False Claims Suit Fails; Failure to Plead Fraud with Particularity

A pharmaceutical manufacturer contracted with a physician to perform medical reviews of adverse event reports for four drugs: Actos (type 2 diabetes), Uloric (gout), Kapidex/Dexilant (gastroesophageal reflux disease), and Prevacid (same). The physician claimed that the manufacturer asked her to misreport adverse events including incidences of heart failure, renal failure, pancreatic cancer, and, most notably, bladder cancer, with regard to Actos. The physician complied with those directions on certain occasions after having made known her objections.


As to the drugs Uloric, Kapidex/Dexilant, and Prevacid, the doctor alleged that the manufacturer pressured her to falsify her medical conclusions, asking her to classify events as “non-serious” or to change her causality assessment to “unrelated” so as to avoid reporting within 15 days as required by the FDA. Specifically, the doctor alleged that she was directed to alter her analysis of reported adverse events involving the interactions between the three drugs and other medications likely to be taken by senior citizens. The doctor did not clearly allege that she complied with the manufacturer's directions. She did allege, however, that on various occasions officials for the manufacturer altered her assessments directly.


The doctor filed a qui tam action under the False Claims Act (FCA) alleging that the manufacturer had failed to report promptly and accurately to the FDA a number of post-approval adverse events associated with the four subject drugs. As to all four drugs the doctor asserted that the manufacturer should have reported adverse events earlier, and that the manufacturer consistently took actions to resist label changes through under-reporting. In addition, the doctor alleged that she had discovered systematic under-reporting by the manufacturer of the incidence of bladder cancer in adverse event reports. The doctor amended her complaint twice and was denied two further motions to amend her complaint.


The United States District Court for the District of Massachusetts dismissed the doctor's claims under Rule 9(b), reasoning that although she had alleged facts that would demonstrate a fraud on the FDA with respect to intentional under-reporting of adverse events, she failed to allege the specific details of any claims that were allegedly rendered false as a result. Sufficient allegations should have included specific medical providers who allegedly submitted false claims, the rough time periods, locations, and amounts of the claims, and the specific government programs to which the claims were made. From the absence of such specifics in the doctor's complaints, the district court inferred that the doctor meant to assert that all claims for the subject drugs during the relevant time period were rendered false by the manufacturer's alleged misconduct. The district court held that the doctor had not provided the specific factual allegations necessary to support the inference that the FDA would have withdrawn approval from all four drugs immediately upon receiving the withheld information.


The district court also dismissed the claims under Rule 12(b)(6) for failure to state a claim, holding that the doctor had not adequately established that compliance with adverse-event reporting requirements was a material precondition to the payment of the claims at issue. Finally, the district court dismissed the doctor's various state-law claims both because they failed to state a claim under state law and because they failed to plead with specificity the details of any claims for payment made to any of the states.


The First Circuit United States Court of Appeals affirmed the district court on its Rule 9(b) and denial of amendment rulings, and did not reach the 12(b)(6) issue. Rule 9(b) requires a party to state with particularity the circumstances constituting fraud or mistake. Relators are required to set forth with particularity the who, what, when, where, and how of the alleged fraud. A relator must provide details that identify particular false claims for payment that were submitted to the government. In a qui tam action in which the defendant is alleged to have induced third parties to file false claims with the government, a relator can satisfy this requirement by providing factual or statistical evidence to strengthen the inference of fraud beyond possibility without necessarily providing details as to each false claim. Because FCA liability attaches only to false claims, a complaint must sufficiently establish that false claims were submitted for government payment as a result of the defendant's alleged misconduct.


The court found that the doctor alleged next to no facts in support of the proposition that the manufacturer's alleged misconduct resulted in the submission of false claims or false statements material to false claims for government payment. The doctor alleged a conclusion that numerous claims for the four subject drugs would not have been submitted for government payment but for the manufacturer's misconduct, but alleged no more than that. What was missing were any supporting allegations upon which her conclusion rested and any particulars.


The court found that the district court did not abuse its discretion when it denied the doctor’s third and fourth motions to amend her complaint. The proposed amendments would not have cured the pleading defects. The third motion was mere boilerplate appended to a motion in opposition. Moreover, the fourth motion occurred after judgment.


See: U.S. ex rel. Ge v. Takeda Pharmaceutical Co. Ltd., 2013 WL 6399780 (C.A.1 (Mass.), December 6, 2013) (not designated for publication).


See also Medical Law Perspectives, May 2013 Report: Drugs, Dosage, and Damage: Physician Liability for Prescribing or Administering Medication