UNITED STATES of America EX REL. Shara AMBROSECCHIA, States of CA, CO, CT, DE, District of Columbia, FL, GA, HI, IL, IN, LA, MD, MS, MI, MN, MO, MT, NV, NH, NJ, NM, NY, OK, RI, TN, TX, VA and WI, Plaintiff-Appellant v. PADDOCK LABORATORIES, LLC, a wholly-owned subsidiary of Perrigo Co.; Perrigo Company, PLC, Defendants-Appellees
No. 16-1506
United States Court of Appeals, Eighth Circuit
May 5, 2017
855 F.3d 949
Counsel who presented argument on behalf of the appellee was James Christopher Martin, of Pittsburgh, PA. The following attorney(s) appeared on the appellee brief; Colin E. Wrabley, of Pittsburgh, PA., Eric Dubelier, of Washington, DC., Katherine J. Seikaly, of Washington, DC., Richard Lee Heppner, Jr., of Pittsburgh, PA., M. Patrick Yingling, of Pittsburgh, PA.
Before RILEY, Chief Judge,1 GRUENDER, Circuit Judge, and GRITZNER, District Judge.2
GRUENDER, Circuit Judge.
Relator Shara Ambrosecchia appeals the district court‘s3 dismissal of claims she brought against two pharmaceutical manufacturers under the False Claims Act (“FCA“). For the following reasons, we affirm.
I. Background
In November 2012, Ambrosecchia filed suit on behalf of the United States of America, twenty-seven states, and the District of Columbia against Paddock Laboratories and Perrigo Company (“Defendants“) for violations of the FCA and analogous state statutes. In 1962, amendments to the Food, Drug, and Cosmetic Act required drugs previously approved by the Food and Drug Administration (“FDA“) to undergo a review for effectiveness under the Drug Efficacy Study Implementation Program (“DESI“). Drugs determined to be “less than effective” and for which a notice of opportunity for a hearing was published (“DESI-LTE“) are not eligible for Medicare and Medicaid reimbursement unless re-approved. Ambrosecchia, a former employee of both Defendants, alleged that the Defendants reported reimbursement-eligible classification codes to the Center for Medicare and Medicaid Services (“CMS“) for certain DESI-LTE drugs, thereby causing the United States and relevant state governments to provide reimbursement for ineligible drugs.
Defendants filed a motion to dismiss the second amended complaint under
II. Discussion
A. Motion to Dismiss
First, Ambrosecchia contends that it is not appropriate to resolve whether the public disclosure bar applies on a motion to dismiss because the public disclosure bar, as amended in 2010, is no longer jurisdictional. Prior to 2010,
The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed—
(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party;
(ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or
(iii) from the news media....
However, this court has already determined that the amended public disclosure bar is appropriately resolved on a motion to dismiss, even assuming that it no longer poses a jurisdictional question. U.S. ex rel. Paulos v. Stryker Corp., 762 F.3d 688, 696 (8th Cir. 2014) (“Assuming the motion is best viewed as one made under Rule 12(b)(6), a court may still consider matters incorporated by reference or integral to the claim, items subject to judicial notice, and matters of public record.” (quotation
B. Public Disclosure Bar
We review dismissal under
A relator who qualifies as an original source is exempt from the public disclosure bar.
an individual who either (i) prior to a public disclosure under subsection (e)(4)(a) [sic], has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) [sic] who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section.
To qualify under subsection (2),4 Ambrosecchia must have (1) independent knowledge that (2) “materially adds to the publicly disclosed allegations or transactions,” in addition to providing the information to the Government before filing.5
Ambrosecchia claims that her information materially adds to the existing information by demonstrating scienter. However, the complaint provides no more than the simple, conclusory allegation that Defendants’ actions were knowing. The complaint does not elaborate, and this “formulaic recitation of the elements of [the] cause of action” alone is not sufficient. See Iqbal, 556 U.S. at 678 (quotations omitted). Accordingly, Ambrosecchia‘s complaint is insufficient to plausibly state that she qualifies as an original source.
