OPINION AND ORDER
TABLE OF CONTENTS
INTRODUCTION.. .782
BACKGROUND... 782
A.Relevant Statutes.. .783
B. The Alleged Scheme... 784
C. Other Cases and Procedural History. . .786
LEGAL STANDARDS... 787.
DISCUSSION.. .788
A. The Public Disclosure Bar... 788
B. The First-to-File Bar... 790
1. Related Actions... 790
2. Whether the First-to-File Bar Requires Dismissal.. .792
C. Statute of Limitations... 800
D. The Anti-Kickback Statute... 805
1. Drug Samples and Patient Care Kits.. .806
2. Patient Instruction Sheets and Prescription Pads... 808
E. The False Claims Act.. .809
1. The PPACA.. .812
2. Express Certification... 813
3. Implied Certification... 815
4. Third-Party Claim Submissions... 818
F. Rule 9(b)... 819
1. FERA...820
2. Cоunts I and II: Subsections (a)(1)(A) and (a)(1)(B).. .821
3. Count III: Subsection (a)(1)(C).. .825
4. Count IV: Subsection (a)(1)(G).. .826
5. The Scope of the Scheme and Scien-ter. . .827
G. The Retaliation Claim... 830
H. State Law Claims... 831
I. Wisconsin... 831
2. Delaware, New Mexico, and Texas. . .832
CONCLUSION,.. 834
INTRODUCTION
In this qui tam proceeding, Plaintiff-Relator John A. Wood brings claims under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., ánd state analogues against Defendant Allergan, Inc. (“Allergan”), a pharmaceutical company that develops and manufactures eye care prescription drugs.
Allergan’s motion confirms that, when the Supreme Court observed last year that the FCA’s "qui tam provisions present many interpretive challenges,” it was, if anything, engaging in rhetorical understatement. Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, — U.S. -,
The issues , are too complicated and the Court’s holdings are too numerous to usefully summarize here. For now, it suffices to say that, for the lengthy reasons discussed below, Allergan’s motion to dismiss is largely denied.
BACKGROUND
Generally, in considering a motion to dismiss, a court is limited to the facts alleged in the complaint and is required to accept those facts as true. See, e.g., LaFaro v. N.Y. Cardiothoracic Grp., PLLC,
A. Relevant Statutes
The statutes at the heart of this case are discussed in more detail below, but a brief introduction to them is warranted at the outset. As noted, Wood brings claims under the FCA. To the extent relevant here, the FCA imposes significant penalties on any person who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” or any person who “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” 31 U.S.C. § 3729(a)(1)(A)-(B); see also Escobar,
' As a qui tom-statute, the FCA permits private persons, known as “relators,” to bring actions to recover damages on behalf of the United States. 31 U.S.C, § 3730(b). The statute includes other procedural quirks as well, several of which loom large in this case.: First, the statute" provides that a relator must file his or her complaint under seal so as to permit the government to -decide whether it wants to intervene. See id. § 3730(b)(2). At the Government’s request, the seal can remain in effect indefinitely; moreover, even if the Government declines to intervene at the outset, it may do so at any point later in the litigation upon a showing of good cause. See id. § 3730(b)(3). Second, certain provisions of the statute provide incentives for relators to file quickly, while balancing the Government’s interest in notice with concerns about parasitic 'or opportunistic law suits. The “first-to-file”' bar, for-instance, states that once an action has been brought, “no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” Id. § 3730(b)(5). Relatedly, the “public disclosure” bar generally requires courts to “dismiss an action” if “substantially the same allegations or transactions as alleged in the' action or claim were publicly disclosed” at an earlier date. Id. § 3730(e)(4)(A). In isolation, each of these requirements presents interpretive challenges; taken together, they create a veritable thicket of complexity.
The gravamen of Wood’s FCA claims, as discussed below, is that Allergan induced
B. The Alleged Scheme
Allergan is a pharmaceutical company that “has been a pioneer in the development of prescription eye care products,” which it develops, manufactures, and markets for use in the cataract surgery setting. (Third Am. Compl. ¶ 22). Wood was employed by Allergan as a Senior Territory Manager from October 2008 to July 2010, during which time he discovered that Allergan was engaging in practices that allegedly violated the AKS and the FCA. (Id. ¶¶ 18-19). Specifically, Wood alleges that — from at least 2003 through 2011— Allergan provided substantial numbers of free custom care kits, drug samples, customized patient instruction sheets, and customized, pre-printed prescription pads to induce physicians to prescribe Allergan drugs to their cataract patients, most of whom were Medicare or Medicaid recipients. (Id. ¶¶ 42, 100-101, 125). Allergan executives were purportedly aware of, and encouraged, the provision of these free goods in exchange for the prescription of Allergan drugs. (See ¶¶ 125-136). For the custom care kits, Allergan sales representatives worked with ophthalmologist offices nationwide to determine which of twelve different versions of the kit each office preferred to receive pursuant to a signed “Custom Care Kit Agreement.” (Id. ¶¶ 137, 141). Pursuant to these Custom Care Kit Agreements, Allergan provided well over 100 million dollars’ worth of free drug samples to physicians. (See id. ¶¶ 148-150 (detailing nearly 150 million dollars’ worth of samples distributed during a single six-month period)). Notably, however, Allergan provided the free kits only to physicians who agreed to prescribe its drugs and, for physicians already doing so, those who agreed to prescribe large quantities of those drugs. (Id. ¶¶ 155-157). Allergan tracked the ratio of free drug samples provided to drugs prescribed by each doctor, and the company would stop providing free kits to physicians who were not prescribing sufficient quantities of its drugs. (Id. ¶¶ 155-160). In late 2008, Allergan stopped providing free custom care kits based on growing concerns over the program’s legality. (Id. ¶¶ 161-163).
After terminating its custom care kit program, Allergan continued to provide
Wood alleges that Allergan’s provision of these free products — including the drug samples worth hundreds of millions of dollars — induced participating physicians to write hundreds of thousands of prescriptions for Allergan drugs in violation of the AKS. (Id. ¶¶ 219-220). Pharmacies then filled these prescriptions, unwittingly submitting “false” claims for reimbursement to federal and state healthcare programs, including Medicare, Medicaid, the Federal Employee Health Benefits Plan (“FEHBP”), and the Department of Defense TRICARE program (formerly known as CHAMPUS), and CHAMPVA. (Id. ¶ 101, 230). In doing so, Allergan caused physicians and pharmacies to falsely certify compliance with applicable federal and state laws. (Id. ¶¶ 239-244). For example, pharmacies affix their unique provider identification numbers to every electronic claim submitted for Medicaid reimbursement; .these identification numbers “serve as electronic stamps” indicating the pharmacies “are in compliance with all applicable federal and state laws.” (Id. ¶ 227). Additionally, in the Medicare context, physician-providers must sign agreements certifying their compliance with federal law and their understanding that Medicare reimbursement is conditioned on compliance with, among other statutes, the AKS. (Id. ¶ 242 (discussing Centers for Medicare and Medicaid Services (“CMS”) Forms 865A and 855I)).
C. Other Cases and Procedural History
Significantly, Wood was not the first person to bring FCA claims against Allergan along the lines of those alleged here. On October 29, 2008, a relator filed United States ex rel. Lampkin v. Johnson & Johnson, Inc., No. 08-CV-5362 (D.N.J.), alleging that Allergan, along with two other pharmaceutical companies, violatéd thé AKS and thereby the FCA by shipping free surgical kits to physicians nationwide to induce them to prescribe a particular Allergan drug. (See Docket No. 68 (“Partridge Decl.”) Exs. 2, 3). And on January 11, 2010, another relator filed United States ex rel. Caryatid, LLC v. Allergan, Inc., No. 10-CV-46 (D.D.C.), alleging similar violations resulting from Allergan’s provision of free surgical kits to physicians. (See Partridge Decl., Exs. 1, 4). The United States declined to intervene in both actions, resulting in the complaints eventually being unsealed — in Caryatid, on July 27, 2011, and in Lampkin, on February 16, 2012. (See id. Ex. 2 ("Lampkin Docket”) No. 26; id. Ex. 4 (“Caryatid Docket”) No. 15), On January 23, 2012, the Caryatid action was dismissed pursuant to the, relator’s unopposed motion to dismiss for failure to timely serve Allergan. (See Caryatid Docket No. 16). The Lampkin action was dismissed with respect to Allergan for failure to serve on December 14, 2012. (See Lampkin Docket No. 54). On May 13, 2013, the entire action was dismissed, when the court granted the remaining defendant’s motion to dismiss. (See id. Docket No. 59).
On July 26, 2010 — during the time that the Lampkin and. Caryatid actions were under seal, but before they were dismissed — Wood filed this action under seal on behalf of the United States, twenty-six states, and the District of Columbia. (Docket No. 1; Docket No. 61 (“Original Compl.”)). Nearly six years later, in March 2016, the United States and the states declined' to intervene. (Docket Nos. 25, 26).
