UNITED STATES of America, ex rel., et al. v. EISAI, INC., et al.
Nos. 13-10973, 13-11949
United States Court of Appeals, Eleventh Circuit
June 11, 2014
783 F.3d 783
The indictment also alleged that Castillo intentionally obtained or caused to be obtained an owner‘s registration certificate by falsifying and concealing a material fact concerning the true owner of an aircraft, in relation to the transportation of a controlled substance by said aircraft and facilitating a controlled substance offense, namely, possession with intent to distribute five kilograms or more of cocaine. This statement set forth all of the elements of the offense under
Finally, Castillo‘s abduction from the Dominican Republic does not serve as a bar to the jurisdiction of the district court. Although the United States and the Dominican Republic have an extradition treaty, because the treaty does not expressly bar such abductions, the manner of Castillo‘s abduction does not prevent him from being tried in the district court for crimes against the laws of the United States. See Alvarez-Machain, 504 U.S. at 657, 112 S.Ct. at 2190. Accordingly, neither of Castillo‘s jurisdictional challenges requires dismissal of the indictment.
Based on the above, we affirm.1
AFFIRMED.
Gary M. Farmer, Jr., Seth Lehrman, Steven R. Jaffe, Farmer Jaffe Weissing Edwards Fistos & Lehman, PL, Steven F. Grover, Joffe Law, PA, James P. Gitkin, Salpeter Gitkin, LLP, Fort Lauderdale, FL, Mark Alan Lavine, U.S. Attorney‘s Office, Miami, FL, for Plaintiff-Appellant.
Thomas F. Cullen, Jr., Eben S. Flaster, Cheryl Zak Lardieri, Goodell Devries Leech & Dann, LLP, Baltimore, MD, Patricia E. Lowry, Squire Sanders (US), LLP, West Palm Beach, FL, Jeffrey S.
Before MARTIN, FAY, and SENTELLE,* Circuit Judges.
PER CURIAM:
We affirm the dismissal of this case for the reasons set forth in the district court‘s scholarly and thorough January 31, 2013, Order and its April 1, 2013, clarification Order.
AFFIRMED.
* Honorable David Bryan Sentelle, United States Circuit Judge for the District of Columbia, sitting by designation.
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA
Case No. 09-22302-CV-WILLIAMS
UNITED STATES OF AMERICA, et al., ex rel. Michael Keeler, Plaintiffs, vs. EISAI, INC., Defendant.
ORDER
THIS MATTER is before the Court on Defendant Eisai Inc.‘s (“Eisai“) Motion to Dismiss (DE 95). Eisai is a Japanese manufacturer of pharmaceutical drugs. Michael Keeler (“Relator“) was one of twenty-four sales representatives for Eisai‘s United States subsidiary, a position he held during a three-year period from sometime in 2006 through April 2009. He initiated this qui tam action on August 4, 2009 under the False Claims Act (“FCA“), which allows individuals to bring private actions in the name of the Government against individuals who defraud the Government.
I. BACKGROUND
Principally, Relator claims that Eisai promoted its drugs for non-approved uses and paid medical providers to use its drugs in non-approved ways, which he personally observed or became aware of while working at the company. According to Relator, service providers allegedly submitted claims for reimbursement through government-administered health care programs that were not reimbursable and with respect to which they falsely certified that they had not received a kickback in connection with the claim. Further, Relator contends that Eisai falsified drug payment information and submitted it to the Government, thereby failing to give the Government preferred rates as it was contractually obligated to do. The Complaint describes this conduct as beginning in 2006 and continuing to this date.
A. Off-Label Promotion
Relator contends that the Defendant marketed and promoted two cancer-treating drugs, Ontak and Dacogen, for off-label uses, i.e., uses that go beyond what has been approved after an exacting review process by the Food and Drug Administration. Ontak was approved to treat cutaneous T-Cell lymphoma “for patients whose malignant cells express the CD-25 component of the IL-2 receptor.” (Compl. ¶ 92.) Despite this, Eisai allegedly promoted the drug for treatment of follicular non-Hodgkin‘s lymphoma, chronic lymphatic lymphoma, relapsed/refractory B-cell non-Hodgkin‘s lymphoma, adult T-cell leukemia lymphoma, peripheral T-cell lymphoma, graft versus host disease and melanoma. (Id. ¶ 83).3 Dacogen is indicated solely for the treatment of myleodysplastic syndromes, a condition in which bone marrow does not produce enough healthy blood cells, but Eisai allegedly promoted it for treatment of acute myelogenous leukemia, which is a cancer affecting blood cells. (Id. ¶¶ 165-66.)
As a sales representative for Eisai, who also attended company meetings and interacted with other employees, Relator claims to have direct and personal knowledge of the message Eisai sought to communicate to physicians. (Compl. ¶¶ 12-14, 54.) While Eisai‘s official policy was that off-label studies should not be distributed during sales, he was “supplied with numerous articles of dubious scientific nature, touting various off-label uses of Ontak which were to be distributed to physicians and referred to during visits to physicians.” (Id. ¶¶ 87, 96, 125.) Apart from educating physicians about the suitability of its drugs for other indications, Eisai “marketed the spread“: that is, Eisai alerted certain providers of the profit to be earned based on the difference between the discounted price of Ontak they received and the reimbursements they would recoup. (Id. ¶ 129.) The “spread” was approximately $700 per dose administered and motivated doctors to prescribe the drug as much as possible. (Id. ¶ 133.)4 He alleges that sales representatives were trained to use similar tactics to market Dacogen. (Id. ¶ 172.)
