On January 11, 2013, the United States Court of Appeals for the Fourth Circuit issued an opinion reaffirming the requirement that False Claims Act relators plead presentment of a false claim with particularity. United States ex rel. Nathan v. Takeda Pharmaceuticals N.A. Inc. (No. 11-2077). The Fourth Circuit’s decision requires relators proceeding under the civil False Claims Act, 31 U.S.C. Section 3729(a)(1)(A), to offer concrete details that plausibly allege—not just speculate—that actual presentment of a false claim occurred. By holding relators to the requirement of pleading false claims with particularity, the Fourth Circuit strikes a blow against relators who would simply allege a fraudulent scheme with hopes of basing the rest of their case on facts learned through costly discovery. The holding should be of particular utility to defendants in cases that are based on alleged “off-label” promotion, in which relators often rely on speculative assertions that claims were actually submitted for reimbursement for off-label uses that were ineligible for payment under government-funded programs.
In Nathan, a sales manager for Takeda Pharmaceuticals filed a qui tam suit alleging Takeda caused false claims for payment to be presented to the federal government by marketing the drug Kapidex for off-label uses. The relator identified two marketing practices he claimed resulted in false claims: Takeda’s promotion of Kapidex to rheumatologists, who do not typically treat patients with conditions that can be treated by Kapidex’s on-label uses; and Takeda’s promotion of high doses of Kapidex for the treatment of conditions for which the FDA has approved only lower doses.
Liability under Section 3729(a)(1)(A) of the False Claims Act requires that the defendant actually presented a false claim to the government for payment. Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 789 (4th Cir. 1999). Relying on United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir. 2009), the relator in Nathan urged the Fourth Circuit to adopt a relaxed application of Rule 9(b)’s pleading standard that would permit the relator to plead only the existence of a “fraudulent scheme” from which the relator argued the court should infer that actual false claims for payment were presented to the government. In Grubbs, the relator had alleged a conspiracy by doctors in which doctors fraudulently recorded having performed medical services that were never actually performed. The Fifth Circuit held that the relator’s presentment allegations satisfied Rule 9(b), even absent specific allegations that the doctors’ fraudulent records caused the hospital’s billing system to present fraudulent clams to the government. Id. at 192.
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Topics: False Claims Act, Kapidex, Off-Label Promotion, Pharmaceutical, Pleadings, Prescription Drugs, Qui Tam, Takeda Pharmaceuticals
Published In: Business Torts Updates, Civil Procedure Updates, Government Contracting Updates, Health Updates
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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