LEGAL STANDARDS
When reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court must “aecept[ ] all factual allegations in the complaint and draw[ ] all reasonable inferences in the plaintiffs favor.” ATSI Commc’ns, Inc. v. Shaar Fund, Ltd.,
As the FCA is an anti-fraud statute, Wood’s claims must also comply with Rule 9(b) of the Federal Rules of Civil Procedure, which requires a plaintiff to plead fraud claims “with particularity.” Fed. R. Civ. P. 9(b). To comply with Rule 9(b), a complaint “must: (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Lerner v. Fleet Bank, N.A.,
In particular, “where the alleged fraudulent scheme involved numerous transactions that occurred over a long period of time, courts have found it impractical to require the plaintiff to plead the specifics with respect to each and every instance of fraudulent conduct.” Id.; see United States v. Wells Fargo Bank, N.A., 972 F.Supp.2d 593, 615-16 (S.D.N.Y. 2013). Thus, “where a relator pleads a complex and far-reaching fraudulent scheme with particularity, and provides examples of specific false claims submitted to the government pursuant to that scheme, a relator may proceed to discovery on the entire fraudulent scheme.” United States ex rel. Bledsoe v. Cmty. Health Sys., Inc.,
DISCUSSION
Allergan moves to dismiss the Third Amended Complaint on several grounds. First, Allergan contends that the Court lacks jurisdiction to hear this action under the FCA’s “public disclosure” and “first-to-file” bars. Second, Allergan alleges that, even if neither of those bars applies, the majority of Wood’s claims fall outside the FCA’s statute of limitations, as measured from the Third Amended Complaint. Third, Allergan asserts that Wood fails to plead a predicate violation of the AKS, in part because the PDMA expressly authorizes drug manufacturers to provide free samples to physicians. Fourth, with respect to the FCA claims, Allergan contends both that Wood’s theory of falsity (as to pre-PPACA claims) fails as a matter of law and that Wood fails to plead any false claim with the particularity required under Rule 9(b). Fifth, Allergan challenges several of Wood’s state law claims on similar grounds. And finally, Allergan asserts that Wood fails to state a retaliation claim as a matter of law. The Court addresses each argument in turn, beginning with the two purportedly jurisdictional issues;
A. The Public Disclosure Bar
Allergan’s first argument is that the Court lacks subject-matter jurisdiction because of the FCA’s “public disclosure bar,” which, as noted above, generally requires courts to dismiss an action or claim “if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed” in a judicial proceeding, a governmental report, hearing, audit, or investigation, or in the news media. 31 U.S.C. § 3730(e)(4)(A). Until 2010, the public disclosure bar was unambiguously jurisdictional: “No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions....” 31 U.S.C. § 3730(e)(4)(A) (2009). In the PPACA, however, Congress amended the provision to remove any reference to jurisdiction. See Pub. L. No. 111-148, § 10104(j)(2), 124
Whether the public disclosure bar applies turns on whether the allegations in Wood’s complaint were “publicly disclosed” prior to his filing of the initial complaint in July 2010. Significantly, nine courts of appeals have held that the bar applies only where there has been a disclosure outside of the government. See, e.g., United States ex rel. Chattanooga-Hamilton Cty. Hosp. Auth.,
The Second Circuit has not yet opined on this issue. In light of that vacuum, Allergan invites the Court to follow the Seventh Circuit, the sole court of appeals to conclude that disclosure to a competent public figure, without more, satisfies the “public disclosure” requirement. See United States ex rel. Mathews v. Bank of Farmington,
B. The First-to-File Bar
Allergan’s next argument^ — that Wood’s action must be dismissed pursuant to, the FCA’s “first-to-file” bar because, when it was filed, the Lampkin and Caryatid actions were both pending (albeit under seal) — requires a more extended discussion. The bar, codified in Section 3730(b)(5), provides: “When a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5). The core statutory “command is simple: as long as a first-filed complaint remains pending, no delated complaint may be filed.” United States ex rel. Batiste v. SLM Corp.,
1. Related Actions
Of course, the Court need not address those two thorny issues. if, as Wood argues, the Lampkin and Caryatid actions were not “related” to this one within the meaning of Section 3730(b)(5), so the Court begins there. Although the Second Circuit has not yet weighed in, every court of appeals that has addressed the issue has held that “[a] second action is ‘related,’ within'the meaning of the first-to-file bar, if the claims incorporate the same material elements of fraud as the earlier action, even if the allegations incorporate additional or somewhat different facts or information.” United States ex rel. Heath v. AT & T, Inc.,
Applying this “essential facts” standard, the Court concludes that Lamp-kin was indeed “related” to this action.
Wood’s strongest argument to the contrary is that the AKS and FCA allegations in Lampkin were limited to only one drug (Zymar), while the allegations here relate to additional drugs (Acular and, perhaps, Pred Forte). (Compare Lampkin Complaint ¶¶ 4-5, 19, with Third Am. Compl. ¶¶ 154, 210-213). In support of that argument, Wood cites cases holding that “the drug itself is an essential element of the fraudulent scheme alleged.” United States ex rel. Banigan v. Organon USA Inc.,
2. Whether the First-to-File Bar Requires Dismissal
The fact that this case is “related” to Lampkin, however, does not end the analysis, because Lampkin was dismissed on December 14, 2012, and, thus, is no longer a “pending action” for purposes of Section 3730(b)(5). Notably, the Supreme Court recently confronted a remarkably similar scenario in Kellogg Brown & Root Services., Inc. v. ex rel. Carter. There, the district court had relied on the first-to-file bar to dismiss an FCA case with prejudice; while the case was on appeal, however, the earlier-filed cases were dismissed. See
Allergan concedes that point, but argues that dismissal without prejudice is nonetheless required because no amendment can change the fact that Wood initiated this action while at least one related case was “pending.” (Allergan Mem. 9). By contrast, Wood — perhaps notably, supported by the Government at oral argument— contends that dismissal is unnecessary because filing the Third Amended Complaint after Lampkin was dismissed “cured” the first-to-file defect in his original complaint. (Wood Opp’n 4-8; Tr. at 21-23). Given that any dismissal would be without prejudice to Wood filing a new action, see Carter,
Complicating matters, the Second Circuit (consistent with the theme that pervades this Opinion) has not addressed that question, and the federal courts that have addressed it have adopted radically different approaches. The majority have held that the first-to-file bar is jurisdictional and (in part as a result) that violation of the bar is not curable by amendment. See, e.g., United States v. Medco Health Solutions, Inc., No. 11-CV-684 (RGA),
Based on a careful review of the FCA’s text, structure, and. purpose, the Court concludes that Wood and the Government have the better of the argument and that a violation of the first-to-file bal-eаn be cured by amending or supplementing the complaint after the first-filed action has been dismissed. As an initial matter, the Court agrees with the D.C. Circuit that the first-to-file bar is not jurisdictional. See Heath,
Other considerations bolster the conclusion that “the first-to-file rule bears only on whether a qui tarn plaintiff has properly stated a claim,” rather than on the scope of courts’ jurisdiction. Heath,
Significantly, most of the courts to hold that a first-to-file rule violation cannot be cured have rested heavily, if not primarily, on their view that the rule is jurisdictional in nature and the “hornbook” principle that “jurisdiction ... depends upon the state of things at the time of the action brought.” Grupo Dataflux v. Atlas Global Grp., L.P.,
To the contrary, courts routinely allow plaintiffs to cure violations of such rules by filing amended or supplemental complaints pursuant to Rule 15, See generally 6 Wright & Miller, Fed. Prac. & Proc. Civ., § 1474 (3d ed.) (noting “the most common use of Rule 15(a) is by a party seeking to amend in order to cure a defective pleading” and listing a wide range of permissible amendments, which courts “liberal[ly]” construe to further “the basic objectives of the federal rules,” that is, “the determination cases on their merits”); id. § 1505 (listing a wide variety of permissible purposes for supplementation and noting that Rule 15(d) was revised specifically to make clear that courts have “discretion to allow a supplemental pleading even though the original pleading is defective in stating a claim or defense” (internal quotation marks omitted)); see also, e.g., Klinger v. Corr. Corp. of Am., No. 11-CV-2299,
Second, and in any event, the structure and purpose of the FCA generally, and the first-to-file rule specifically, call for allowing a relator in Wood’s circumstances to avoid dismissal by amending or supplementing his complaint. There can be no dispute that the primary purpose of the FCA is to permit the Government to recover for fraud inflicted upon it. See Cook County, Ill. v. United States ex rel. Chandler,
Ignoring Congress’s primary intent to aid the Government in fighting fraud, Allergan contends that the first-to-file rule “is intended to ‘prevent the filing of more qui tam suits once the government already has been made aware of the potential fraud’ ” and to “discourage ... parasitic lawsuits that merely feed off previous disclosures of fraud.” (Allergan Mem. 8 n.6 (quoting United States ex rel. Poteet v. Medtronic, Inc.,
In light of the sealing requirement for newly filed qui tam suits and the public disclosure bar, therefore, it is hard to see what work the first-to-file rule does in combating parasitic or opportunistic lawsuits, Nor, in light of the fact that it ceases to apply if the earlier-filed action is dis-misséd, does the rule necessarily shield the Government from being notified of the same fraud more than once. After all,
[wjhile filing the complaint might put the government on notice, and while the government may remain on notice while the action is pending, the government does not cease to be on notice when a relator withdraws his claim or a court dismisses it. And yet, if that prior claim is no longer pending, the first-to-file bar no longer applies.