In the Complaint, Relator refers to just a few instances in which Eisai engaged in this promotional conduct. For example, in November 2006, Relator was a trainee in an Ontak sales class in which he received off-label studies to use in making presentations to physicians and other similar materials. (Compl. ¶¶ 81-82, 88-90.) At an unspecified time and with no details of its contents, an Eisai District Manager distributed a paper advocating off-label use of Ontak to sales representatives. (Id. ¶ 90.) In June 2007, Eisai‘s director of research wrote an e-mail to Eisai‘s sales managers suggesting that an unapproved off-label marketing update (which is not further described) should be shown to providers but not left with them. (Id. ¶ 99.)5 At an unspecified time and without elaboration, Eisai‘s Vice President of Sales, Leslie Mirani, instructed unknown sales representatives to promote Dacogen for off-label use, to promote longer administration at more frequent intervals, and to use larger dosages. (Id. ¶ 174.) Finally, without describing who was involved, where it occurred, or when it was said, Relator claims he “was directed to tell physicians ... that there were studies showing that CD-25 positive/negative made no difference in the treatment of patients, which was known to be untrue.” (Id. ¶ 93.)
Beyond employing its sales force to deliver such sales messages, Relator alleges that Eisai engaged physicians to promote off-label uses. “Dr. Peter Heald was compensated by Eisai to speak and write articles on off-label uses of Ontak.” (Compl. ¶¶ 90, 154.) Additionally, Lauren Pinter-Brown, M.D. was paid $20,000 as another Ontak consultant and spoke to a group of South Florida physicians in 2008 about off-label uses of Ontak and “presenting claims to Medicare and Medicaid.” (Id. ¶¶ 154, 164, 249.) And in October 2008, Dr. Francine Foss spoke at a dinner in South Florida “on the use of Ontak for treating peripheral T cell lymphoma.” (Id. ¶ 153.)6
According to the allegations, doctors were also paid to conduct off-label studies. Relator provides a single example of this: a doctor named Nam Dang, M.D. was paid $50,000 in consulting fees, and authored “clinical studies related to the off-label use of Ontak for unapproved conditions, including B-cell lymphoma and [peripheral T-cell lymphoma].” (Compl. ¶ 248.) Dr. Dang was also identified as an Eisai contact to physicians, who were told to “call
Additionally, Eisai funded hospitals for their role in facilitating Eisai‘s promotion of off-label uses of its products to doctors. In March 2007, the University of Miami Sylvester Cancer Center was given an “educational grant” to allow a doctor to make a presentation on Ontak‘s approved uses, but which ultimately addressed the off-label use of Ontak. (Compl. ¶¶ 148-49.) Likewise, in July 2007, the University of Arizona and a doctor received a “preceptorship” grant, which was followed by that doctor presenting on Ontak‘s use for treatment of B-cell lymphoma. (Id. ¶ 150.) Relator believes that similar educational grants were given to two other facilities—the Dana Farber Cancer Center and the Lurie Cancer Center at Northwestern University. (Id. ¶ 151.)
Finally, although it is not tied to any payment, prescription, or claim submission, Relator makes much of Eisai‘s Oncology Reimbursement Assistance (“OAR“) Program, which guaranteed that prescribers would be paid at Medicare rates. As purportedly reflected in an e-mail that Relator sent to an Eisai employee in March 2007, Eisai promised to cover the price of Ontak if it was not covered in whole or in part by Medicare when a claim was submitted, regardless of whether it was ultimately approved or rejected by the Government. (Compl. ¶¶ 139, 146.)8 Relator alleges that this practice “greatly increase[ed] the number of drug prescriptions and, indirectly, the amount of money spent by the federal government for reimbursement of prescriptions covered by the Government Health Care Programs.” (Id. ¶¶ 139-141.) More to the point, he alleges that this practice was a recognition by Eisai that off-label uses might not be reimbursed by the government. (Id. ¶¶ 142-43.) Relator claims that unnamed Eisai sales representatives were trained at unspecified times to deliver messages that Relator loosely describes in his Complaint as “essentially” comprised of the following:
Medicare could reject these claims because you‘re prescribing Ontak for an offlabel use. But don‘t worry: We‘ll coach you on the claims submission process to optimize reimbursement. With our tips on coding, these claims submissions will fly below the radar. Trust us. Besides, we‘ve got your back—If Medicare or Medicaid doesn‘t pay you, we will ensure that you are not out of pocket!
(Id. ¶ 142.)
B. Kickbacks
Next, Relator alleges that Eisai engaged in a “nationwide system” of kickbacks as part of its marketing strategy.
