United States District Court, E.D. Pennsylvania
UNITED STATES OF AMERICA ex rel. YOASH GOHIL, Plaintiff,
SANOFI-AVENTIS U.S. INC., et. al., Defendant
[Copyrighted Material Omitted]
For UNITED STATES OF AMERICA ex rel. YOASH GOHIL, Plaintiff: CARL D. POPLAR, LEAD ATTORNEY, CHERRY HILL, NJ; DAVID C. KISTLER, LEAD ATTORNEY, PRO HAC VICE, BLANK ROME LLP, PRINCETON, NJ; NICHOLAS CARL HARBIST, STEPHEN M. ORLOFSKY, BLANK ROME, LLP, PRINCETON, NJ; SUSAN DEIN BRICKLIN, U.S. ATTORNEY'S OFFICE, PHILADELPHIA, PA; WILLIAM R. CRUSE, BLANK ROME LLP, PHILADELPHIA, PA.
For AVENTIS PHARMACEUTICALS, INC., Defendant: MICHAEL L. KOON, LEAD ATTORNEY, SHOOK HARDY & BACON, KANSAS CITY, MO; RICHARD L. SCHEFF, LEAD ATTORNEY, MONTGOMERY MCCRACKEN WALKER & RHOADS LLP, PHILADELPHIA, PA; ROBERT J. MCCULLY, LEAD ATTORNEY, SHOOK HARDY & BACON LLP, KANSAS CITY, MO; ELLEN C. BROTMAN, MONTGOMERY MCCRACKEN WALKER & RHOADS, PHILADELPHIA, PA; JENNIFER L. HERBST, MICHAEL B. HAYES, MONTGOMERY MCCRACKEN WALKER & RHOADS, LLP, PHILADELPHIA, PA.
For SANOFI-AVENTIS U.S. INC., AVENTIS, INC., Defendants: MICHAEL L. KOON, LEAD ATTORNEY, SHOOK HARDY & BACON, KANSAS CITY, MO; ROBERT J. MCCULLY, LEAD ATTORNEY, SHOOK HARDY & BACON LLP, KANSAS CITY, MO; JENNIFER L. HERBST, MICHAEL B. HAYES, MONTGOMERY MCCRACKEN WALKER & RHOADS, LLP, PHILADELPHIA, PA; RICHARD L. SCHEFF, MONTGOMERY MCCRACKEN WALKER & RHOADS LLP, PHILADELPHIA, PA.
LAWRENCE F. STENGEL, J.
Yoash Gohil, relator, brings this False Claims Act lawsuit on behalf of the United States against his former employer Sanofi-Aventis U.S., Inc. [Aventis] and its subsidiaries. Mr. Gohil alleges that Aventis engaged in a fraudulent marketing scheme which caused numerous healthcare providers
to submit false claims to federally funded health insurance programs. Aventis has moved to dismiss the Second Amended Complaint. I will grant the motion in part.
Mr. Gohil was employed by Aventis and its predecessor companies from February 1982 until his resignation in June 2002. Second amended complaint (SAC) ¶ 1. At all relevant times, Mr. Gohil was a Senior Oncology Sales Specialist whose duties included the marketing, promotion and sale of pharmaceuticals manufactured by Aventis. Id. ¶ 2. This case concerns the marketing of Taxotere, a chemotherapy agent manufactured by Aventis which Mr. Gohil was assigned to promote and sell in the Philadelphia region. Id. ¶ 20.
Originally, the Food and Drug Administration (FDA) approved Taxotere for the treatment of patients with Non-Small Cell Lung Cancer (NSCLC) and Breast cancer, but only after the failure of prior platinum based chemotherapy. Id. This is also known as second line treatment. In November 2002, the FDA approved Taxotere for first line treatment of NSCLC. Id. ¶ 22. There were no other approved medical indications. Id. Between 1996 and 2004, Taxotere was the most expensive taxane on the market. Id. ¶ 25. A substantial portion of individuals who are treated with Taxotere are participants in a federal insurance program including Medicare, Medicaid, CHAMPUS/Tricare, and the Federal Employee Health Benefit Plan (FEHBP).
From 1996 until 2004, Aventis engaged in a marketing plan which promoted Taxotere for off-label uses. Id. ¶ 15. An off-label use is a use which is not approved by the FDA. This scheme took two forms. First, Aventis trained and directed its employees, such as Mr. Gohil, to misrepresent the safety and effectiveness of the off-label use of Taxotere to expand the market for Taxotere into unapproved settings. Id. ¶ 16, 60. Second, Aventis paid healthcare providers illegal kickbacks in the form of sham unrestricted grants, speaking fees, travel, entertainment, sports and concert tickets, preceptorship fees, free samples an free reimbursement assistance to encentivize providers to prescribe Taxotere for off-label uses. Id. ¶ 17. By the means of this fraudulent marketing scheme, Aventis dramatically increased revenue on sales of Taxotere from $424 million in 2000 to $1.4 billion in 2004. Id. ¶ 182.
Federal Insurance Programs will pay for an off label use of a prescription drug if the drug is used for a medically accepted indication or the drug is medically necessary. Id. ¶ ¶ 44-48. Aventis marketed Taxotere
for off-label use in the first line treatment of Breast Cancer and NSCLC, second line treatment of Ovarian Cancer and for the treatment of other unspecified medical indications. Id. ¶ 58-63, 98, 100, 101, 105. According to Mr. Gohil, the prescription of Taxotere in these settings would not be eligible for reimbursement. Id. ¶ 50. Additionally, prescriptions of Taxotere which were " produced through the payment directly or indirectly of a kickback" were ineligible for reimbursement. Id. ¶ 112-113. " Consequently, Defendant Aventis' fraudulent marketing scheme caused a substantial number of healthcare providers to submit claims for reimbursement to Governmental medical reimbursement systems for the use of Taxotere, which would not have otherwise been paid had the Government reimbursement programs known of Aventis' fraudulent marketing scheme." Id. ¶ 186.