Id. at 964. The text and structure of the statute thus suggest that the primary, if not sole, purpose of the first-to-file rule is to help the Government uncover and fight fraud. That is, it “vindicates the goal of encouraging relators to file; it protects the potential award of a relator while his claim remains viable, but, when he drops his action, another relator who qualifies ... may pursue his own.” Id.; see also, e.g., Campbell v. Redding Med. Center,
Viewing the first-to-file rule in that light, it is plain that barring, a relator in Wood’s position from curing his violation of the rulé would undermine, rather than advance, the purposes of the FCA. For one thing, it would diminish the incentive for any relator with valuable information to file suit, as she would have to discount the probability of laying exclusive claim to any spoils by the risk that, unbeknownst to her, someone else had beaten her to the courthouse door. For another, where, as here, a case remains sealed for an extended period of timе, it could result in the relator’s claims being precluded by either the public disclosure bar or the statute of limitations — through no fault of his own. See, e.g., Medco Health,
In the final analysis, the strongest— perhaps the only — support for Allergan’s view that a violation of the first-to-file requires dismissal without prejudice is the plain language of the statute. As the. Shea Court reasoned: “The first-to-file bar prohibits bringing a ‘related action,’ not a related complaint..., No matter how many times [a later-filing relator] amends his Complaint, it will still be true that he *br[ought] a related action based on the facts underlying the [then] pending action.’”
In sum, the Court concludes (1) that the first-to-file rule is non-jurisdictional and (2) in light of that, as well as the text, purpose, and structure of the FCA, that a violation of the rule is curable through the filing of an amended or supplemental complaint after the earlier-filed action was dismissed. Here, Wood did just that, as he filed the Third Amended Complaint on May 23, 2016, after Lampkin (and Caryatid) had been dismissed.
C. Statute of Limitations
Before 'turning to the substance of Wood’s FCA cláims, one last thorny procedural issue remains: whether and to what extent those claims are time barred. The FCA’s statute of limitations is set forth in Section 3731(b), which provides as follows:
(b) A civil action under section 3730 may not be brought—
(1) more than 6 years after the date on which the violation of Section 3729 is committed, or
(2) more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed,
whichever occurs last.
31 U.S.C. § 3731(b). Ordinarily, the statute of limitations is “an affirmative defense that must be raised in the answer.” Ellul v. Congregation of Christian Bros.,
For better or for worse, the parties’ dispute once again requires consideration of a complex issue that the Second Circuit has not yet addressed and upon which other courts are divided: namely, whether a relator, such as Wood, can avail himself of the potentially longer statute of limitations set forth in subsection (b)(2) or is limited to the six-year period set forth in subsection 3731(b)(1). Some courts have held that “Congress intended. Section
Although there are strong arguments on both sides of this divide, the Court finds the thorough and well-reasoned textual analysis of Judge Lamberth in Pogue most convincing. See
The plain language of Section 3731 is enough to settle the matter, but Judge Lamberth’s interpretation has the added advantage of advancing the FCÁ’s purposes by sometimes giving relators more time to seek recovery on behalf of the Goyernment. See id. at 87-88. The cases that conclude otherwise “most frequently cite one concern as the moving force behind their' decisions: that would-be relators will ‘sleep on their rights,’ sit back, and watch false claims build up, perhaps all the way to the ten-year limit.” Id.; see, e.g., Griffith,
Admittedly, Judge Lamberth’s reading of the text creates an odd result, as a relator’s. statute of limitations may “turn on the knowledge of a government official — knowledge that the relator would often never be able to discover.” Griffith,
Accordingly, the Court concludes that Wood may avail himself of the potentially longer statute of limitations in Section 3731(b)(2). That does not settle the matter, however, as the parties also dispute whether the relevant complaint for purposes of assessing timeliness is Wood’s original complaint (filed on July 26, 2010) or the Third Amended Complaint (filed on May 23, 2016), the first' complaint filed after Lampkin was dismissed. (Compare Allergan Mem. 27, with Wood Opp’n 26-27). Wood argues that the Third Amended Complaint “relates back” to the date of the original complaint pursuant to Rule 15(c)(1)(B) because it “asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out — or attempted to be set out — in the original pleading.” (Wood Opp’n 27).
Substantially for the reasons stated by Judge Failla in Hayes v. Dep’t of Educ. of the City of New York,
Notably, Allergan does not really argue otherwise. Instead, invoking the first-to-file rule, it effectively asks the Court to treat the original complaint (and first two amended complaints) as a legal nullity, to which the Third Amended Complaint — the first pleading that arguably complied with the first-to-file rule — could not relate back. (Allergan Mem. 27-28; Allergan Reply 18-19). In support of that request, Allergan cites Cephalon and Makro Capital of Am., Inc. v. UBS AG,
By contrast, at least two courts have considered and rejected precisely the argument that Allergan is making here. See Richards v. City of Bangor, Me.,
Thus, the Court holds that — even though Wood’s original complaint was defective under the first-to-file rule — Rule 15 should be applied in the normal course and that the Third Amended Complaint relates back to the original complaint for statute-of-limitations purposes. In light of that, and the Court’s conclusion above that Wood may avail himself of the potentially (and, here, likely) longer statute of limitations set forth in Section 3731(b)(2), none of Wood’s FCA claims may be dismissed at this stage as time barred.
D. The Anti-Kickback Statute
At long last, the Court can turn to the first merits-related issue: Allergan’s argument that Wood fails to allege a predicate violation of the AKS. The AKS prohibits offering, paying, soliciting, or receiving “any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind ... in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program.” 42 U.S.C. § 1320a-7b(b)(1)(A). The statute requires intent to induce a referral or recommendation through the use of “remuneration,” which is defined as “transfers of items or services for free or for other than fair market value.” Id. §§ 1320a-7b(b)(2), 1320a-7a(i)(6). Courts have interpreted “remuneration” expansively to include “anything of value in any form whatsoever.” United States v. The Health All. of Greater Cinn., No. 03-CV-
Notably, to prove a violation of the AKS, one need not prove that the primаry or sole purpose of the remuneration was to induce the referral of patients or the recommendation of items or services; it is. enough if that was “one purpose” of the remuneration. See, e.g., United States v. McClatchey,
Here, Wood alleges that Allergan violated the AKS by providing “valuable remuneration to physicians, including a no-cost suite of products and office supplies consisting of large shipments of Allergan drugs, supplies of cataract surgery patient care kits, physician-branded practice-related medical instructions for physicians to provide to patients, and pre-printed physician prescription pads.” (Wood Opp’n 12). At first glance, those allegations would seem to clear the plausibility hurdle easily. See, e.g., OIG Compliance Program Guidance for Pharma. Manu., 68 Fed. Reg. 23731-01, 23737 (May 5, 2003) (“Any time a pharmaceutical. manufacturer provides anything of value to a physician who might prescribe the manufacturer’s product, the manufacturer should examine whether it is providing a valuable tangible benefit to the physician with the intent to induce or reward referrals.”). But Allergan argues otherwise on two grounds. First, Allergan contends that the provision of free drug samples and patient care' kits containing free drug samples Was authorized- by the PDMA. More specifically, Allergan contends that, in light of the PDMA, drug samples ultimately passed along to patients have no monetary’ value to physicians (unless physicians are unlawfully selling the samples, which is not alleged here), and so by definition cannot constitute remuneration. (Allergan Mem. 12-14), Second, Allergan contends that “the supplies such as patient instruction sheets and pre-printed prescription' pads were of “nominal” valué and benefited patients rather' than physicians — removing them from the realm of remuneration. (Allergan Mem. 15-17). The Court considers each argument in turn.
1. Drug Samples and Patient Care Kits
Allergan’s first argument — that the free drug samples sent by Allergan do
Allergan’s argument is not without some force given the language of the PDMA and the Office of Inspector General’s Guidelines, see OIG Compliance Program Guide,
At a minimum, Wood’s allegations raise a question of fact — whether- ophthalmologists would otherwise have had to cover the costs of these drugs, thus lowering their profits per surgery — not suitable for resolution at the motion to dismiss stage.