However, there were few details regarding the payments these health care providers received from Eisai. For example, Relator contends that at an unidentified Tampa resort at some point in 2007, one unnamed physician received $3,000 in accommodations relating to his attendance at a lecture “focus[ing] on Ontak‘s use for Tcell lymphoma and other cancers.” (Compl. ¶ 157.) In July 2007, unspecified “[m]onies” were paid to a “Dr. Miller” for making a “presentation regarding use of Ontak for B cell lymphoma.” (Id. ¶ 150.) And without elaboration, Relator claims that “[o]ther physicians promoting off-label use of Ontak who received very substantial compensation from Eisai were Dr. Nam Dang, Nevada Cancer Center, Dr. Pinter-Brown, UCLA, Dr. Timothy Kuzel with Northwestern, and Dr. Peter Heald, a dermatology professor.” (Id. ¶ 154.) “[S]imilar educational grants were paid in return for off-label presentation access to such well-known cancer treatment centers as: the Dana Farber Cancer Center in Boston, Lurie Cancer Center at Northwestern University in Chicago, and the M.D. Anderson Cancer Center in Houston, Texas.” (Id. ¶ 151.)
C. Submission of False Claims for Reimbursement
Relator alleges that any claim for reimbursement resulting from Eisai‘s off-label promotion or payment of kickbacks is fraudulent, unreimbursable, and constitutes a “false claim” within the meaning of the FCA. (Compl. ¶¶ 135, 219, 229.) Providers can receive payment by submitting claims through three government-funded programs: Medicare, which provides health services for individuals 65 and older (Compl. ¶ 12); Medicaid, which provides health services to low-income individuals, and is paid for by states that are reimbursed to some degree by the federal government (Id. ¶ 13); and TRICARE, which provides health services to military personnel and their dependents. (Id. ¶ 14.)
With respect to kickbacks, providers seeking Medicare coverage agree that their claims are “conditioned upon the claim and the underlying transaction complying with [Medicare] laws, regulations, and program instructions (including, but not limited to, the Federal anti-kickback statute and Stark law, and on the [provider‘s] compliance with all applicable conditions of participation in Medicare.” (Id. ¶ 224.) Similar language is contained in certifications accompanying cost reports they must submit. (Id. ¶¶ 225-226.)10 Individual
However, there are few details to support a conclusion that any hospital or doctor that received payments from Eisai as described above—assuming they constitute kickbacks—submitted a claim for reimbursement. As best the Court can tell, Dr. Foss, whose role is otherwise described as a speaker and director of off-label studies, “prescribe[ed] Ontak off-label and ma[de] false and fraudulent claims to Medicare and Medicaid.” (Compl. ¶ 256(a).) The Dana Farber Cancer Center and the M.D. Anderson Cancer Center appear on a company report as having purchased Ontak, a purchase for which Relator believes they sought reimbursement. (Id. ¶ 240.) Dr. Pinter-Brown was paid for serving as a consultant; at one point in the Complaint, Relator refers to the fact that she “made off-label Ontak claims to Medicare and Medicaid.” (Id. ¶ 249.) Finally, the Complaint suggests that the most frequent lecturers were also the top off-label prescribers. (Compl. ¶¶ 156, 163). As discussed below, without more, these conclusory allegations are insufficient to assert that claims were actually submitted to the Government for reimbursement.
Similarly, with regard to off-label promotion—assuming this activity can render a claim false—there are few allegations to support Relator‘s assertion that doctors who were persuaded by Eisai to prescribe medication off-label submitted claims to the Government. With respect to the three doctors who were paid for speeches regarding Ontak as described above—Drs. Heald, Pinter-Brown, and Foss—the Complaint is conspicuously silent as to whether any prescribing doctor was in attendance or whether any speaker caused any particular off-label claim to be submitted. The same is true of Dr. Dang, who was alleged-
Nevertheless, the Complaint does provide limited discussion of submissions that resulted from Eisai other promotional activities. Over a nine month period, Eisai sales representatives made in-person sales calls to three doctors at Baptist Hospital, stating that clinical data demonstrated that Dacogen was effective for an off-label indication and leaving behind Eisai-sponsored studies and marketing materials. (Compl. ¶ 177.) According to the Complaint, Baptist Hospital then used Dacogen for non-approved uses. (Id. ¶ 177.) Relator alleges that Eisai “intended that [its] above-described marketing practices would result in the submission of off-label claims to Medicare and Medicaid” and that they “caused [the hospital] to submit false or fraudulent claims ... which were approved and paid by Medicare and Medicaid respectively.” (Id. ¶ 178.) Relator makes verbatim allegations with respect to in-person sales calls by unspecified “Eisai sales representatives” to two doctors at Memorial Regional Hospital, two doctors at Sylvester Cancer Center, and two doctors at Boca Raton Community Hospital. (Id. ¶¶ 179-184.) Relator asserts that the promotions and other activities resulted in false claims by roughly two dozen hospitals during the two-and-a-half year timeframe of the Complaint and Relator provides approximate dollar figures based on his estimation. (Id. ¶¶ 57, 59, 256.)
Relator also alleges that Eisai was directly involved in falsifying submissions. Without specifying exactly who, where, when, or what statements were made, the Complaint states that Eisai hired reimbursement specialists to coach physicians, hospitals, and other medical providers on how to present off-label Ontak claims for reimbursement, including through telephone support. (Compl. ¶¶ 241-42.) For instance, Eisai recommended that they provide an “off-label secondary diagnosis code[]” on a Medicare claim form, such as diabetes. (Id. ¶¶ 241-246.)11 Through this, Eisai intended and caused false claims for payment to be submitted to Medicare and Medicaid. (Id. ¶¶ 243-45.)
