The First Circuit Court of Appeals recently affirmed the dismissal of a False Claims Act (“FCA”) case against a pharmaceutical company, because the Relators improperly relied on aggregate data. The data was insufficient evidence that the company’s promotion of the drugs resulted in the submission of any false claims.
As background, the pharmaceutical company had previously entered into a settlement agreement with the U.S. Department of Health and Human Services (“HHS”) to resolve allegations of FCA violations. The pharmaceutical company agreed to report “probable” FCA violations to HHS, and to pay a stipulated daily penalty for failure to report “Reportable Events.” The company had been accused of off-label drug promotion, causing the submission of false claims to Medicaid for the off-label use. The Relators in the instant suit sought to prove that the off-label practice continued after the settlement. The district court ruled that whether or not the practice continued, there was insufficient evidence that an “actual false claim” resulted from any off-label promotion.
The First Circuit Court of Appeals agreed. It stressed that FCA liability only occurs if the conduct complained of has resulted in the filing of a false claim for payment, and at the summary judgment stage there must be competent evidence of such a claim. The Relators argued that evidence of aggregate data reflecting the amount of money expended by Medicaid on a specific off-label use was sufficient, because it showed that false claims had been submitted. However, the Court of Appeals found the evidence to be insufficient (and stated it would likely not even survive a motion to dismiss), because the data did not identify “specific entities who submitted claims . . . much less times, amounts, and circumstances” of the claims.
The First Circuit also affirmed the district court’s dismissal (on a motion to dismiss) of Relators’ “reverse” FCA claims. The Relators charged that the pharmaceutical company violated its agreement with HHS by failing to report “Reportable Events” and pay the stipulated daily fine. However, the settlement agreement only required the pharmaceutical company to notify HHS of any “Reportable Events” after the company determined that the conduct was a “probable violation.” Since the complaint did not allege that the company made any such determination, it failed to state a claim for relief on that basis.
Finally, the First Circuit affirmed the granting of summary judgment on the FCA retaliation claims for the termination of one of the Relators, because the complaint did not assert that the Relator reported false claims to his supervisor. Instead, the Relator only alleged regulatory violations. Termination for the reporting of regulatory violations does not fall within the purview of the FCA anti-retaliation provision. Because the Relator did not allege he had investigated or reported false claims submitted to the government, his termination was not actionable.
The case is U.S. ex rel. Booker v. Pfizer, and is available here: http://media.ca1.uscourts.gov/pdf.opinions/16-1805P-01A.pdf.