2. Patient Instruction Sheets and Prescription Pads
Allergan’s argument concerning the patient instruction" sheets and pre-printed prescription pads can be more swiftly dispatched. Wood alleges that Allergan provided physicians who prescribed its drugs with customizable patient instruction sheets and customizable, pre-printed prescription pads. (Third Am. Compl. ¶¶ 209-215). Physicians were able to design the sheets and pads, with Aller-gan covering all printing and shipping costs. (See id.). These supplies undoubtedly had monetary value (a standard order of twenty prescription pads, for example, cost $53 (id. ¶ 214)). In arguing otherwise, Allergan contends that the supplies lacked any marketing utility as they were provided to patients after them surgeries and that the prescription pads could be used only to prescribe Allergan drugs — eliminating any independent value to physicians. (Allergan Reply 9-10 & n.17). But the Third Amended Complaint alleges that these patient instruction sheets were “generally regarded]” as a “necessity,” raising the plausible inference that physicians
E. The False Claims Act
With that, the Court can finally turn to the substantive crux of this case: whether Wood has, as a matter of law, alleged violations of the FCA. The focus of the FCA has always been “on those who present or directly induce the submission of false or fraudulent claims” to the Government. Escobar,
Several definitions are in order. The FCA defines a “claim” as “any request or demand ... for money or property” that “is presented to an officer, employee, or agent of the United States.” 31 U.S.C. § 3729(b)(2)(A). The Act also defines “knowing” and “knowingly” to mean that a person has “actual knowledge of the information,”- “acts in deliberate ignorance of the truth or falsity of the information,” or “acts in reckless disregard of the truth or falsity of the information.” Id. § 3729(b)(1)(A). Finally, the Act defines “material” to mean “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” Id. § 3729(b)(4). By contrast, the Act does not define the terms “false or fraudulent.” Instead, the Second Circuit has interpreted those terms to refer to a claim that is “aimed at extracting money the government otherwise would not have paid.” Mikes,
Complicating matters further, legally false claims can be further broken down into two sub-categories: express certification claims and implied certification claims. See id. at 697-700. “Express” legal falsity generally arises whеre “a government program requires participants to submit forms explicitly stating that they have complied with certain statutes. Where the party certifying compliance is, in fact, violating the statute in question, that certification is ‘false.’ ” TEVA Pharm.,
The Supreme Court’s decision in Escobar is significant, even if its implications are not yet entirely clear. There, the relators brought an action against a mental health facility after discovering that the facility’s practitioners were not licensed to provide mental health treatment under state law. See id. at 1997-98. Relying on an implied certification theory, they alleged FCA violations premised on the submission of claims to Medicaid — even though
The Escobar Court emphasized that this materiality standard is “demanding.” Id. at 2003. The Government’s designation that “compliance with a particular statutory, regulatory, or contractual requirement” as a condition for payment does not suffice; nor does the Government’s having “the option to decline to pay if it knew of the defendant’s noncompliance.” Id. Moreover, “minor or insubstantial” noncompliance can never be material, as the FCA is not “a vehicle for punishing garden-variety breaches of contract or regulatory violations.” Id.; see also id. at 2001 (“Whether a provision is labeled a condition of payment is relevant to but not dispositive of the materiality inquiry.”). Proof of materiality also includes — but is not limited to — “evidence that' the defendant knows that the Government consistently refuses to pay claims ... based on noncompliance with the particular [provision]” or, conversely, evidence that “the Government regularly pays a particular type of claim in full despite actual knowledge that certain requirements were violated.” Id. at 2003-04. After articulating these standards, the Supreme Court vacated the judgment below and remanded for a determination of whether the violated requirements were “so central to the provision of mental health counseling that the Medicaid program would not have paid the[ ] claims had it known of the[ ] violations.” Id. at 2004.
For present purposes, Escobar has several relevant takeaways. First, the Supreme Court did not address the theory of express certification. Thus, there is no reason to believe Escobar modified or eliminated existing law (including Mikes) pertaining to that theory of falsity. Second, the Escobar Court explicitly endorsed the implied certification theory, but addressed only one type of such claims — namely, those involving fraudulent half-truths. See id. 2000-01. Accordingly, contrary to the assertions of Allergan and amicus PhRMA (Docket No. 84, Ex. 1 (“PhRMA Br.”), at 6; Docket No. 99 (“Allergan Final Reply”), at 2-4), Mikes also remains good law — and binding on this Court — to the extent it held that falsity may arise from the defendant’s submission of a claim for payment that does not include a specific representation about the goods or services provided, coupled with noncompliance with a material payment requirement. See Mikes,
With these principles in mind, the Court turns to Wood’s legal theories of falsity, which the Government has wholeheartedly endorsed in its Statements of Interest. Wood and the Government argue, first, that claims premised on an underlying AKS violation are necessarily “tainted,” amounting to per se false claims (the “taint theory”). Second, they assert that the various Medicare and Medicaid provider applications and agreements signed by physicians and pharmacies who were induced by the unlawful kickbacks to subscribe and provide Allergan drugs expressly certify compliance with the AKS (the “express certification theory”). (Wood Opp’n 19-20; Wood Reply 8-9; Gov’t SOI 8-15). And third, they contend that the act of submitting a claim for reimbursement itself implies compliance with relevant federal law (the “implied certification theory”). (Wood Opp’n 17-19; Wood Reply 2-12; Gov’t SOI 15-16; Gov’t Supp. SOI 2-12). Of these, the taint theory is the broadest and most novel. See TEVA Pharm.,
1. The PPACA
Before turning to those theories, however, the Court pauses to address one straightforward implication of the PPACA, enacted in 2010. As a result of that statute, the law now provides expressly that “a claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim.” 42 U.S.C. § 1320a-7b(g), as amended by PPACA, Pub. L. No. 111-148, 124 Stat. 119 (2010); see Novartis V,
2. Express Certification
Wood points to several possible bases for express certification here. The first bases relate to Medicare Part D.
Wood also alleges that, “when submitting claims data to CMS for payment, Part D plans (and their subcontractors) must certify that the claims data is true and accurate to the best of their knowledge and belief, which includes the absence of any false claims.” (Third Am. Compl. ¶ 243 (citing 42 C.F.R, § 423.505(k)(3))). Moreover, those Part D sponsors have agreed to comply with “Federal laws and regulations designed to prevent fraud, waste, and abuse, including but not' limited to applicable provisions of Federal criminal law, the False Claims Act (31 U.S.C. §§ 3729 et seq.), arid the antkickback statute (section 1128B(b) of the Act).” 42 C.F.R. § 423.505(h)(1). Indeed, CMS regulations require that all subcontracts between Part D plan sponsors and downstream entities, including pharmacies, contain language obligating the pharmacy to comply with all applicable federal laws. See id. § 423.505(i)(4)(iv).
These arguments are well founded in case law from this. Circuit and beyond. In TEVA Pharmaceuticals, for example, Judge McMahon analyzed the CMS Form 8551 and concluded that, “while the form itself may be directed at a physician’s services (Part B) rather than the provision of medication (Part D), the language of the certification applies to all claims made to Medicare by or at the behest of the physician. The certification under CMS Form 8551 is [thus] sufficient to -underpin an FCA claim for Medicare Part D reim
Allergan’s (and PhMRA’s) arguments to the contrary are unpersuasive. The. company contends that the Medicare Provider Agreement contains “forward-looking statements regarding a provider’s agreement to comply, in the future, with applicable laws” that are not actionable absent a “then-existing intent not to abide by the pledge.” (Allergan Mem. 18). But Allergan’s sole support for that argument, United States ex rel. O’Donnell v. Countrywide Home Loans, Inc.,
Outside of the Medicare Part D context, however, Wood’s claims are on less solid ground. To be eligible for reimbursement under Medicaid, Wood alleges that healthcare providers must “sign and submit- to CMS various Provider Applications, Provider Agreements, and Claims Forms that include various certifications of compliance with applicable laws — including the AKS.” (Third Am. Compl. ¶ 78). Although these “Medicaid Provider Application[s] var[y] from state to state, the provider typically affirms and undertakes compliance with all applicable state and Federal laws.” (Id. ¶ 79). Additionally, the standardized Claim Form, Form CMS 1500, used for Medicaid and TRICARE/CHAMPUS (as well as Medicare), requires providers to certify- as follows: “I understand that payment and satisfaction of this claim will be from. Federal, and Stаte funds, and that any false claims, statements, or documents, or concealment of a material fact, may be prosecuted under applicable Federal. or State laws.” (Third Am. Compl. ¶ 82). The problem for Wood, however, is that the Third Amended Complaint fails to identify any express certifications for these claims (a defect that could be construed as a failing on the merits or a failure to meet the heightened pleading standards of Rule 9(b), which are discussed below). See TEVA Pharm.,
3. Implied Certification
After Escobar, liability under the implied certification theory does not require “violation of a contractual, statutory, or regulatory provision that the Government expressly designated a condition of payment.”