The most significant document Relator points to regarding false submissions is a GOERS report, which was provided to Eisai‘s sales representatives. This report shows the number of units of Ontak that Eisai sold to 188 named providers, and lists their addresses and reporting dates. (Compl. ¶¶ 59, 238, 240; Compl. Ex. G.) Although the report provides little more than the provider‘s name and the quantity of drugs each had bought by a certain date (notably, it includes no billing information, such as dollar value of the sales and how much was reimbursed by the Government), he alleges that he “was informed by managers that the providers listed in the GOERS report routinely bill Medicare and Medicaid.” (Id. ¶ 240.) Based on his own experience, Relator estimates that of his $5.5 million in sales of Ontak, twenty-five percent was later false-
D. Best Price Violations
While all other allegations assert that Eisai engaged in conduct that caused false claims to be filed, Relator asserts one way in which Eisai made a false claim to the Government directly—falsely reporting pricing information. Medicare and Medicaid rebate programs ensure that pharmaceutical companies offer state governments reimbursement rates for drugs that are no greater than the rate charged to other entities (i.e., manufacturers must provide the Government with the “Best Price“). (Compl. ¶¶ 187-88.) As part of the agreement to provide such rebates, manufacturers must make quarterly reports that disclose pricing information for covered drugs, including the best price offered to any purchaser. (Id. ¶¶ 188-89, 191.) Relator contends that Eisai falsified information about its drug pricing to the Government with respect to Ontak, Dacogen, and two other drugs: Aloxi, which is used to treat nausea caused by chemotherapy, and Fragmin, which is used to treat blood clots caused by cancer or heart conditions. (Id. ¶¶ 185-86.) Relator alleges that this conduct is actionable under the FCA. (Compl. ¶ 192.)
These drugs were highly profitable to Eisai, but also faced stiff competition from rival manufacturers making versions under their own name. (Id. ¶¶ 194-96.) Accordingly, Eisai gave prospective buyers aggressive discounts, which were approved at the sales representative and management level, but not tracked centrally by Eisai. (Id. ¶¶ 194, 196.) Eisai‘s discounts were based on volume and bundling with other drug sales. Relator was told by unnamed supervisors that Eisai‘s best customers were allowed volume discounts that were not included on company price lists or information sent to the Government. (Id. ¶ 201.) At a conference in 2008, Relator and other sales representatives learned that Eisai planned to falsely report an increase in the cost of Aloxi—which would increase its average sales price—and obtain a higher reimbursement rate from Medicare and Medicaid. (Id. ¶¶ 204-05.) In reality, because of discounts offered to physicians, the sales price was decreasing. (Id. ¶ 205.) At a sales meeting in 2008, an Eisai sales representative named “Frank” told Relator that “[n]obody else” but Jackson Memorial Hospital in Miami, Florida was getting a low price on Fragmin. (Id. ¶¶ 207-08.) While he did not specify a price that Jackson paid or the price Eisai reported to the Government, he mentioned that “[w]e are almost giving it away.” (Id. ¶ 207.) And finally, two upper level Eisai managers launched a plan to bundle Aloxi and Dacogen in order to “gain a formulary position at each institution purchasing them.” (Id. ¶¶ 214-15.)
E. Procedural History
This case has a procedural history commensurate with the breadth and complexity of the allegations. After his initial complaint, Relator filed an amended complaint on July 8, 2010 (DE 19).12 On February
Based on the allegations described above, Relator essentially brings three distinct claims. Count I alleges that Defendant‘s promotion of off-label uses caused doctors to prescribe drugs for offlabel purposes and submit false claims for reimbursement, violating the False Claims Act. Second, in that same Count, Relator alleges that Eisai failed to provide the Government with “best prices” for Ontak, Dacogen and two other drugs, Aloxi and Fragmin. Finally, Count II alleges that Eisai paid prescribers to induce them to prescribe Eisai‘s drugs and to submit claims for reimbursement to Medicare and Medicaid, and also paid for physicians’ speeches and for physicians to conduct offlabel clinical trials. In so doing, Relator asserts that Eisai violated the Anti Kickback Act,
II. LEGAL STANDARD
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead sufficient facts to state a claim that is “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The Court‘s consideration is limited to the allegations presented. See GSW, Inc. v. Long Cnty., 999 F.2d 1508, 1510 (11th Cir.1993). All factual allegations are accepted as true and all reasonable inferences are drawn in the plaintiff‘s favor. See Speaker v. U.S. Dep‘t of Health & Human Servs. Ctrs. for Disease Control & Prevention, 623 F.3d 1371, 1379 (11th Cir.2010); see also Roberts v. Fla. Power & Light Co., 146 F.3d 1305, 1307 (11th Cir.1998). Nevertheless, while a plaintiff need not provide “detailed factual allegations,” the allegations must consist of more than “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (internal citations and quotations omitted). Additionally, “conclusory allegations, unwarranted factual deductions or legal con-
In addition to the requirements of Twombly, Iqbal, and Federal Rules of Civil Procedure 8(a) and 12(b)(6), claims asserted under the False Claims Act (as well as other fraud claims) are subject to the pleading standards of Federal Rule of Civil Procedure 9(b). See United States ex. rel. Clausen v. Laboratory Corp. of Am., Inc., 290 F.3d 1301, 1309-10 (11th Cir.2002).15 That rule provides that “[i]n allegations of fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake” but that “[m]alice, intent, knowledge, and other condition of mind of a person shall be averred generally.” FED. R. CIV. P. 9(b). Rule 9(b) is satisfied if the plaintiff pleads “(1) precisely what statements were made in what documents or oral representations or what omissions were made, and (2) the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) same, and (3) the content of such statements and the manner in which they misled the plaintiff, and (4) what the defendants obtained as a consequence of the fraud.” Ziemba v. Cascade Int‘l, Inc., 256 F.3d 1194, 1202 (11th Cir. 2001) (quoting Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1371 (11th Cir.1997)).
