On January 2, 2015, the U.S. District Court for the Central District of California threw out claims that Walgreens pharmacy violated the federal and California false claims acts on the basis that the plaintiff failed to meet the applicable stringent pleading requirements.

In Irwin v. Walgreens, 2:13-cv-08473, a whistleblower/Relator contended that Walgreens cheated Medicare and Medi-Cal out of millions of dollars by establishing schemes to bill those government healthcare programs for prescriptions that were never picked up by patients, rather than restocking the drugs and reversing any associated charges to the government payers. Among other things, the complaint asserted that, as demonstrated by the fact that they were not picked up by the patients, the prescriptions were not medically necessary, and therefore should not have been billed. The complaint sought money damages, including a penalty of up to $11,000 for each violation and treble damages. In September 2014, the government declined to intervene in the qui tam action.

The decision to dismiss the case was based on the complaint’s lack of specificity and plausibility under Federal Rules of Civil Procedure 12(b)(6) and 9(b), in conjunction with the controlling provisions of the False Claims Act. The FCA imposes liability and provides for the recovery of civil penalties in situations where, inter alia, a person: (1) knowingly presents a false or fraudulent claim to the federal government for payment; (2) knowingly makes or uses “a false record or statement material to a false or fraudulent claim”; or (3) knowingly makes or uses a false record or statement to conceal or improperly avoid or decrease an obligation to the federal government. See 31 U.S.C. § 3729(a)(1)(A), (B), and (G).

The Court concluded inter alia that the complaint failed to allege falsity and scienter with the requisite particularity. In particular, the Court recognized that the FCA does not impose liability for mere negligence, and the complaint did not allege facts suggesting that either Walgreens or any Walgreens representative acted intentionally in failing to reverse a charge for an unclaimed prescription. As the Court concluded, “Relator’s bare allegation that Walgreens acted knowingly, deliberately, or recklessly is unsupported by any factual allegations suggesting that Walgreens acted with the requisite scienter when it returned unclaimed medications to stock without reversing the charge.”

Irwin thus provides another example of the importance of a vigorous defense in qui tam cases, and demonstrates the ability of false claims act defendants to avail themselves of the heightened pleading requirements under the Federal Rules of Civil Procedure.