Notwithstanding Allergan and PhRMA’s arguments to the contrary, these conclusions align with the text of the statute, cf. Allison Engine Co. v. U.S. ex rel. Sanders,
In this case, Wood points to several relevant healthcare certifications: the Standard Medicaid Provider Application, the Standard Medicare Provider Agreement, and the Claim Form 1500 used for submission of Medicare, Medicaid, and TRICÁRE/CHAMPUS claims. (Third Am. Compl. ¶¶ 79-80, 82). All require compliance with “applicable Federal or State laws,” see, e.g., Smith,
The sole remaining question, then, is whethеr compliance with the AKS is “material” to a payment decision by the Government. See Escobar,
4. Third-Party Claim Submissions
One last argument relating to liability under the FCA warrants discussion (although it bleeds into the issue of scienter, which is discussed in the next section): Allergan’s argument that the FCA does not extend to claims that, like those here, are rendered false by one party (Allergan) but submitted to the Government by another (the pharmacists). (See, e.g., Allergan Mem. 19 (“Absent some allegation — and the TCA includes none — that the unnamed pharmacies somehow violated applicable federal and state law themselves, the pharmacies’ statements are literally true... .(emphasis omitted)”); see also PhMRA Br. 7 (“[T]he Government fails to point to any misrepresentations that Allergan made. The Government points only to false statements made by pharmacists and physicians.”)). That argument “borders on frivolous.” United States ex rel. Feldman v. City of New York,
Moreover, to the extent Allergan argues that the pharmacies’ “unwitting” submission of claims defeats either theory of falsity — presumably due a lack of requisite scienter (see Allergan Mem. 19-20 (“[T]hat the ‘unwitting[]’ pharmacies did not know of Allergan’s alleged-violations of the AKS ... eliminates' the pharmacies’ certifications as a basis for falsity.”)) — that argument is of no moment here. Where the defendant is a non-submitting entity, courts merely ask “whether that entity knowingly caused the submission of either a false or fraudulent claim or false records or statements to get such a claim paid. The statute makes no distinction between how non-submitting and submitting entities may render the underlying claim or statements false or fraudulent.” United States ex rel. Hutcheson v. Blackstone Med., Inc.,
F. Rule 9(b)
Having concluded that Wood’s theories of express and implied certification are generally viable, the Court turns to the more specific question of whether Wood’s claims, as pleaded, satisfy the
1. FERA
Before doing so, however, it is necessary to note that the relevant provisions of the FCA were amended in 2009 by FERA, which expanded liability under the Act. Prior to FERA, the three subsections relevant here established liability, where: a defendant “knowingly presented], or causefd] to be presented to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval,” 31 U.S.C. § 3729(a)(1); “knowingly [made], use[d], or cause[d] to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the' Govеrnment,” id. § 3729(a)(2); or “conspire[d] to defraud the Government by getting a false or fraudulent claim allowed or paid,” id. § 3729(a)(3). FERA amended these provisions to “clariffy] that liability under section 3729(a) attaches whenever a person knowingly makes a false claim ... without regard to whether the wrongdoer deals directly with the Federal Government ... or with a third party contractor, grantee, or other recipient of such money or property.” S.. Rep. No. 111-10,
Making the task more difficult, FERA specified that subsection (a)(1)(B) applies retroactively; the other amendments apply only prospectively. See Pub. L. No. 111-21,
2. Counts I and II: Subsections (a)(1)(A) and (a)(1)(B)
Wood’s core claims turn on violations of subsections (a)(1)(A) and (a)(1)(B). To prove a violation of the former, a relator must show that “(1) there was a false or fraudulent claim, (2) the defendant knew it was false or fraudulent; (3) the defendant presented the claim, or caused it to be presented, to the United States, and (4) it did so to seek payment from the federal treasury.” United States ex rel. Kester v. Novartis Pharma. Corp. (Novartis I),
The Second Circuit has nоt clearly articulated what constitutes “particularity” in this context, but district courts in this Circuit consistently require relators to “provide a detailed factual basis” to support allegations that a defendant “submitted a false claim in this specific instance, not just that the defendant had a custom of submitting claims.” Novartis I,
In this case, Allergan argues that the Third Amended Complaint fails to identify the “sine qua non” of an FCA action: the false claims. More specifically, Allergan asserts that Wood fails to identify any particular false or fraudulent claims submitted, to the Government or any specific pharmacy (the actor alleged to have submitted the claim) involved in the scheme. (Allergan Mem. 20-21; Allergan Reply 16-17). There is some truth to that assertion, but that does not doom Wood’s pleading. Instead,-the circumstances here are analogous to those in TEVA Pharmaceuticals, in which the relators alleged that “all claims in a similarly defined pool [were] false.”
Similarly, the 161-page Third Amended Complaint here identifies a defined pool of false claims relating to prescriptions for certain Allergan drugs. (See, e.g., Third Am. Compl. ¶ 125). Like the TEVA Pharmaceuticals relator who identified “121 speaker program participants whose prescriptions of the [d]rugs resulted in claims,”
Allergan’s arguments to the contrary fall short. First, Allergan challenges the lack of specific allegations relating to the. third-party pharmacies that submitted the claims to the Government. (Allergan Mem. 21-22). But the double-layered scheme alleged here differs from the usual FCA case in which the defendant either directly submits false claims to the Government or causes the next-level entity to do so. See Wells Fargo,
Notably, courts have consistently recognized “a distinction between a qui tam action alleging that the defendant made false claims to the government, and a qui tam action in which the defendant induced third parties to file false claims with the government.” Duxbury,
Next, Allergan claims that the Third Amended Complaint makes “only a feeble effort” to connect the named physicians to the actual submission of false claims. (Allergan Mem. 22). To the extent Allergan is arguing that Wood generally fails to allege the submission of false claims to the Government, the argument lacks merit. The Third Amended Complaint expressly and repeatedly states that claims tainted by kickbacks were submitted to the Government. (See, e.g., Third Am. Compl. ¶¶ 10, 130-132, 223-224). Additionally, that Medicare and Medicaid reimburse the majority of cataract surgery-related drugs is evident from that fact that cataract surgery is the “No. 1 line-item cost of Medicare reimbursement,” amounting to $3.5 billion in costs‘annually. (Id. ¶ 113). Taking Wood’s allegations together, “it is easy to infer” that claims affected by purported kickbacks were submitted to the federal Government during the alleged time period. Brown,
Finally, Allergan argues that even if Wood’s Medicare claims survive under Rule 9(b), his other claims fail because the Third Amended Complaint contains no representative examples under those programs. (Allergan Mem. 22-23). But “[p]roviding sample claim information for one program with respect to the drugs at issue is a sufficient basis for the Court to infer that similar claims were submitted to the other named government programs.” TEVA Pharm.,
In short, then, the Court concludes that Wood’s allegations are sufficient to support the bulk of his subsection (a)(1)(A) and (a)(1)(B) claims. The purpose of Rule 9(b)’s heightened standard is to ensure that defendants have sufficient notice — not to immunize them from suit at the outset. See Wells Fargo,
3. Count III: Subsection (a)(1)(C).
Wood, relatedly, alleges a violation of subsection (a)(1)(C), the FCA’s conspiracy provision. To state a claim under this subsection, a relator must show that: “(1) the defendant conspired with one or more persons to get a false or fraudulent claim allowed or paid by the United States” and “(2) one or'more conspirators performed any act to effect the object of the conspiracy.” Taylor,
Regardless, taking all the allegations in the Complaint as true; Wood’s claim survives. For example, Wood provides the names and addresses of several physicians, how many free samples were provided to those physicians over what time period, and the corresponding number of Allergan drug prescriptions 'written by those physicians. (Third Am. Compl. ¶¶ 130-131). Moreover, the Complaint alleges that Allergan sales representatives “made it clear to health care professionals” that “Allergan would only provide free products, including drugs and CCKs, to physicians who agreed to prescribe and continue prescribing its products in return.” (Id. ¶ 132). The Third Amended Complaint also includes charts describing specific physicians, the number of samples provided to those physician, and specific customer care kit and drug sample shipment agreements entered into with specific physicians. (See id. ¶¶ 146, 148-150, 171, 173). To receive these goods, Wood alleges, the ophthalmologists had to “coordinate[ ] with an Allergan sales representative,” and these agreements all required the “signatures of the healthcare professional, sales representative, and Area Manager.” (Id. ¶ 140, 156, 167). Finally, Wood alleges special inducements provided to certain physicians who prescribed high quantities of Allergan drugs — detailing specific providers, Allergan representatives, meetings, and telephone calls relating to the provision of those inducements. (See id. ¶¶ 192-207). Wood’s conspiracy allegations are thus far from conclusory and sufficient to survive at this stage (and, notably, Aller-gan does not specifically argue otherwise). See, e.g., United States ex rel. Grubbs v. Kanneganti,
4. Count IV: Subsection (a)(1)(G)
Wood’s final claim — under subsection (a)(1)(G), the “reverse false claims” provision — calls for a different result. Liability here must be premised on a “false statement! ] designed to conceal, reduce, or avoid an obligation to pay money or property to the Government.” Wood ex rel. United States v. Applied Res. Assocs., Inc.,
The Court thus concludes that most of Wood’s subsection (a)(1)(A)," (a)(1)(B), and (a)(1)(C) claims are pleaded with sufficient particularity to satisfy Rule 9(b), but Wood’s subsection (a)(1)(G) claim fails. Before moving on, though, the Court must briefly consider two other arguments raised by Allergan and PhRMA that go to the sufficiency of the Third Amended Complaint, even though they were not necessarily styled as Rule 9(b) challenges.