In the context of the False Claims Act, the complaint must set forth “facts as to time, place, and substance of the defendant‘s alleged fraud” and “the details of the [defendant‘s] allegedly fraudulent acts, when they occurred, and who engaged in them.” Clausen, 290 F.3d at 1309-10 (quotation omitted); accord United States ex rel. Sanchez v. Lymphatx, Inc., 596 F.3d 1300, 1302 (11th Cir.2010). “Underlying schemes and other wrongful activities that result in the submission of fraudulent claims are included in the ‘circumstances constituting fraud or mistake’ that must be pled with particularity pursuant to Rule 9(b).” United States ex. rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 232 (1st Cir.2004). As discussed herein, the Eleventh Circuit has recognized that while these requirements of Rule 9(b) may, in practice, make it difficult for a qui tam plaintiff to bring an action, they are necessary to prevent “[s]peculative suits against innocent actors for fraud” and charges of guilt by association. Clausen, 290 F.3d at 1308 (quoting United States ex rel. Cooper v. Blue Cross & Blue Shield of Fla., 19 F.3d 562, 566-67 (11th Cir.1994) (per curiam)).
III. DISCUSSION
The Court previously found that Relator stated a claim under Rule 12(b)(6), but that his claims were not pleaded with the degree of particularity required by Rule 9(b). Significantly, Relator failed to describe specifically what Eisai did to cause false claims to be submitted, omitted critical details of claim presentation, and did not describe how the alleged kickbacks “crossed the line from legal conduct in compliance with federal statutes to illegal
A. Scheme to Promote Off-Label Uses
The bulk of Relator‘s complaint is focused on imposing liability under the FCA due to Eisai‘s scheme to promote off-label use of its pharmaceutical products.17 Section (a)(1) requires that the Defendant make or cause a claim to be made; that the claim was false; that the falsity was known to the Defendant; and that payment was actually sought from the Government. Under the FCA‘s “cause to be submitted” language, a defendant may be liable notwithstanding the fact that it was not the submitter of a claim or that it was
The Court need not delve into the myriad arguments made by the parties in their extensive briefing since there are immediately apparent defects regarding the circumstances of the fraud.18 As to the
For its part, Defendant seeks a ruling that no false claim is implicated as a matter of law because even if Eisai promoted its drugs for off-label uses and they were prescribed for an off-label use, the claims were still reimbursable. Cases recognize that while off-label promotion is an illegal act under federal law, a relator may not have standing to bring suit for it; a defendant is not subject to FCA liability unless it seeks government compensation (or causes someone else to seek compensation) for which it is not entitled. See United States ex rel. Bennett v. Boston Scientific Corp., No. H-07-2467, 2011 WL 1231577, at *12 (S.D.Tex. Mar.31, 2011) (collecting authority). Looking at the reimbursement requirements of the government programs at issue, Defendant asserts that off-label prescriptions are
While the Court ultimately does not reach the issue of whether Defendant‘s theory is correct as a matter of law, it notes that it would have difficulty accepting that Relator‘s allegations, as pleaded, satisfy the FCA‘s falsity requirement. Relator has not developed, in pleading or in argument, how the mere act of promot-
fraud‘s “who” and “where,” although Relator specified receiving training and marketing materials advocating off-label use, he has failed to properly demonstrate Eisai‘s act of promotion. Relator has not alleged which individuals at Eisai instructed him (or other sales representatives) to fraudulently promote off-label uses, what those instructions were, which doctors sales representatives contacted and induced to prescribe Eisai‘s drugs, and what was said to them to cause them to do so. There are no allegations that Eisai‘s inducing statements themselves were expressly false with the exception of one conclusory allegation that he “was directed to tell physicians ... that there were studies showing that CD-25 positive/negative made no difference in the treatment of patients, which was known to be untrue.” (Compl. ¶ 93.) He has not alleged, for instance, that off-label studies Eisai provided to physicians contained false data, that its representatives gave the impression that the drugs were reimbursable when they were in fact not, or that Eisai misrepresented the indications for which the drugs were approved. See Bennett, 2011 WL 1231577, at *26 (“Importantly, there is no allegation that the defendants concealed or misstated the limits of the FDA‘s approval on the use of the FlexView system.“).
