In EDPA pharma qui tam, district judge dismisses one company on public disclosure grounds, finds whistleblower's complaint sufficient against another

by Ben Vernia | October 19th, 2010

In an October 13 decision in U.S. ex rel. Schumann v. AstraZeneca PLC, Senior District Judge J. William Ditter, Jr., dismissed one set of codefendants (related to Bristol-Meyers Squibb, or BMS), but found the relator’s complaint against AstraZeneca to be sufficiently particular under Rule 9(b).

Addressing the BMS defendants’ motion to dismiss first, Judge Ditter concluded that all of the allegations (relating to kickbacks and Best Price for Coumadin) had been publicly disclosed in prior civil suits, and that although the relator had knowledge that BMS sold the drug to his employer (the pharmacy benefit manager, Medco), he had not alleged direct and independent knowledge of fraud. Because the relator had ample opportunity to cure the defect in his fourth amended complaint, the court dismissed these claims with prejudice.

As for AstraZeneca’s particularity argument, Judge Ditter agreed that the relator was obliged to comply with Fed. R. Civ. P. 9(b), but found that he had done so. Because the claims were “false” only because they were either based on alleged kickback payments from AstraZeneca to Medco, were based on allegedly false best price reports, or in the case of a “reverse false claim,” constituted the false best price reports themselves, the relator had complied with Rule 9(b). The court specifically rejected the company’s argument that the relator had not identified or pled the details of any actual false claim:

Requiring the relator to plead the details of an actual claim would not place AZ in a better position to defend the charges of fraud against it. Here, the “false claims” are only false because they are based on the kickback fraud between AZ and Medco or the “false” best price reports submitted by AZ. If the relator had described the details of an actual claim submitted by a government-plan patient or state Medicaid office and included specifics, such as the contents of the claim, who submitted it, the date, the amount claimed, and the amount actually due, AZ would not be in a better position to defend itself because neither the patients nor the states are being charged with fraudulent conduct. A case should not turn on whether a pointless allegation has been pled or not.

Judge Ditter likewise dismissed the company’s argument that the relator’s best price claim should fail on particularity grounds because he had not alleged any personal knowledge of the content of any best price report. “However, AZ appears to conflate Rule 9(b)’s particularity requirement with the FCA’s requirement that the relator have ‘direct and independent’ knowledge of the fraud if there are public disclosures.”

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