Illinois District Judge dismisses pharmacy qui tam with prejudice

by Ben Vernia | November 28th, 2012

On November 20, Northern District of Illinois Judge James B. Zagel, in U.S. ex rel. Stone v. Omnicare, Inc., dismissed a whistleblower’s complaint with prejudice after concluding that the relator had failed to allege certification and falsity, despite a statement of interest filed by the Government in support of the relator.

Judge Zagel had previously dismissed the relator’s second amended complaint on the grounds that it failed to state a claim for relief under the False Claims Act, and he first appeared inclined to support the relator’s latest complaint:

Like Plaintiff’s first amended complaint, the second amended complaint is again rich with detail about claims for payment Defendant submitted to the government that were allegedly without necessary supporting documentation. And again the complaint ably explains how the government would have rejected those claims if it knew such documentation was absent. As I noted in the April 24 order, missing from the first amended complaint was any allegation that Defendant: (1) falsely certified to the government that it was in compliance with the relevant regulations; and (2) did so with the requisite mental state for a presentment claim under the False Claims Act (“FCA”).

Judge Zagel described the whistleblower’s and Government’s theories as to certification and falsity as “relatively novel,” and he rejected implied certification, which the whistleblower had argued could provide a basis for liability, as unrecognized in the Seventh Circuit. Also unrecognized, he reasoned, was the Government’s argument that a claim for payment in the absence of medical documentation is false regardless of the absence of an accompanying certification.

The Court also found to be inadequate the relator’s description of company pharmacists’ statements that they only cared about getting paid, on the grounds that they were not “at the individualized transaction level” required.

Finally, Judge Zagel dismissed the claims with prejudice:

I do not know what Plaintiff or any other interested party could say to improve the complaint. Waiting until a fourth draft to do so, however, is in any event prejudicial to the orderly process of the courts and to legitimate interests of the civil defendant, who ought to know what legal problem they must face sooner than the day a fourth version of the complaint appears on their doorstep.

Disclosure: I am counsel for a whistleblower in the Northern District of Georgia litigating a qui tam case against the defendant in the case described above, Omnicare, Inc.

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