Last year we lauded the District of Massachusetts’s dismissal of the False Claims Act (FCA) qui tam complaints filed in U.S. ex rel. Ge v. Takeda Pharmaceutical Co. Ltd., 2012 U.S. Dist. Lexis 156752 (D. Mass. Nov. 1, 2012).  The relator was a contract physician who had performed medical reviews of adverse event reports for Takeda.  She alleged in her two complaints that Takeda had asked her to misreport adverse events types for four different drugs and to change her “causal” medical conclusions to “non-serious” or “unrelated.” According to her, this resulted in false claims for payment submitted to the
government.

Seems like a big, big stretch, right?  It is.  The district court found so much wrong with the complaints that the deficiencies are too numerous to re-list.  Suffice it to say that the relator pleaded nothing to show that the alleged misreporting was somehow connected to a material precondition of Medicaid payment, or that the defendants knowingly caused the submission of false claims.  In fact, she made no particular factual allegations as to the existence of false payments.

We were pleased with the decision, particularly since it dismissed a “fraud-on-the-FDA” claim that wasn’t subject to Buckman preemption because FCA claims are federal.  Yet we remained concerned.  The appeal would be to the First Circuit, which has at times been more forgiving to FCA relators than we would like.

There was no reason for worry.  The First Circuit was equally unimpressed.  We knew this from the moment we read the start of the Third Circuit’s analysis, as it reminded us that the FCA’s financial incentives can attract parasitic relators:

Although [the FCA’s] financial incentive encourages would-be relators to expose fraud, it also attracts parasitic relators who bring FCA damages claims based on information within the public domain or that the relator did not otherwise discover.

United State ex rel. Ge v. Takeda Pharmaceutical Co. Ltd., 2013 U.S. App. LEXIS 24634, at *14-15 (1st Cir. Dec. 6, 2013)( quoting United States ex rel. Duxbury v. Orthobiotech Products, L.P., 719 F.3d 31, 33 (1st Cir. 2013)).

The court listed the type of particular allegations that the heightened pleading standard of FRCP 9(b), which applies to FCA claims, requires of relators:

[A] relator must provide details that identify particular false claims for payment that were submitted to the government.  In a case such as this, details concerning the dates of the claims, the content of the forms or bills submitted, their identification numbers, the amount of money charged to the government, the particular goods or services for which the government was billed, the individuals involved in the billing, and the length of time between the alleged fraudulent practices and the submission of claims based on those practices are the types of information that may help a relator to state his or her claims with particularity. . . .

Id. at *15-16 (quoting United States ex rel. Karvelas v. Melrose-Wakefield Hospital, 360 F.3d 220 (1st Cir. 2004)).

The Court didn’t need to scrutinize the Ge complaints to this level of detail.  That’s because the relator had failed to plead, well, a false claim: “Dr. Ge has, however, alleged next to no facts in support of the proposition that Takeda’s alleged misconduct resulted in the submission of false claims or false statements material to false claims for government payment.”  Id. at *16.

There were no facts to support the existence of any false claims or to show that such false claims could have resulted from the alleged misreporting of AEs:

Dr. Ge alleges a conclusion that numerous claims for the four subject drugs would not have been submitted for government payment but for Takeda’s misconduct, but alleges no more than that. What is missing are any supporting allegations upon which her conclusion rests. . . .

. . . Dr. Ge provided in response to the motions to dismiss, at most, aggregate expenditure data for one of the four subject drugs, with no effort to identify specific entities who submitted claims or government program payers, much less times, amounts, and circumstances.

Dr. Ge thus made no attempt in her complaints to allege facts that would show that some subset of claims for government payment for the four subject drugs was rendered false as a result of Takeda’s alleged misconduct. . . .

Id. at *18.  There were simply no allegations to justify the relator’s FCA claims, and the Third Circuit upheld dismissal of the complaints.

It also upheld the district court’s decision not to allow the relator to amend her pleadings.  She made such a request in her opposition brief and, later, in a post-judgment motion. Neither was proper.  In fact, the request in her opposition brief, much like her complaints, consisted of insufficient boilerplate language:

[W]here, as here, a request to file an amended complaint consists of nothing more than “boilerplate sentences stating the well-settled ‘freely given’ standard under which a request for leave to amend is generally analyzed,” a district court “act[s] well within its discretion when completely disregarding the request.”

And so the Ge complaints are gone, now seemingly forever.  This could set a tone for how difficult it is (and should be) to plead a fraud-on-the-FDA claim in a FCA action, particularly one based on misreporting AEs.  The relationship between a misreported AE and the government’s payment of a false claim is tortuous and tenuous, as it requires the snapping together of so many links that really just don’t snap together.  Few if any relators should be able to state such a claim.