That same key information is lacking with respect to the speakers and lecturers who allegedly were engaged to promote Eisai‘s products. Notably, the Complaint is completely silent as to the substance of their remarks and whether any plan participants were present. One example states in its entirety that “[i]n June 2007,
Moreover, even if there were sufficient allegations of statements made by and to physicians, Relator has failed to explain how the representations resulted in prescriptions and requests for reimbursement. For instance, the Complaint does not tie the efforts of Drs. Heald, Brown, Foss, and Dang—all of whom allegedly received payment for lecturing on off-label uses or conducting off-label studies—to any claim submitted by them or others. There is no allegation that a prescribing doctor who later sought reimbursement attended those lectures or considered the studies. At no point does Relator allege that any particular prescriber that is alleged to have submitted off-label claims was actually aware of any of Eisai‘s representations as communicated by these doctors. The same is true of the named hospitals and institutions that received money in exchange for research and lectures regarding Eisai‘s drugs. For instance, the University of Arizona is alleged to have received a grant in July 2007 (presumably for allowing a presentation on off-label use of Ontak) (Compl. ¶ 150), but it is not one of the institutions that is alleged to have submitted claims. Indeed, it is not mentioned again anywhere else in the Complaint.
Similarly, Relator has failed to plead with particularity that any claims for off-label use were in fact submitted to the Government and reimbursed as a result of the scheme, which is a requirement for an action based on off-label promotion under Section (a)(1) and which deficiency scuttled the previous iteration of his Complaint. See Solvay, 588 F.3d at 1325 (requiring a plaintiff to link the fraudulent scheme to the submission of false claims); United States ex rel. Atkins v. McInteer, 470 F.3d 1350, 1359 (11th Cir.2006) (holding that a plaintiff must “provide the next link in the FCA liability chain: showing that the defendants actually submitted reimbursement claims for the services he describes“); Corsello v. Lincare, Inc., 428 F.3d 1008, 1013-14 (11th Cir.2005) (affirming dismissal where complaint “did not allege that a specific fraudulent claim was in fact submitted to the government“);
Whether submission of the claim is sufficiently established is a different question than whether the scheme has been sufficiently pleaded. See Corsello, 428 F.3d at 1014 (“In short, Corsello provided the ‘who,’ ‘what,’ ‘where,’ ‘when,’ and ‘how’ of improper practices, but he failed to allege the ‘who,’ ‘what,’ ‘where,’ ‘when,’ and ‘how’ of fraudulent submissions to the government.“). The presentment requirement calls on relators not only to describe details about how the schemes operated (however well that might be pleaded), but to cite specific occurrences of actual fraud. Clausen, 290 F.3d at 1305, 1311-1312 & n. 21. Thus, for at least some of the claims, a relator must provide the following: “details concerning the dates of the claims, the content of the forms or bills submitted, their identification numbers, the amount of money charged to the government, the particular goods or services for which the government was billed, the individuals involved in the billing, and the length of time between the alleged fraudulent practices and the submission of claims based on those practices.” United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 232-33 (1st Cir.2004) (quoting Clausen, 290 F.3d at 1312 n. 21).
Illustrating this principle is the decision in Clausen (relied on for various points by both sides), which involved allegations that a medical testing company submitted
B. Kickback Allegations
Relator‘s kickback allegations present an independent ground for an FCA violation, but also fail to meet the applicable heightened pleading standards. The Complaint alleges that as part of the promotion of its drugs, Eisai paid doctors to speak and write articles regarding off-label uses; paid doctors to conduct off-label studies;
Courts have recognized that under an express certification theory, “[f]alsely certifying compliance with the ... Anti-Kick-
Alternatively, an implied certification theory, which is also alleged, recognizes that the FCA is violated where compliance with a law, rule, or regulation is a prerequisite to payment but a claim is made when a participant has engaged in a knowing violation. Wilkins, 659 F.3d. at 313. So, for example, in McNutt v. Haleyville Medical Supplies, Inc., 423 F.3d 1256 (11th Cir.2005), the Eleventh Circuit affirmed the denial of a motion to dismiss finding that allegations of kickbacks can create FCA liability where compliance with the Anti-Kickback Statute is a prerequisite for payment. Id. at 1259-60. In particular, the alleged kickbacks in McNutt—which the Government identified with “detailed facts” as well as “specific claims” that were submitted for reimbursement—disqualified the defendants’ medical services from reimbursement under the Medicare program, but the defendants nevertheless submitted claims for reimbursement. Id. at 1257-1259. The court concluded that “[w]hen a violator of government regulations is ineligible to participate in a government program and that
It is important to note, however, that as with any basis for FCA liability, such claims are subject to Rule 9(b)‘s pleading requirements. Cf. Wilkins, 659 F.3d. at 313 n. 20 (finding that relator stated a claim but declining to address whether it was pleaded with particularity). Thus, the Court in Parke-Davis held that even if kickbacks are illegal, dismissal was proper since the relator “failed to allege that physicians either expressly certified or, through their participation in a federally funded program, impliedly certified their compliance with the federal antikickback statute as a prerequisite to participating in the federal program.” 147 F.Supp.2d at 55. In particular, the complaint did not assert that the defendant “caused or induced a doctor and/or pharmacist to file a false or fraudulent certification regarding compliance with the anti-kickback statute.” Id.
