inducing Medicare claims through overfill in Aranesp vials and related kickback schemes.
Providers sign CMS-855 Provider Agreements certifying compliance with the Anti-Kickback Statute as a precondition of payment; the agreement explicitly ties payment to AKS compliance.
CMS later adopted a final rule clarifying that overfill is not included in Aranesp's ASP calculation and that no payment is made for overfill, while continuing to pay claims prior to that rule.
Amgen allegedly marketed overfill as a reimbursement opportunity to providers, while INN/ASD purportedly funded discounts and a pass-through of administrative fees to influence provider behavior.
The Court has previously addressed multiple motions, including partial judgments on pleading and partial summary judgment, with ruling that the AKS precondition of payment is valid and CMS’s Provider Agreement is a proper exercise of authority, and that Amgen’s ASP calculation did not include overfill.
This memorandum resolves remaining issues on whether the AKS precondition is valid, CMS procedure/authority, Amgen’s ASP treatment of overfill, and safe harbor defenses for INN/ASD.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is AKS compliance a precondition of Medicare payment?	Compliance is required under AKS; certification is valid.	No express statutory precondition; Provider Agreement oversteps authority.	Precondition of payment upheld; certification valid and CMS authority sustained.
Did CMS procedurally and lawfully adopt the Provider Agreement?	CMS acted within its authority; PRA compliance sufficed.	Procedural flaws and improper agency action.	CMS action upheld; Provider Agreement properly enacted and entitled to deference.
Did Amgen inflate Aranesp's ASP by excluding overfill, making ASP misleading?	Overfill is a price concession that should reduce ASP; exclusion inflates ASP.	Overfill is not included in ASP under current CMS policy; calculation correct.	Amgen's ASP calculation not including overfill is lawful; Relator's MSJ denied; Amgen's MSJ granted as to ASP inflation claim.
Do INN and ASD qualify for GPO/discount safe harbors to shield liability?	GPO safe harbor not satisfied due to disclosures and close relationships; discounts funded improperly.	GPO/discount safe harbors apply; proper disclosures and non-collusive conduct.	INN & ASD summary judgment denied on safe harbor defense; genuine issues of fact remain; no complete shield established.
Did Amgen, INN, and ASD knowingly cause false claims through overfill marketing?	There is evidence of intentional marketing and knowledge of CMS policy.	Lack of proof of knowledge or intent to defraud; actions were lawful interpretations.	Remains for trial; mixed questions of law and fact; summary judgment not appropriate on conspiracy via overfill marketing.

Key Cases Cited

Rost v. Pfizer, Inc., 507 F.3d 720 (1st Cir. 2007) (false claims and materiality framework)
Hutcheson v. Blackstone Med., Inc., 647 F.3d 379 (1st Cir. 2011) (materiality and preconditions under FCA)
Blackstone Med. v. United States, 647 F.3d 388 (1st Cir. 2011) (materiality as limitation on 'false or fraudulent')
Rogan v. United States, 517 F.3d 449 (7th Cir. 2008) (kickbacks can render claims false where payment is involved)
Pogue v. Diabetes Treatment Ctrs. of Am., 238 F. Supp. 2d 264 (D.D.C. 2004) (certificate of compliance and precondition of payment considerations)
Loughren v. Unum Grp., 613 F.3d 300 (1st Cir. 2010) (materiality and knowledge standard in FCA)
Visiting Nurse Ass’n Gregoria Auffant, Inc. v. Thompson, 447 F.3d 68 (1st Cir. 2006) (agency discretion under 42 U.S.C. § 1395g(a))
United States ex rel. Suter v. National Rehab Partners, Inc., 2009 WL 3151099 (D. Idaho 2009) (mixed questions of law and fact in FCA context)
Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13 (1st Cir. 2009) (AWA/ASP related FCA liability context)