District Court dismisses kickback qui tam against Stryker Corp.

by Ben Vernia | May 11th, 2010

In a May 3 opinion, W.D.Mich. Judge Robert Jonker granted a motion by Stryker Corp. to dismiss a declined qui tam complaint because of insufficient particularity, under Fed. R. Civ. P. 9(b). The relator is a sales representative at a Zimmer distributor in Florida, and alleged that after stocking a physician’s inventory room with Zimmer products, he learned that the doctor had instead commenced to use Stryker’s products, following a dinner, and an agreement by Stryker to fund the doctor’s residents’ training and research projects. He alleged “upon information and belief” that the physician and Stryker had entered into a kickback arrangement.

Judge Jonker, after reviewing the Supreme Court’s recent plausibility pleading standard and Sixth Circuit caselaw applying Rule 9(b) to qui tam cases, concluded that the alleged facts were just as consistent with a legal arrangement as an illegal one. The court rejected the relator’s request for relaxing the pleading standard. Judge Jonker agreed that the Sixth Circuit had left open the possibility of relaxing the particularity requirement “in circumstances where a relator demonstrates that he cannot allege the specifics of actual false claims that in all likelihood exist, and the reason that the relator cannot produce such allegations is not attributable to the conduct of the relator.” The case before it, the court concluded, did not present those circumstances, but it nevertheless permitted the relator the opportunity to amend the complaint.

Finally, Judge Jonker dismissed the relator’s unjust enrichment count, finding that there is no private right of action under the Antikickback Statute, and that the False Claims Act does not extend standing to relators to bring such claims.

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