First, Allergan contends that the Third Amended Complaint “does not plead a multi-state, multi-year scheme with particularity” and, thus, asks the Court to limit the temporal and geographic scope of the case. (Allergan Mem. 23). Allergan’s argument appears to hinge on Wood’s sampling data, which derives from a particular time period (2008 to 2009) and region (the Midwest). But Wood’s representative samples are just that — samples. Allergan offers no support for the proposition that a relator who, consistent with Rule 9(b), provides a sléw of. representative examples is then limited to the scope of those examples. Instead, Allergan’s cases stand for the proposition that a pleading entirely lacking in detail that puts forth a single occurrence of fraud is insufficient. See Hericks v. Lincare Inc., No. 07-CV-387,
Moreover, the Third Amended Complaint includes evidence that the alleged scheme was implemented nationwide by Allergan’s sales team and corporate officials (see Third Am. Compl. ¶¶ 35-41, 47, 129), and lists sample shipment agreements with physicians in well over thirty states. (Id. ¶¶ 171, 173). This is more than sufficient to sustain the geographic, scope of Wood’s claims at this stage. See, e.g., Novartis II,
Second, Allergan and PhRMA make several arguments with respect to the FCA’s scienter requirement.
To the extent Escobar requires knowledge that a violation of the AKS is material to the Government’s payment decisions, the allegations in the Third Amended Complaint plainly suffice. Allergan certainly knew that violation of the statute carried substantial penalties, and Allergan’s own internal documents rеquired employees to comply with the statute. (Third Am. Compl. ¶ 126 (quoting from an Allergan document stating that “Allergan employees may never provide samples to induce a health care professional to purchase, prescribe, or recommend Allergan products, or to reward a health care professional for doing so”)). The closer question is whether Allergan knew or recklessly disregarded the possibility that its actual conduct violated the AKS in light of, among other things, the provisions of the PDMA authorizing free samples. (See Allergan Mem. 14 n.13). That is because some courts have held that a defendant’s “reasonable interpretation of any ambiguity inherent in the regulations belies the scienter necessary to establish a claim of fraud under the FCA.” United States ex rel. Ketroser v. Mayo Found.,
At this stage, taking all of Wood’s allegations as true, the Court concludes that the Third Amended Complaint plausibly alleges that Allergan acted at least with reckless disregard to the possibility that
In light of these detailed allegations, Allergan’s position may not have been objectively reasonable at the time of the alleged violations. United States ex ret Brown v. Celgene Corp., No. 10-CV-3165 (GHK),
G. The Retaliation Claim
Wood’s final federal claim is that Allergan unlawfully retaliated against him by terminating his employment after he engaged in protected activity under the FCA, namely investigating and reporting the alleged fraud. (Third Am. Compl. ¶¶ 258-274; 288-290). Section 3730(h) of the FCA, which was amended in 2009, prqvides that an employee “shall be entitled” to relief “if that employee ... is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against ... because of lawful acts done by the employee ... in furtherance of an action under this section or other efforts to stop 1 or more violations of this subchapter.” 31 U.S.C. § 3730(h)(1).
Wood alleges that, in April 2010, he prepared a written proposal for winning back, the business of an ophthalmology group from Allergan’s rival, Alcon, through, means in line with Allergan’s long-standing business practices. (Third Am. Compl. ¶¶ 259-261, 264). After an Alcon salesperson “lodged a complaint” that the proposal was unlawful, Wood told Allergan’s legal team that he “was only following company policy, including directions he had been given by his manager.” (Id. ¶ 263). Wood subsequently “reported his concerns about the illegal sampling and kickback scheme” to the company’s compliance and human resource departments, (Id. If 268). In doing so, he alleges that he provided “Allergan personnel with . specific. information regarding sampling directives and activities that he believed, in good faith, were in violation of Allergan’s policies and Federal law,” including (1) the provision of.inducements to health care professionals with the intent to influence them to recommend or purchase products that may
These allegations are plainly sufficient to satisfy the second and third elements of a retaliation claim, and Allergan (wisely) does not suggest otherwise. Whether they are sufficient to satisfy the first element is a closer question — if only because Wood does not allege that he explicitly reported “false claims or fraudulent activity in connection with Government payment.” (Allergan Mem. 19). But the Third Amended Complaint alleges that Wood internally reported “the provision of free goods” meant to influence providers to use or prescribe "products that may be reimbursed by a federal health care program.” (Third Am. Compl. ¶¶ 10, 269). That, combined with Wood’s knowledge that Medicare and Medicaid provided reimbursements for a significant portion of Allergan drugs used or prescribed by ophthalmologists (see id. ¶ 147), is enough to show that his “investigation reasonably could have led to a FCA action.” Boone v. MountainMade Found.,
H. State Law Claims
Finally, the Court turns to Wood’s claims under state law analogs to the FCA. Allergan argues that Wood’s claims, under the law of twenty-four states, either fail or must be curtailed under the applicable statutes of limitation, but the company devotes less two pages of briefing to the issues in total. (Allergan Mem. 28-29; Allergan Reply 19). Accordingly, the Court will address the claims only in passing as well.
1. Wisconsin
First, Allergan contends that Wood’s Wisconsin claim must be dismissed because the state’s legislature repeated its
2. Delaware, New Mexico, and Texas
Second, Allergan contends that Wood’s Delaware, New Mexico, and Texas claims must be wholly or partially dismissed because, under those state laws, a relator cannot proceed in the absence of either state intervention or (in the case of Delaware and New Mexico) a written determination by the state that substantial evidence of a violation exists. (Allergan Mem. 28-29). New Mexico law requires the state to “make a determination of whether there is substantial evidence that a violation has occurred” and directs that a complaint “shall be dismissed” if the state “determines that there is not substantial evidence that a violation has occurred.” N.M. Stat. Ann. § 27-14-7(E)(2). Delaware law included a similar requirement until 2009. See Del. Code Ann. tit. 6, § 1203(b)(2) (2005), amended by Claims Reports Delaware False Claims & Reporting Act, 2009, 2009 Del. Legis. Serv. 166 (West). But while those provisions may well doom Wood’s New Mexico and Delaware claims in the long run, they are not a valid basis for dismissal under Rule 12(b)(6), as they require consideration of matters outside of the record. See, e.g., United States ex rel. King v. Solvay S.A.,
As for Texas, the parties appear to agree that Wood’s claims should be dismissed to the extent they pertain to fraudulent conduct occurring before May 4, 2007. (Allergan Mem. 28-29; Wood Opp’n 29). On that date, the state amended its false claims act to remove a provision that required dismissal of an action if the state declined to intervene. Compare Tex. Hum. Res. Code Ann. § 36.104 (2001), with Tex. Hum. Res. Code Ann. § 36.104 (2010). Although some courts have held that the amended statute applies where, as here, the lawsuit was filed or the state’s decision not to intervene occurred on or after May 4, 2007, see King,
3. Retroactivity and Timeliness
Allergan next argues that claims under Connecticut, Georgia, Indiana, Minnesota, Montana, New Jersey, New Mexico, Oklahoma, Rhode Island, and Virginia law fail because the false claims acts in those states were enacted between 2003 and 2011 — the time period of the fraudulent conduct alleged here — and not made retroactive. (See Allergan Mem. 29).
