In United States ex rel. Ge v. Takeda Pharmaceutical Co. Ltd., 737 F.3d 116 (1st Cir. 2013), the United States Court of Appeals for the First Circuit affirmed the dismissal of a qui tam complaint against a drug manufacturer on the ground that Relator’s conclusory allegations were insufficient to plead fraud with particularity under Federal Rule of Civil Procedure 9(b).
Relator sued her former employer, drug manufacturer Takeda Pharmaceutical Co. and its North American subsidiary (collectively Defendants), on behalf of the United States and a number of states, alleging that Defendants delayed and under-reported adverse events to the Food and Drug Administration (FDA) in an effort to resist label changes to four of its drugs. Relator brought claims under the federal False Claims Act (FCA) and various analogous state statutes. Defendants moved to dismiss arguing that Relator had failed to plead fraud with particularity under Federal Rule of Civil Procedure 9(b) and that it failed to state a claim under Federal Rule of Civil Procedure 12(b)(6). The district court granted Defendants’ motion on both grounds. United States ex rel. Ge v. Takeda Pharm. Co. Ltd., Nos. 10-11043, 11-10343, 2012 WL 5398564 (D. Mass. Nov. 1, 2012).
On appeal to the First Circuit, Relator argued that her allegations satisfied the pleading requirements of Rules 9(b) and Rule 12(b)(6). Reaching only the district court’s holding under Rule 9(b), the First Circuit affirmed the district court’s dismissal. The court first faulted Relator for having “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.” 737 F.3d at 124. Specifically, the court explained that although Relator “alleges a conclusion that numerous claims for the four subject drugs would not have been submitted but for Takeda’s misconduct, [she] alleges no more than that. What is missing are any supporting allegations upon which her conclusion rests and any particulars.” Id. Second, the court rejected as inadequate the “aggregate expenditure data for one of the four subject drugs” because it was not accompanied by any “effort to identify specific entities who submitted claims or government program payers, much less times, amounts, and circumstances.” Id. Finally, the court denied Relator’s “attempt to satisfy the Rule 9(b) requirements with a per se rule that if sufficient allegations of misconduct are made, it necessarily follows that false claims and/or material false information were filed” because such a rule would “violate the specificity requirements of Rule 9(b).” Id. The court also denied Relator’s request for leave to amend her second amended complaints.
Relators in FCA actions often assert expansive claims short on factual detail. The Takeda decision demonstrates the stringent pleading requirements of Rule 9(b) and should be useful precedent for challenging insufficient FCA pleadings.