560 F.Supp.3d 412
D. Mass.2021Background
- Teva manufactures Copaxone, an MS drug whose per-patient cost rose sharply; Medicare Part D beneficiaries face tiered cost-sharing including a coverage gap and catastrophic coverage.
- Teva operated a patient program (Shared Solutions) that referred Medicare-eligible Copaxone patients to specialty pharmacy ACS and donated to copay-assistance charities The Chronic Disease Fund (CDF) and The Assistance Fund (TAF).
- Government alleges Teva coordinated with ACS to time and size donations (totaling >$328 million from 2006–2015) so new funds would be used almost exclusively to cover Copaxone copays, increasing Medicare-paid claims.
- Complaint asserts AKS violations (payments intended to induce Medicare purchases) and FCA violations (claims resulting from illegal remuneration), plus conspiracy and unjust enrichment counts.
- Teva moved to dismiss under Rule 12(b)(6); the court evaluated AKS liability (remuneration, intent, knowing/willful), FCA causation and conspiracy, unjust enrichment, and a First Amendment defense.
- Court denied dismissal except it dismissed Count IV (unjust enrichment); most FCA/AKS-based claims and conspiracy survived pleading-stage review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Remuneration under AKS | Donations to CDF/TAF functioned as indirect remuneration to patients | Donations to independent charities sever link to manufacturers | Survives: donations plausibly constitute remuneration |
| Intent requirement (control) | Teva intended donations to induce Copaxone purchases even without formal control | Liability requires control/agreements with charities (Celgene) | Rejected: control not required to plead intent |
| Intent sufficiency | Teva timed and sized donations with ACS batch submissions to target Copaxone patients | Teva merely hoped/expected beneficial effect | Survives: facts plead specific intent beyond mere hope |
| Knowing/willful violation | Teva knowingly flouted OIG guidance and internal warnings about risks | Conduct not clearly unlawful; guidance allows lawful donations | Survives: allegations plausibly show knowing and willful conduct |
| FCA causation | Teva’s scheme caused Medicare claims tied to Copaxone copay grants | Other donors to funds preclude linking Teva contributions to specific false claims | Survives: complaint links 30 foundation payments to subsequent Medicare claims plausibly |
| FCA conspiracy | Teva, ACS, and charities agreed (explicitly/implicitly) to route funds to Copaxone patients | Foundations lacked agreement to submit false claims | Survives: allegations permit inference of conspiratorial agreement |
| Unjust enrichment | Government seeks equitable relief for Teva’s profits from scheme | FCA provides adequate legal remedy; equitable claim redundant | Dismissed: unjust enrichment claim declined as duplicative |
| First Amendment | Evidence of communications used to show intent not protected speech that defeats AKS enforcement | Theory would criminalize speech incident to giving | Rejected: AKS targets conduct; use of speech as evidence is permissible |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (establishes plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions excluded from factual pleading requirements)
- Guilfoile v. Shields, 913 F.3d 178 (First Cir.) (AKS violation producing federal payment yields per se false claim under FCA)
- United States v. Celgene Corp., 226 F. Supp. 3d 1032 (C.D. Cal.) (addressed donations to copay foundations; relied on by defendants)
- United States v. McClatchey, 217 F.3d 823 (10th Cir.) (distinguishes improper intent from mere collateral hope or expectation)
- United States ex rel. Vitale v. MiMedx Grp., Inc., 381 F. Supp. 3d 647 (D.S.C.) (similar facts finding plausible AKS violation based on timed donations)
- United States v. Bay State Ambulance & Hosp. Rental Serv., 874 F.2d 20 (1st Cir.) (knowledge/voluntariness standard for statutory violations)
- United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89 (3d Cir.) (FCA requires causal connection between illegal remuneration and federal claim)
- President & Fellows of Harvard Coll. v. United States, 323 F. Supp. 2d 151 (D. Mass.) (agreements to cause false claims can be explicit or implicit for FCA conspiracy)
- Wisconsin v. Mitchell, 508 U.S. 476 (speech admissible evidentiary use to prove intent)