Finally, Allergan challenges Wood’s claims under the laws of twenty-one states on timeliness grounds. (Allergan Mem. 27-28). As Allergan concedes, however, these states’ laws have statute-of-limitations provisions that are substantially similar, if not identical, to the federal FCA’s statute-of-limitations provision discussed above. See Cal. Gov’t Code § 12654(a); Colo. Rev. Stat. § 25.5-4-307(1)(a); Conn. Gen. Stat. § 17b-3011; Del. Code. Ann. tit. 6, § 1209(a)(1); D.C. Code § 2-381.05(a)(1); Fla. Stat. § 68.089(1)(a); Ga. Code Ann. § 23-3-123(a); 740 Ill. Comp. Stat. 175/5(b)(1); Ind. Code § 5-11-5.5-9(b)(1); La. Rev. Stat. Ann. § 46:439.1(B); Mass. Gen. Laws ch. 12, § 5K(1); Mich. Comp. Laws § 400.614(1)(a); Minn. Stat. Ann. § 15C.11(a); Mont. Code § 17-8-404; Nev. Rev. Stat. § 357.170(1); N.C. Gen. Stat. § 1-615(a); N.J. Stat. Ann. § 2A:32C-11; Okla. Stat. tit. 63, § 5053.6(B)(1); R.I. Gen. Laws § 9-1.1-5(b)(1); Tenn. Code Ann. § 71-5—184(b)(1); Va. Code Ann. § 8.01-216.9. (Allergan Mem. 8 n.5). Additionally, Allergan devotes no separate briefing to these state laws, instead incorporating by reference its arguments as to the federal FCA. Following Allergan’s lead, the Court applies its holding as to the federal FCA here, and declines to delve into the law of each state. Accordingly, Wood’s California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Louisiana, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Jersey,
CONCLUSION
In Carter, the Supreme Court candidly acknowledged that its holding could produce “practical problems” with respect to the FCA’s qui tam provisions.
• With respect to Wood’s federal FCA claims (Counts I-V):
O First, Wood’s claims are not precluded by the FCA’s public disclosure bar, 31 U.S.C. § 3730(e)(4)(A), as the allegations were disclosed only to government officials at the time Wood filed his original complaint;
O Second, the instant action is “related” to the earlier-filed Lampkin and Carytid actions for purposes of the FCA’s first-to-fíle bar, 31 U.S.C. § 3730(b)(5), but that bar is non-jurisdictional, and — in light of that fact as well as the text, purpose, and structure of the FCA — the first-to-fíle defect in the original complaint was cured by the filing of the Third Amended Complaint after the earlier-filed actions had been dismissed;
O Third, the FCA’s statute-of-limitations provision permitting claims to be brought for up to ten years depending on when the relevant facts are known or should be known to “the official of the United States charged with responsibility to act,” 31 U.S.C. § 3731(b)(2), applies to actions brought by private relators;
O Fourth, Rule 15(c)(1)(B) of the Federal Rules of Civil Procedure applies to the question of whether the Third Amended Complaint “relates back” to the original complaint, even though the original complaint was filed under seal and in violation of the “first-to-fíle” rule;
O Fifth, under Rule 15(c)(1)(B), the Third Amended Complaint relates back to the original complaint for purposes of the statute of limitations because it merely expands on the claims alleged in the initial pleading;
O Sixth, Wood alleges plausible violations of the AKS relating to Aller-gan’s provision of free surgical kits, drug samples, and office supplies;
O Seventh, Wood alleges at least two viable theories of liability under the FCA: express certification of compliance with the AKS for Medicare Part D claims and implied certification оf compliance with the AKS for non-Part D Medicare, Medicaid, and TRICARE/CHAMPUS claims;
O Eighth, Wood’s core claims under 31 U.S.C. §§ 3729(a)(l)(l) and (a)(1)(B) satisfy the heightened •pleading requirements of Rule 9(b) with respect to Medicare, Medicaid, and TRICARE/CHAMPUS and may proceed, but his CHAMPVA and FEHBP claims are dismissed with leave to amend;
O Ninth, Wood’s conspiracy claim under 31 U.S.C. § 3729(a)(1)(C) satisfies the heightened pleading requirements of Rule 9(b) and may proceed;
O Tenth, Wood’s “reverse false claims” claim under 31 U.S.C.§ 3729(a)(1)(G) does not meet the heightened pleading requirements of Rule 9(b) and is dismissed with leave to amend; and
O Eleventh, Wood alleges a plausible claim of unlawful retaliation, 31 U.S.C. § 3730(h), as he was terminated just after internally reporting purported violations of federal law;
• With respect to Wood’s state law claims (Counts VT-XXXI):
O First, Wood’s claims under California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Louisiana, Massachusetts, Michigan, Nevada, New York, North Carolina, Tennessee, Virginia, and Wisconsin law survive in their entirety; and
O Second, Wood’s claims under the l'emaining state laws at issue are limited to conduct on or after certain dates as follows: Georgia, May 24, 2007; Indiana, July 1, 2005; Minnesota, July 1, 2010; Montana, May 1, 2005; New Jersey, March 13, 2008; New Mexico, July 26, 2006; Oklahoma, November 1, 2007; Rhode Island, July 1, 2007; and Texas, May 4, 2007.
Accordingly, Allergan’s motion to dismiss the Third Amended Complaint is DENIED in part and GRANTED in part. To the extent that Wood has been granted leave to file a Fourth Amended Complaint, he shall do so within thirty days. Allergan shall answer within thirty days of that deadline or the filing of the Fourth Amended Complaint, whichever is later.
The Clerk of Court is directed to terminate Docket No. 64.
SO ORDERED.
Notes
. Allergan pic, an Irish holding company formed in 2013, was also named as a Defendant in the Third Amended Complaint (see, e.g., Docket No. 38 ("Third Am. Compl,”) ¶¶ 24-29), but all claims against the company were dismissed by agreement aniong the parties on March 17, 2017. (Docket No. 111). Accordingly, the Court need not address any arguments specific to Allergan pic.
. In conjunction with its motion to dismiss, Allergan filed a motion asking the Court to take judicial notice of certain documents from two other federal cases relevant to the discussion below. (Docket No, 67). By Order dated March 15, 2017, the Court granted the motion as unopposed. (Docket No. 106).
. For further description of how certification operates under Medicare, Medicaid, and TRICARE (formerly CHAMPUS), see Judge McMahon’s thorough opinion in United States ex rel. Arnstein v. TEVA Pharmaceuticals USA, Inc., No. 13-CV-3702 (CM),
. Shortly before the case was unsealed, it was reassigned from the Honorable Miriam G. Cedarbaum to the undersigned. (Docket No. ’ 23).
. The states on whose behalf Wood brings claims are California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Louisiana, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina,
. On December 22, 2016, Taxpayers Against Fraud Education Fund moved for leave to file an amicus brief. (Docket No. 95), The Court denied the motion as untimely. (Docket No. 98).
. Allergan also moves to dismiss the Third Amended Complaint for lack of subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure. (Docket No, 65 ("Allergan Mem.”) 1). The Court need not separately discuss the Rule 12(b)(1) standards, however, because — for reasons discussed below — it concludes that Allergan’s arguments are either not jurisdictional or without merit whether they are analyzed under Rule 12(b)(1) or (b)(6).
. In light of this conclusion, the Court need not, and does not, reach Wood’s alternative argument that the public disclosure bar is inapplicable because he qualifies as an "original source." (Wood Opp’n 10-11). See 31 U.S.C. § 3730(e)(4)(A) (directing the court to dismiss an action that has been publicly disclosed "unless the action is brought by the Attorney General or the person bringing the action is an original source of the information”).
. During oral argument, the Government urged the Court to follow the Sixth Circuit's decision in Walburn v. Lockheed Martin Corp.,
. Wood may be on stronger ground in arguing that Caryatid was not "related,” as the gravamen of the FCA claim in that case was that Allergan unlawfully promoted the use of certain drugs for off-label purposes not approved by the Food and Drug Administration. (See Partridge Decl., Ex. 1, ¶¶ 10-13, 15-17, 19). The Court need not decide that question, however, given its conclusion that Lampkin was related. Moreover, the Lampkin action was filed before the Caryatid action (October 29, 2008, versus January 11, 2010), and dismissed later (December 14, 2012, versus January 23, 2012), (Compare Lampkin Docket No. 54, with Caryatid Docket No.16). (The Lampr kin action was not dismissed altogether until May 13, 2014, but all claims against Allergan were dismissed for failure to serve oh December 14, 2012. (See Lampkin Docket Nos’. 54, 59). For present purposes, that distinction is immaterial.)
. Congress could have addressed that potential problem by including a provision in the FCA tolling the statute of limitations during the pendency of a related lawsuit, but it did not. Nor do the parties suggest that there is any doctrine of equitable tolling that could apply here.
