DOJ Informs Supreme Court that It Will Dismiss FCA Case if Remanded to District Court

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On November 30, 2018, the Solicitor General of the United States filed an amicus curiae brief in the closely watched False Claims Act (FCA) lawsuit, Gilead Sciences Inc. v. U.S. ex rel. Campie. In what appears to be an unprecedented move, the Solicitor General stated in an amicus brief filed with the Supreme Court – without any prior indication – that the Department of Justice (DOJ) will move to dismiss the relator’s complaint if the case is remanded back to the district court because allowing the case to proceed “would impinge on agency decision making and discretion and would disserve the interests of the United States.”

Defendant Gilead Seeks Review of Ninth Circuit Decision

Two relators filed an FCA lawsuit against Gilead Sciences, Inc. in 2010 alleging that the pharmaceutical manufacturer misrepresented to the government that it obtained an active ingredient in three of its HIV drugs from specifically approved facilities. The relators also allege that Gilead provided false or inaccurate information to the Food and Drug Administration (FDA) in an attempt to gain approval to receive ingredients from an alternate facility. The relators argue that the government would not have reimbursed Gilead for the drugs at issue had it known the truth about the source of the drugs’ active ingredients.

The DOJ declined to intervene in the case, but the relators proceeded on their own. Gilead moved to dismiss the complaint, and the district court dismissed the relators’ FCA claims for failure to plead the falsity of claims submitted to the government. The relators appealed that decision. After the district court’s dismissal, the Supreme Court issued its opinion in Universal Health Services, Inc. v. U.S. ex rel. Escobar, addressing in part the FCA’s materiality requirement. The Ninth Circuit Court of Appeals subsequently reversed the district court’s ruling, holding that the relators sufficiently pleaded the falsity, scienter and materiality elements of their claims. With respect to materiality, the Ninth Circuit noted that the relators allege “more than the mere possibility that the government would be entitled to refuse payment if it were aware of the violations.” The DOJ filed an amicus curiae brief with the Ninth Circuit supporting reversal of the district court’s decision.

In December 2017, Gilead filed a petition for writ of certiorari with the Supreme Court. According to Gilead, the question presented for the Supreme Court’s review is whether an FCA claim fails where the government continued to approve and pay for products after learning of the alleged regulatory violations at issue. In April 2018, after the parties and amicus parties had completed their briefing, the Court invited the Solicitor General to file a brief expressing the views of the United States.

Solicitor General’s Views Not Limited to Question of Materiality

In its brief, the Solicitor General expressed its view that the Ninth Circuit’s decision was well reasoned and not inconsistent with Escobar or with decisions of other courts of appeals and that, as such, Gilead’s petition should be denied. Remarkably, however, the government took the additional step of informing the Court in its brief that it will move to dismiss the relators’ complaint if the case remains revived and is remanded to the district court. The government stated that that decision is “based in part on the government’s thorough investigation of [the relators’] allegations and the merits thereof.” In addition, the government expressed concern about the burdensome discovery requests that likely would be issued to the FDA to determine “exactly what the government knew and when” if the case proceeds past the pleading stage. Those requests, according to the Solicitor General, would distract the agency from its public health responsibilities. Based on all of those considerations, the government concluded that “continued prosecution of the suit is not in the public interest.”

The government’s determination comes in the wake of the January 2018 “Granston memo,” which outlined the DOJ’s interest in dismissing meritless qui tam FCA cases pursuant to the government’s dismissal authority under 31 U.S.C. § 3730(c)(2)(A). Although the DOJ has exercised that authority in other cases, the Campie case appears to be the first instance in which the government has expressed that intent for the first time to the Supreme Court, particularly where the government previously filed an amicus brief with a court of appeals and did not express any such intent. Moreover, any FCA case in which the materiality of the underlying violation is at issue likely will necessitate discovery from the government as to how it has responded to similar violations in the past. The government’s determination that the Campie case should not move forward therefore begs the question whether the government will seek to dismiss other qui tam cases involving disputed questions of materiality.

Although the government offers the plausible justification of avoiding burdensome discovery to support its position, it also is difficult not to wonder whether the government, at least in part, is using its dismissal authority to avoid an adverse ruling or the development of unfavorable precedent on the materiality issue. It remains to be seen whether and how the government will continue to use or threaten to use its dismissal authority to head off either potentially burdensome discovery or unfavorable rulings, or both.

Finally, as discussed here, the Supreme Court recently received another petition for writ of certiorari asking the Court to clarify how the FCA’s materiality requirement should be enforced.

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