Recently, in United States ex. rel. Ibanez v. Bristol-Meyers Squibb Co., No. 16-3154 (Oct. 27, 2017), the Sixth Circuit Court of Appeals affirmed a decision by the U.S. District Court for the Southern District of Ohio to dismiss an FCA complaint brought by two relators on behalf of the government, finding that the complaint lacked the particularity required under Rule 9(b) of the Federal Rules of Civil Procedure.

Former Employees Accused Company of Improperly Promoting Medication

The qui tam action was brought by two former employees of Bristol-Meyers Squibb Co., who alleged that the company, along with co-defendant Otsuka America Pharmaceutical, Inc., had engaged in a scheme to encourage healthcare providers to prescribe the antipsychotic drug Abilify for certain unapproved or “off-label” uses and that some of the resulting prescriptions were paid for by government programs.

Sixth Circuit Dismissed Complaint Because Relators Failed to Satisfy Rule 9(b) Standards

In affirming the district court’s dismissal of the relators’ complaint, the Sixth Circuit explained that in order to satisfy Rule 9(b)’s pleading requirements, relators must adequately allege, from start to finish, each step in the chain of causation ultimately ending in the submission of a false claim to the government.

In the context of “off-label promotion schemes,” the Sixth Circuit explained that relators must provide a specific “representative claim” in which:

  1. A physician to whom Defendants improperly promoted their drug actually prescribed that medication for an off-label use.
  2. The patient who was prescribed the medication then filled the prescription.
  3. The filling pharmacy in turn submitted a claim to the government for reimbursement on the prescription.

The Sixth Circuit held that absent a representative claim identifying all three elements, the relators’ complaint failed to adequately plead a violation of the FCA under Rule 9(b).

Relators Attempted to Apply Relaxed 9(b) Pleading Standard

The Sixth Circuit also rejected the relators’ attempt to bypass Rule 9(b)’s pleading requirements through application of the more “relaxed” pleading standard applied in the Sixth Circuit’s recent decision in U.S. ex rel. Prather v. Brookdale Senior Living Communities, Inc. The Sixth Circuit explained that the so-called Prather exception applies only in “limited circumstances” where the relator has alleged specific, detailed personal knowledge of a company’s billing practices. As former sales representatives for Bristol-Meyers, the relators in Ibanez did not possess or allege this type of personal knowledge.

FCA Conspiracy Claims Dismissed for Lack of Proof of Agreement to Violate the Act

The Sixth Circuit also affirmed the district court’s dismissal of the relators’ FCA conspiracy claims. Although the relators had described defendants’ plan to increase the number of Abilify prescriptions through improper promotion of the drug, these allegations fell short of establishing FCA liability because, even if a foreseeable consequence of defendants’ plan was that some of the off-label prescriptions would be submitted to the government for payment, that would not amount to a conspiracy to violate the FCA. In the Sixth Circuit’s words: “[T]o adequately allege an FCA conspiracy, it is not enough for relators to show there was an agreement that made it likely there would be a violation of the FCA; they must show an agreement was made in order to violate the FCA.”

Sixth Circuit Cited Futility When Denying Motion to File Additional Complaint

Finally, the Sixth Circuit affirmed the district court’s denial of the relators’ motion to file a third amended complaint on grounds that the amendment would be futile. The Sixth Circuit highlighted several examples of exhibits offered by the relators in support of their motion to file a third amended complaint and identified the deficiencies in each.

First, the relators attached an exhibit identifying reimbursements paid by Massachusetts Medicaid for prescriptions filled for pediatric patients before Abilify had any pediatric indications. The Sixth Circuit pointed out, however, that the exhibit failed to identify the prescribing physicians or to connect them to defendants’ alleged improper promotion of the drug.

Similarly, the relators attached an exhibit identifying prescriptions paid by California Medi-Cal that were prescribed by doctors who maintained relationships with defendants. This exhibit failed to identify the diagnoses for which the prescriptions had been written, thus leaving it to the court to infer that they had been written for off-label uses.

The relators also attempted to build a representative claim by attaching a receipt to fill an Abilify prescription for a patient in 2015 as well as a 2013 diagnostic assessment of that patient reporting that he was prescribed Abilify for an off-label use by another doctor earlier in the year. But, as the Sixth Circuit explained, the 2013 assessment failed to identify which pharmacy filled the prescription and whether it was reimbursed by the government, and the 2015 prescription could not be tied to any improper promotion of the drug by defendants. Accordingly, these exhibits, similar to those above, were inadequate to provide the single, specific claim for reimbursement required to survive a motion to dismiss.

Sixth Circuit Split from Other Circuits

In its opinion in Ibanez, the Sixth Circuit described the nature of relators’ claims as “unusually attenuated” and noted that the FCA was an “awkward vehicle” for punishing off-label promotion schemes. This sends a strong signal to future litigants that the Sixth Circuit will view these types of cases with skepticism and scrutiny.

The case also marks a split from other circuits regarding the pleading requirements of Rule 9(b) in FCA cases. As pointed out by Judge Stranch in dissent, many other circuits, including the First, Second, Third, Fifth, Seventh, Eighth, Ninth, Tenth, and D. C. Circuits, have concluded that Rule 9(b)’s requirement of particularity is not necessarily synonymous with a representative sample.

Generally, Rule 9(b) may be satisfied in those circuits where a relator alleges the particular details of a scheme to submit false claims and provides “reliable indicia” leading to a strong inference that claims were actually submitted. As the dissent concluded, the relators’ proposed third amended complaint in Ibanez contained sufficient facts and reliable indicia to support a strong inference that false claims were submitted to the government for reimbursement, and thus would likely have satisfied this application of Rule 9(b).