In United States ex rel. Palmieri v. Alpharma, 2014 WL 1168953 (D. Md. Mar. 21, 2014), the U.S. District Court for the District of Maryland dismissed relator’s False Claims Act (FCA) complaint for failure to plead fraud with particularity under Rule 9(b).

Relator, a pharmaceutical sales representative, alleged that the pharmaceutical manufacturer defendants violated the FCA by aggressively marketing their Flector Patch (a topical pain medication) to encourage doctors to prescribe it for off-label uses and at unapproved doses. According to the relator, some of the resulting off-label, excessive, or unlawfully-induced prescriptions of the Flector Patch were submitted for reimbursement to federal and state health care programs, such as Medicaid and Medicare. The district court, following the Fourth Circuit’s decision in U.S. ex rel. Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451 (4th Cir. 2013), found the complaint failed to satisfy the requirements of Rule 9(b) because Relator was asking the Court to infer that false claims for reimbursement had been submitted, without providing any details of an actual false claim.

The district court reasoned that “when a defendant’s actions . . . could have led, but need not necessarily have led, to the submission of false claims, a relator must allege with particularity that specific false claims actually were presented to the government.” Palmieri, 2014 WL 1168953, at *10. The court found that relator’s allegations that nine patients of two Pennsylvania doctors received off-label prescriptions were insufficient because they did not provide any details of these prescriptions being submitted for reimbursement to the government. Id. at *10-12. To illustrate why it is improper to infer that false claims were submitted, the court described the so-called “donut hole” in Medicare Part D coverage, which refers to an area between the initial drug coverage limit and the catastrophic drug coverage threshold where Medicare does not reimburse for prescription drugs. Id. at *11. Any Flector Patch prescription to a Medicare Part D patient falling in this coverage gap could not result in a false claim because that prescription would not be reimbursable by the government at all.

The Palmieri decision highlights the important function of Rule 9(b) in differentiating between allegations of possible fraud and actual fraud. Defendants should be vigilant in assessing allegations of FCA violations and can leverage this decision (and the Takeda decision on which it was based) to seek dismissal of suits that require courts to infer violations of the FCA.