. It is true, as Allergan notes (Allergan Mem. 9; Allergan Reply 4-5), that the Second Circuit described the first-to-file rule as jurisdictional in United States ex rel. Pentagen Techs. Int'l, Ltd. v. CACI Int’l, Inc.,
. It is worth noting also that the "time of filing” rule for jurisdiction may not be as rigid as these courts have assumed. That is, courts do sometimes allow plaintiffs to cure jurisdictional defects in their complaints pursuant to Rule 15. See, e.g., Mathews v. Diaz,
. Shea appears to be the only case in which a court held that the first-to-fíle rule is nonjurisdictional and that a violation of the rule cannot be cured. See
. Of course, the Government itself could always file suit, as the first-to-file rule does not
. Admittedly, the Third Amended Complaint does not contain any factual allegations relating to dismissal of the earlier-filed' actions. But the Court is not aware of any authority requiring a relator to affirmatively plead the absence of a pending earlier-filed suit to proceed (a point that arguably reinforces the conclusion that the first-to-file rule is non-jurisdictional). But see Gadbois,
. As the Court suggested at oral argument on Allergan’s motion (Tr. 79-80), there is a strong argument to be made for certifying an interlocutory appeal from the Court’s ruling on the "first-to-file” issue. After all, the issue seems to involve "a controlling question of law”; in light of the divide among federal courts, there is plainly a "substantial ground for difference of opinion”; and an immediate appeal from the order would "materially advance the ultimate termination of the litigation” if the Second Circuit were to reverse. 28 U.S.C. § 1292(b); see, e.g., Atlantic Holdings, Inc. v. Sovereign Wealth Fund Samruk-Kazyna JSC, 12-CV-8852 (JMF),
. There is yet another question upon which courts have disagreed, albeit one that does not matter here: To the extent that it is the government official’s knowledge that controls, does the phrase "official of the United States charged with responsibility to act” refer solely to the Attorney General (or his designee) or to a broader swath of federal officials? Compare, e.g., Kreindler & Kreindler, 777 F.Supp. at 204-05 (holding that knowledge of senior army officials in charge of the Black Hawk helicopter project was sufficient to trigger the three-year filing window), aff'd on other grounds,
. Of course, reading "official of the United States” in subsection (b)(2) to include a relator would avoid this odd result. But that reading is, to put it mildly, hard to square with the plain language.of the statute. See Pogue,
. Wisely, Wood does not rely on Rule 15(c)(1)(A), which provides that an amended complaint relates back when "the law that provides the applicable statute of limitations allows relation back.” The FCA includes an explicit relation-back provision for pleadings by the Government. See 31 U.S.C. § 3731(c). In light of that provision, most courts agree that relators cannot rely on Rule 15(c)(1)(A). See, e.g., United States ex rel. Miller v. Bill Harbert Int'l Const., Inc.,
. Indeed, the strength of that reasoning is underscored by the facts of this very case: Wood diligently filed his complaint in July 2010, but the complaint remained sealed — for reasons entirely out of Wood’s hands — for nearly six years, until March 2016, when the Government finally completed its investigation and declined to intervene. (Docket Nos. 24, 26).
. At oral argument, Wood and the Government pressed an alternative theory of AKS liability based on the PDMA’s definition of "drug sample” as "a unit of a drug ... intended to promote the sale of the drug.” 21 U.S.C. § 353(c)(1) (emphasis added); see also S. Rep. No. 100-303, at 2-3 (1988) (noting that the PDMA was meant to "acquaint the practitioner with the therapeutic value of the medication and thus encourage the written prescription of the drug” (emphasis added)). Allergan’s conduct, Wood and the Government argued (Tr. 60, 74-75), did not fall within the scope of the PDMA’s exemption because it provided samples of certain drugs to induce the prescription of other drugs, (See, e.g., Third Am. Compl. ¶ 128 ("Area Manager ... instructed sales representatives to 'Leverage Pred—Forte!!!!!!!!!!!' in order to drive sales of Acular LS.”)). The Court need not address the viability of that theory here.
. In 2009, Congress amended several relevant provisions of the FCA, including Section 3729(a)(1)(A) (previously Section 3729(a)(1)), Section 3729(a)(1)(B) (previously Section 3729(a)(2)), and Section (a)(1)(G) (previously Section (a)(3)). See Fraud Enforcement and Recovery Act of 2009 ("FERA”), Pub. L. No. 111-21, § 4, 123 Stat. 1617 (2009). These amendments have no bearing here, so — for simplicity's sake — all citations are to the current version of the FCA. The Court does, however, discuss the import of the FERA amendments when analyzing the parties’ Rule 9(b) arguments below.
. Allergan and PhMRA suggest that Mikes is no longer good law after Escobar because the Second Circuit did not “ground” its implied certification analysis "in any principle of common law fraud.” (PhRMA Br. at 6; Allergan Final Reply at 2-4). But Escobar addressed only the meaning of the term "fraud
. Any liability based on the requirements of Medicare Part D would apply only to claims that accrued on or after January 1, 2006, the effective date of the Part D program. See Medicare Prescription Drug, Improvement, and Modernization Act, Pub. L. 108-173 § 101(a)(2), 117 Stat. 2066, 2071 (2003); see also 42 U.S.C. § 1395w-101(a)(2).
. For similar reasons, there is no merit to PhRMA’s contention that, "when someone submits a bare claim for payment unaccompanied by affirmative representations, the only implied representations that the submitter makes are about facts that ‘go to the basis, or essence, of the transaction.’ " (PhMRA Br. 4 (quoting Restatement (Second) of Torts § 151 cmt. j)). Under Escobar, distinguishing between conditions of payment that are covered and conditions of payment that are not is a task for the materiality standard.
. PhMRA appears to concede that some violations of the AKS could give rise to liability under the FCA, but only where they involve "kickbacks that cause the Government to pay for medically unwarranted treatment” because "only those kickbacks could .affect the underlying value of the transaction to the Government.” (PhRMA Br. 9). Nothing in the relevant statutes, regulations, or precedents, however, suggests that courts should engage in this sort of "slicing-and-dicing” of kickback claim types. Moreover, kickback schemes of the sort alleged here do result in higher costs to the Government — and thus "affect the underlying value of the transaction to the Government” — insofar as they result in the prescription of brand name drugs rather than lower-cost generic drugs.
.The Supreme Court declined to decide whether the materiality requirement in Section 3729(a)(1)(A) is derived from Section 3729(b)(4) or from the common law, see
. To the extent that Wood is required to ' allege facts that would support a finding of materiality in the Third Amended Complaint, see Escobar,
. In light of the foregoing conclusions, the Court need not reach two other theories of implied certification pressed by Wood: first, that the claims at issue can be treated as factually false claims, specifically "fraudulent inducements” (Wood Reply 6-8); and, second, that claims submitted by the pharmacies contained "misleading half-truths” because each claim included the "pharmacies' unique provider identification number” and "the unique National Drug Code” for the relevant Allergan drugs. (See Wood Opp’n 18-19). Nor, as discussed above, does the Court need to address whether the taint theory is a valid basis for a claim under the FCA.
. For reasons discussed above, the Court need not address further ‘ Allergan’s and PhRMA's arguments relating to the scienter of the physicians and pharmacists that served as intermediaries between Allergan and the Gov-eminent. (See, e.g., Allergan Mem. 19-20; Allergan Final Reply 12). Put simply, their scienter is irrelevant tp Allergan’s liability under the FCA, which provides for liability
. Although PhRMA appears to urge the Court to apply the common law definition of "knowing” to the statute (PhRMA Br. 13), the Escobar Court explicitly noted that the FCA "abrogates the common law in certain respects. For instance, the Act’s scienter requirement ’require[s] no proof of specific intent to defraud.'"
. The amended version of Section 3730(h)(1) plainly applies here, as Wood alleges that he engaged in protected conduct beginning in April 2010 and Was terminated in retaliation for that conduct in July 2010, Cf. United States ex rel. Sasaki v. New York Univ. Med. Ctr., No. 05-CV-6163 (LMM),
. That conclusion is reinforced by the 2009 amendment of Section 3730(h)(1), which was intended to “widen the scope of protected activity” by ensuring, among other things, that “steps taken to remedy the misconduct” are protected "whether or not such steps are clearly in furtherance of a potential or actual qui tam action.” 155 Cong. Rec. at El300; see, e.g., Layman v. MET Labs., Inc., No. 12-CV-2860 (RDB),
. Arguably, the Delaware provision would not even apply to Wood’s claims as it was eliminated in 2009, before he filed his original complaint. See, e.g., Dale v. Abeshaus, No. 06-CV-04747 (JKG),
. The effective dates for each state statute are as follows: Connecticut, October 5, 2009; Georgia, May 24, 2007; Indiana, July 1, 2005; Minnesota, July 1, 2010; Montana, May 1, 2005; New Jersey, March 13, 2008; New Mexico, May 19, 2004; Oklahoma, November 1, 2007; Rhode Island, July 1, 2007; Virginia, January 1, 2003. (Allergan Mem. 29 n.30 & App'x 1).