The First Circuit Court of Appeals has affirmed the dismissal for failure to plead fraud with specificity of a qui tam action against a pharmaceutical company alleging violations of the False Claims Act. The State of Rhode Island was one of the governments on behalf of which plaintiff purported to file suit.
Plaintiff worked for defendant as a contract physician performing medical reviews of adverse event reports with respect to four drugs. She alleges that she was terminated when she complained that defendant was improperly reporting adverse events to the Food and Drug Administration. After plaintiff had twice amended her complaint, defendant moved to dismiss arguing that plaintiff had failed to allege fraud with specificity as required under F.R.C.P. 9(b). Defendant argued that plaintiff had failed to identify any particular claim that was rendered "false" as a result of the alleged improper reporting of adverse events. Plaintiff objected in part by presenting a declaration by one of her attorneys as to the total amount the federal government had expended for one of the drugs. In a footnote in her objection, plaintiff also requested permission to amend her complaint a third time. The district court granted the motion to dismiss. Following the entry of judgment, plaintiff moved for reconsideration and to amend her complaint. The district court denied those motions and plaintiff appealed.
Quoting its earlier opinion, United States ex rel Karvelas v. Melrose-Wakefield Hospital, 360 F.3d 220 (1st Cir. 2004), the First Circuit said in such cases the "relator must provide details that identify particular false claims for payment that were submitted to the government." The details could include the dates of the claims, their identification numbers, the content of the bills submitted, the individuals involved in the billing, and the temporal relationship between the alleged fraudulent conduct and the submission of claims. In an action in which defendant is alleged to have induced third parties to file false claims, the relator can satisfy the requirement with "factual or statistical evidence to strengthen the inference of fraud beyond possibility without necessarily providing details as to each false claim."
The First Circuit said it was undisputed that defendant did submit adverse event reports to the FDA and that was no specific allegation that any of the events were not eventually reported. It held plaintiff had failed to set forth allegations as to which claims to the government were rendered false by improper reporting. The Court rejected a "per se rule" that if allegations of improper reporting are set forth all claims made were false.
The Court rejected plaintiff's argument that the district court abused its discretion by failing to grant her suggestion in her objection that she be allowed to amend if the court was inclined to grant the motion. The First Circuit said this request did not constitute a motion to amend. It also rejected her argument that the district court should have granted her post-judgment motion to amend the complaint a third time. It said there was no abuse of discretion where the district court had denied the motion for reconsideration.
United States ex rel Helen Ge, M.D. v. Takeda Pharmaceutical Co., Ltd. Nos. 13-1088 and 13-1089, slip op., (1st Cir. Dec. 6, 2013)
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