Herein lies the problem with Relator‘s claims. Even assuming that the payments alleged constitute illegal kickbacks,21 the allegations that participants actually received payments and falsely certified compliance—like the complaint in Parke-Davis and in contrast to McNutt—are not sufficiently pleaded. As noted above, there are scarcely any allegations that any doctor or facility that received such payments filed a claim for reimbursement—and none that are pleaded with any degree of particularity. With respect to those few who did submit claims for reimbursement, there are no submission allegations that can satisfy Clausen. Thus, Relator fails to con-
C. Best Price Violations
Finally, the Court is compelled to reach the same conclusion with respect to Relator‘s FCA claims based on allegations of false best price submissions. As with other claims, the linchpin of these allegations is not that Eisai violated any law requiring it to provide the Government with the best price of its drugs or provided less in program rebates than what was owed, but that it falsified information provided to the Government and profited from it (although Relator confuses the two in the Complaint and in argument). Section
In this regard, the Complaint alleges that Eisai provided participants with discounts that presumably did not factor into best price reports.22 It also alleges that Eisai affirmatively and knowingly falsified information provided to the Government by altering its reported prices. Because of this, Eisai presumably was able to charge the Government more than it otherwise would have. Again, as with Relator‘s other allegations, these claims are subject to Rule 9(b). See United States ex. rel. Foster v. Bristol-Myers Squibb Co., 587 F.Supp.2d 805, 825 (E.D.Tex.2008).
Very briefly, the Complaint fails to allege with specificity what data was submitted by Eisai to the Government that was false or fraudulent. The time periods alleged are broad and often run from when Eisai acquired the rights to produce the drugs at issue until Relator ended his employment. Nevertheless, there is not one description of a single discount that was offered to a single provider. There is no discussion of any particular pricing report and any assertions that discounts were not reported are conclusory and unsupported by specific facts. None of the allegations set forth precisely what statements were made, when such statements were made, where such statements were made, and who made them. See Ziemba, 256 F.3d at 1202 (citations omitted). Relator‘s best price violations thus fail to meet the 9(b) standard.
D. Relaxation of the 9(b) Standard
Despite the infirmities of his complaint, Relator devotes the majority of his brief to arguing against a heightened pleading standard. In particular, to the extent that his Complaint is deficient, he asks the Court to apply a relaxed standard that would allow him to proceed to discovery based upon his information and belief. He contends that as an insider, he is able to proffer sufficient indicia of reliability that can excuse a lack of particularity; that because he has alleged a far-reaching scheme, general discussions of unlawful conduct are sufficient to establish his claim; and that the information needed to properly plead his claim is exclusively in the hands of the Defendant, depriving him
First, it is true that some courts have recognized that information based on first-hand knowledge can lend credibility to the relator‘s claims and propel it over pleading hurdles. For instance, in Hill v. Morehouse Medical Associates, Inc., No. 02-14429, 2003 WL 22019936 (11th Cir. Aug.15, 2003)a case upon which Relator heavily relies (see Opp‘n at 10-11)—the Eleventh Circuit allowed an FCA claim against a medical services provider to proceed where the relator was a billing coder in the department where the fraud occurred and possessed first-hand knowledge of the fraudulent conduct (i.e., altering diagnosis codes to qualify for payment) based on her experience there. Among other things, she was able to name some of the participants in the scheme, describe the defendant‘s practices in detail, recount the frequency of submission of each type of claim, and identify the documents in the defendant‘s possession that would prove the fraud. Hill, 2003 WL 22019936, at *4-5. However, she could not recite the names of patients or the dates that the claims were submitted, at least in part because copying private records would violate laws regarding patient confidentiality. Id. at *2, 4-5 & n. 8. The Eleventh Circuit concluded that these were appropriate cir-
However, it is important to understand that the Court in Atkins later emphasized that Hill was not binding precedent and stated that ”Clausen supercedes Hill to the extent that Hill is inconsistent with Clausen.” Atkins, 470 F.3d at 1358 n. 15. Thus, while the relator in Atkins “cite[d] particular patients, dates and corresponding medical records for services that he contend[ed] were not eligible for government reimbursement,” he was in the same position as the relator in Clausen insofar as he “fail[ed] to provide the next link in the FCA liability chain: showing that the defendants actually submitted reimbursement claims for the services he describe[d].” Id. at 1359. As this Court has concluded previously, Relator has failed to proffer “facts as to time, place, and substance of the defendant‘s alleged fraud, specifically, the details of the defendants’ allegedly fraudulent acts, when they occurred, and who engaged in them.” Clausen, 290 F.3d at 1310 (citations and internal quotation omitted).23 Accordingly, Relator‘s claims must fail.
Most concerning, however, is that many of the details that were required to have been pleaded and should have been known to Relator are absent from the Complaint. At the very least, as a salesman, Relator should be familiar with Eisai‘s drug sales and marketing program. But he is unable to plead with particularity what was told to him by Eisai employees and what he told doctors when he met with them. He states, for example, that he “was directed” to make false statements about Ontak‘s effectiveness, but he cannot say who instructed him, when, or where. (Compl. ¶ 93.) And despite the fact that the information was not protected, in contrast to Hill, Relator has no documentation to illustrate the false nature of the claims. As Defendant observes, “[i]f Keeler were a genuine whistleblower with information about actual fraud, it would not have been difficult for him as a disgruntled former employee to satisfy these requirements.” (Reply at 7.) Consequently, in light of the paucity of details, the Court has no basis to find that Relator‘s claims are more likely to be reliable rather than purely speculative or as the court in Clausen warned, spurious. 290 F.3d at 1313 n. 24.