Mr. Gohil filed his original qui tam complaint on May 17, 2002 and the case was assigned to Chief Judge Tucker. He filed an amended complaint on July 19, 2002. In June 2002, Mr. Gohil resigned from Aventis, and he initiated a wrongful termination action against Aventis in New Jersey Superior Court pursuant to New Jersey's Conscientious Employee Protection Act and New Jersey's Law Against Discrimination (the CEPA action). In the state court lawsuit, Mr. Gohil alleged that Aventis retaliated against him because he objected to sales activities which violated federal and state laws, including FDA regulations.
While the Government was deciding whether to intervene in this action, the parties engaged in discovery in the CEPA action. Aventis produced tens of thousands of pages of training materials, manuals, and journal abstracts about Taxotere. Mr. Gohil took depositions of several current and former Aventis employees. At the close of discovery, Aventis moved for summary judgment. On October 31, 2005, before any decision was rendered on that motion, the parties settled the CEPA action, and the case was dismissed. The settlement agreement included a broad a release of liability in favor of Aventis.
On August 15, 2006, the Government elected to decline intervention in this qui tam case. The case was unsealed and a summons issued as to Aventis on September 11, 2006. With leave of court, Mr. Gohil filed the SAC under seal on February 9, 2007 giving the Government another opportunity to intervene which it declined. On February 29, 2008, Chief Judge Tucker unsealed the SAC and ordered jurisdictional discovery. Discovery was contentious, and Mr. Gohil took an unsuccessful appeal from one of Chief Judge Tucker's rulings. Discovery finally concluded on October 5, 2010, and the pending motion to dismiss followed on December 15, 2010. The action was reassigned to my docket on November 27, 2013, and I heard oral arguments on the motion to dismiss on February 19, 2014.
a. The False Claims Act
Under the False Claims Act (FCA), persons who submit fraudulent applications for payment to the United States are liable to the Government in a civil action for civil penalties and treble damages. 31 U.S.C.A. § 3729(a)(1) (West 2015). In addition to the Attorney General, the q ui tam  provisions of the act empower private individuals, like Mr. Gohil, to file lawsuits on behalf of the United States seeking damages
sustained by the Government for the payment of false claims. § 3730(b). Relators, the citizen plaintiff in FCA parlance, must file their complaints under seal and serve the Government with a copy of the complaint and disclosure of all material evidence. § 3730(b)(2). The court cannot lift the seal until the Government investigates the claims and either decides to take over the action or notifies the court that it declines to intervene in the case. § 3730 (b)(4). If the Government declines to intervene, it retains the right to veto any settlement negotiated by the relator, and it may move to intervene at a later date upon a showing of good cause. § 3730(b)(1); (b)(3)
Congress enacted the Qui tam provisions to employ citizens in the quest to recover money depleted from the national treasury as a result of fraud against the Government. U.S. ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 650, 304 U.S.App.D.C. 347 (D.C. Cir. 1994) (discussing legislative history). " On the downside, overly generous qui tam provisions present the danger of parasitic exploitation of the public coffers...." Id. at 649 (citing United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443 (1943)). In an effort to strike a balance between private enforcement and avoiding opportunistic lawsuits, the FCA contains a specific jurisdictional provision which I will address first.
b. Aventis's 12(b)(1) Motion
1. Standard of Review
Aventis moves to dismiss this case pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction. To select the correct standard of review, I first note that Aventis's motion is a factual attack on jurisdiction. Unlike a facial challenge which concerns a pleading deficiency, Aventis maintains that Mr. Gohil has not complied with the jurisdictional prerequisites contained in the False Claims Act.
United States ex rel. Atkinson v. Pa. Shipbuilding, 473 F.3d 506, 512 (3d Cir. 2007). Accordingly, " [I] may consider and weigh evidence outside the pleadings to determine if [the court] has jurisdiction." Gould Electronics Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000) (citing Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)). " [N]o presumptive truthfulness attaches to plaintiff's allegations." Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). A qui tam relator must establish by a preponderance of the evidence that the court has jurisdiction. See Gould, 220 F.3d at 178 (citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)); United States ex rel. Biddle v. Bd. of Trustees of the Leland Stanford Jr. University, 161 F.3d 533, 540 (9th Cir. 1998).
2. The False Claims Act Public Disclosure Bar
Following the Supreme Court's decision in Marcus v. Hess, Congress revised the FCA to prohibit qui tam actions which are based of publicly available information. Springfield Terminal, 14 F.3d at 649. In Marcus, the relator " copied the information on which his qui tam suit was based from the Government's own criminal indictment." Id. (citing
Marcus, 317 U.S. at 537). Obviously, such parasitic lawsuits do not aid the Government's efforts to recover fraudulently paid funds. Rather, such lawsuits are an additional drain on the public fisc. Thus, the statute seeks to reserve qui tam actions for those relators with independent knowledge of the fraud as follows:
No court shall have jurisdiction over an action under this section
based upon the public disclosure of allegations or transactions in a criminal,
civil, or administrative hearing, in a congressional, administrative, or
Office report, hearing, audit, or investigation, or from the news media,
unless the action is brought by the Attorney General or the person bringing
the action is an original source of the information.
31 U.S.C.A. § 3730(e)(4)(A) (West 2009), amended by Pub. L. No. 111-148, Title X, § 10104(j)(2), 124 Stat 119. In turn, an original source is:
an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action ...