As a result, the public disclosure bar applies, and the district court was correct to dismiss Ambrosecchia‘s FCA claims.6 Because we find in Defendants’ favor on these grounds, we need not address their argument that Ambrosecchia‘s complaint does not satisfy
Next, Ambrosecchia challenges the district court‘s decision to deny her leave to amend her second amended complaint. “We review the denial of a motion for leave to amend a complaint for an abuse of discretion.” Fuller v. Sec‘y of Def., 30 F.3d 86, 88 (8th Cir. 1994) (citation omitted). Although the district court “should freely give leave [to amend] when justice so requires,”
D. Joinder Motion
Finally, Ambrosecchia‘s contention that the district court should have entered a default judgment against Perrigo Company, PLC instead of allowing it to join Paddock‘s motion to dismiss is without merit. Allowing one party to join another party‘s motion is a matter well within the district court‘s “substantial case management discretion.” See United States v. Edwards, 159 F.3d 1117, 1130 (8th Cir. 1998) (reviewing a district court‘s decision to enforce the parties’ pretrial discovery agreement); cf. Mosley v. Gen. Motors Corp., 497 F.2d 1330, 1332 (8th Cir. 1974) (reviewing the decision to allow parties to join litigation for abuse of discretion). Accordingly, we may reverse only if the district court abused its discretion. See Edwards, 159 F.3d at 1130. Ambrosecchia originally named Perrigo Company, Inc. (an American corporation) in her complaint. During the litigation, Perrigo reincorporated in Ireland. As a result, its name changed to Perrigo Company, PLC. The named party in the case remained Perrigo Company, Inc. Paddock and Perrigo Company, Inc. jointly filed a motion to dismiss the second amended complaint. Later, Ambrosecchia moved to amend the second amended complaint to correct the party‘s name from Perrigo Company, Inc. to Perrigo Company, PLC. After the district court granted the motion, Perrigo Company, PLC filed a notice of joinder in the motion to dismiss. The district court allowed the joinder. Ambrosecchia contends that this decision violates due process, but she fails to offer any relevant rationale for or cite any cases supporting this argument. Ambrosecchia cannot demonstrate that she lacked notice and the ability to brief arguments relating to Perrigo. Cf. Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542 (1985) (“An essential principle of due process is that a deprivation of life, liberty, or property be preceded by notice and opportunity for hearing appropriate to the nature of the case.” (quotation omitted)). Indeed, her response to the motion to dismiss included specific arguments regarding Perrigo. Thus, the district court did not abuse its discretion.
III. Conclusion
For the foregoing reasons, we affirm.
Finally, we, like the district court, find it “apparent from the complaint that the target of [Lager‘s] allegations is the difference between the AWPs and what he calls the drugs’ ‘true selling prices.‘” CSL Behring, 158 F.Supp.3d at 791. The 2013 OIG Report examined the subject drugs and concluded that the AWP figures for roughly two-thirds of those drugs were higher than their actual sales prices. In turn, Red Book and CMS data reveal that Vivaglobin and Hizentra fall into this category. As recognized above, this data “show[s] the significant spread between ASPs and AWPs” for the subject drugs. Id. at 789. The ASP for Vivaglobin ranged from $66.06 to $68.42 during the period in question, while its AWP ranged from $119.82 to $127.57. Likewise, the ASP for Hizentra ranged from $68.72 to $72.44, while its AWP ranged from $150.66 to $151.07. As the district court correctly observed, Lager‘s “‘true selling prices’ of $65 to $70 are the same as the ASPs for the drugs. This is not a coincidence, because the ASP is intended to be a proxy for providers’ acquisition costs.” Id. at 791 (citation omitted).
In summary, we find that the following essential elements of Lager‘s claims were publicly disclosed prior to him filing suit: DME infusion drugs are reimbursed based on AWPs; AWPs are not based on actual sales data but are based on figures supplied by manufacturers to the third-party publishers; using AWP-based reimbursement results in inflated payments to providers; manufacturers and providers profit from the spread between AWP-based reimbursement rates and actual costs; providers seek out patients covered by federal programs in order to maximize their reimbursements; and the AWPs for Vivaglobin and Hizentra are approximately twice the ASPs for the drugs. This state of affairs has been labeled as a scam and fraud by the press and in multiple civil lawsuits.
Id.
III. Conclusion
Accordingly, we affirm the judgment of the district court.