With that in mind, the remaining bases for relaxation are inapplicable. While the broad nature of a scheme may make plead-
IV. REMAINING STATE CLAIMS
Relator‘s remaining claims are brought pursuant to various states’ false claims laws. Those claims are subject to the heightened pleading standard of Rule 9(b) and based on the foregoing, are subject to dismissal. See United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720, 723, 731 (1st Cir.2007); Hopper v. Solvay Pharms., Inc., 590 F.Supp.2d 1352, 1363 (M.D.Fla.2008), aff‘d 588 F.3d 1318 (11th Cir.2009).
V. CONCLUSION
In sum, Relator has failed to set forth a claim under even the minimal pleading requirements recognized by long-standing
It is similarly unknown whether another insider (with more knowledge of Eisai‘s activities) or the Government (with the benefit of claim submission records) could have pursued this case. See Atkins, 470 F.3d at 1360 n. 17 (“We note, however, that the government already possesses the claims-false or otherwise-a potential defendant has submitted for payment. The government can, therefore, access those claims on its own and evaluate any FCA liability that it believes should attach before determining whether to bring suit or intervene ... when the government brings an FCA action or intervenes in a qui tam action, we may assume that it does not do so solely to use the discovery process as a fishing expedition for false claims.“). And finally, there still may be other allegations that fall outside the FCA ambit altogether; that is not to say that Eisai may not be immune from action under other statutes by other parties. See Clausen, 290 F.3d at 1311 (“The False Claims Act does not create liability merely for a health care provider‘s disregard of Government regulations or improper internal policies unless, as a result of such acts, the provider know-
In light of the foregoing, it is hereby ORDERED AND ADJUDGED as follows:
(1) Defendant‘s Motion to Dismiss (DE 95) is GRANTED. The above-styled case is DISMISSED WITH PREJUDICE.
(2) Defendant‘s Motion to Unseal (DE 197) is DENIED. Any and all other pending motions are DENIED AS MOOT.
(3) The Clerk is directed to CLOSE this case for administrative purposes.
DONE AND ORDERED. in chambers in Miami, Florida, this 31st day January, 2013.
KATHLEEN M. WILLIAMS
UNITED STATES DISTRICT JUDGE
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA
Case No. 09-22302-CV-WILLIAMS
UNITED STATES OF AMERICA, et al., ex rel. Michael Keeler, Plaintiffs, vs. EISAI, INC., Defendant.
ORDER
THIS MATTER is before the Court on Relator‘s Motion to Amend Order of Dismissal under Rules 60(a) and (b) and Rule 59(e) (DE 236). The motion seeks three things: (1) to clarify the Court‘s January 31, 2013 Order of Dismissal to state that the case is not dismissed with prejudice as to other parties in interest that might be
The Court has reviewed the motion and the record and concludes that under any standard, Relator‘s requests must be denied. As to the first, Relator has not shown how he has been affected by the Court‘s order to the extent it may affect other potential plaintiffs or relators. See Mot. at 5 (stating that the United States “should not be prejudiced if a relator‘s allegations are challenged under Rule 9(b)“). As to the remaining grounds—which raise similar issues—Relator has not shown that dismissal with prejudice was not warranted. See Corsello v. Lincare, Inc., 428 F.3d 1008, 1014-15 (11th Cir. 2005) (holding that trial court did not err in denying relator‘s request to file an amended complaint where there was a repeated failure to cure deficiencies in three prior complaints).
Finally, as Mr. Keeler acknowledges in his reply, he has neither attached a proposed complaint for the Court to review in accordance with Local Rule 15.1 nor has explained how his allegations would withstand the scrutiny required by Federal Rule of Civil Procedure 9(b). In any event (and aside from the fact that, as Defendant sets forth, this motion is a totally inappropriate vehicle for the relief requested), allowing Mr. Keeler to use documents obtained in discovery to overcome pleading hurdles would circumvent the purpose of
Accordingly, it is hereby ORDERED AND ADJUDGED that Relator‘s Motion (DE 236) is DENIED. Although Relator suggests that he may seek to re-file the motion, he is warned that having dismissed this action and denied reconsideration, the proper avenue for challenging the Court‘s rulings is an appeal. (See DE 256, at 1 (“[T]he Court will need to see and evaluate Relator‘s additional allegations and/or evidence in order to determine if it is proper to vacate or modify its Order.“)) Any further filings in this action may result in the imposition of sanctions.
DONE AND ORDERED in chambers in Miami, Florida, this 1st day of April, 2013.
Arys R. CABRERA, Plaintiff-Appellant, v. U.S. DEPARTMENT OF TRANSPORTATION, Ray LaHood, Secretary of Transportation, Defendant-Appellee.
No. 12-16536.
United States Court of Appeals, Eleventh Circuit.
June 11, 2014.