Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States ex rel. Brown v. Pfizer, Inc.

United States District Court, E.D. Pennsylvania

April 12, 2017

THE UNITED STATES OF AMERICA, et al., ex rel. CATHERINE A. BROWN and BERNARD G. VEZEAU
v.
PFIZER, INC.

          MEMORANDUM

          R. BARCLAY SURRICK, J.

         Presently before the Court is Defendant Pfizer Inc.'s Second Motion to Dismiss. (ECF No. 103.) For the following reasons, Defendant's Motion will be denied.

         I. BACKGROUND

         A. Procedural History

         On March 1, 2016, we ruled on Defendant's First Motion to Dismiss Plaintiffs' First Amended Complaint. United States v. Pfizer, Inc., No. 05-6795, 2016 WL 807363 (E.D. Pa. Mar. 1, 2016); (ECF Nos. 93, 94.) The factual background surrounding this matter is set forth in that Memorandum.

         On March 15, 2016, Relators filed a Second Amended Complaint. (SAC, ECF No. 98.) On May 6, 2016, Defendant filed the instant Motion to Dismiss. (Def.'s Mot., ECF No. 103.) Relators filed a Memorandum in Opposition to Defendant's Motion to Dismiss on June 24, 2016. (Rels.' Mem. Opp., ECF No. 107.) On July 13, 2016, Defendant filed a Reply Memorandum in Support of its Motion. (Def.'s Reply, ECF No. 109.) On July 27, 2016, Relators filed a Reply Memorandum in Opposition to Defendant's Memorandum. (Rels.' Reply, ECF No. 111.) Since that time, Defendant has submitted three separate “notices of supplemental authority, ” and Relators have submitted one “notice of supplemental authority.” On October 31, 2016, Defendant filed the first Notice of Supplemental Authority (ECF No. 115), and on December 22, 2015, Relators filed a response (ECF No. 116). On January 30, 2017, Defendant filed a second Notice of Authority (ECF No. 117), and on March 6, 2017, Relators filed a response (ECF No. 118). On March 15, 2017, Defendant filed a third Notice of Authority (ECF No. 119), and on March 25, 2017, Relators filed a response (ECF No. 120). On April 7, 2017, Relators filed a Notice of Supplemental Authority. (ECF No. 121.) The Second Motion to Dismiss is now ready for disposition.

         B. Parties' Contentions

         Defendant advances four arguments in support of its Second Motion to Dismiss. First, Defendant contends that the Court lacks subject matter jurisdiction over portions of Relators' SAC. In the prior Memorandum, we concluded that Relators' claims were barred by the first-to-file rule. However, we permitted Relators to file an amended complaint. Pfizer, 2016 WL 807363, at *8. Defendant now argues that Relators lack subject matter jurisdiction because Relators are required to file a separate action in order to cure the jurisdictional defect. Defendant further argues that even if Relators were to file a new action, it would be time-barred under the False Claim Act's (“FCA”) six-year statute of limitations. Second, Defendant maintains that its off-label use of Vfend on neutropenic patients and for empiric therapy is covered by Medicare and other healthcare programs. Third, Defendant alleges that Relators have failed to state a claim that Defendant paid kickbacks to physicians and pharmacists. Defendant argues that its actions do not qualify as illegal kickbacks because they are protected by a safe harbor regulation. Fourth, Defendant argues that Relators have not stated a claim under the FCA because Relators did not allege that Defendant submitted reimbursement claims to the FDA that contained expressly false statements. Defendant argues that Relators must rely on the implied false certification theory, and that Relators have failed to properly state a claim under that theory. Defendant further argues that Relators have failed to satisfy the materiality requirement of the FCA because the government continued to pay for Vfend after Relators' allegations in 2005.

         Relators reject each of Defendant's arguments, citing our previous Memorandum, which Relators claim addressed many of the same arguments that Defendant raises in the instant Motion. With regard to Defendant's jurisdictional argument, Relators argue that this Court specifically permitted Relators to file the SAC to reassert their claims. Relators argue that because they added no additional factual allegations in their SAC, and filed the SAC pursuant to the Court's Order, Defendant's argument is invalid. Further, Relators argue that they have pled facts sufficient to state a claim of fraudulent inducement under the FCA. Relators argue that they have satisfied the FCA's materiality requirement because they alleged that Defendant presented false and misleading statements to the FDA, which in turn caused the FDA to approve Vfend to treat Candida infections. With regard to Defendant's other allegations, Relators maintain that these allegations merely restate the arguments that Defendant made in its First Motion to Dismiss, and should accordingly be dismissed.

         II. LEGAL STANDARD

         Under Federal Rule of Civil Procedure 8(a)(2), “a pleading that states a claim for relief must contain a short and plain statement of the claim showing that the pleader is entitled to relief.” Failure to state a claim upon which relief can be granted is basis for dismissal of the complaint. Fed.R.Civ.P. 12(b)(6). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 556). While a court “must accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading, the plaintiff may be entitled to relief, ” Phillips v. Cnty of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008), “a court need not accept as true ‘legal conclusions' or ‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements . . . .” Wilson v. City of Philadelphia, 415 F. App'x 434, 436 (3d Cir. 2011) (quoting Iqbal, 129 S.Ct. at 1949). “A complaint may not be dismissed because it appears unlikely that the plaintiff can prove those facts or will ultimately prevail on the merits.” McTernan v. City of York, Pa., 564 F.3d 636, 646 (3d Cir. 2009). However, a plaintiff's claims “must contain more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Iqbal, 129 S.Ct. at 1949).

         An FCA complaint must meet the heightened pleading standard set forth by Federal Rule of Civil Procedure 9(b), which demands that a plaintiff “state with particularity the circumstances constituting the fraud or mistake.” Fed.R.Civ.P. 9(b). Therefore, a plaintiff must allege “the who, what, when, where and how of the events at issue.” In re Rockefeller Ctr. Props., Inc. Secs. Litig., 311 F.3d 198, 217 (3d Cir. 2002) (citation and internal quotation marks omitted). There is a split among the Circuit Courts with regard to the “particularity” requirement of Rule 9(b). The Third Circuit has adopted the approach of the First, Fifth, and Ninth Circuits, which ‘have taken a more nuanced reading of the heightened pleading requirements of 9(b).” Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153, 156 (3d Cir. 2014). Under Foglia, “it is sufficient for a plaintiff to allege ‘particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.'” Id. (citations and quotation marks omitted).

         III. DISCUSSION

         A. Subject Matter Jurisdiction

         1. Amended Complaint

         In its First Motion to Dismiss, Defendant argued that Relators' claims were barred by the FCA's first-to-file rule. We noted that a relator is only entitled to relief under the FCA if the relator is the first person to file the complaint. Pfizer, 2016 WL 807363, at * 6; see 31 U.S.C. § 3730(b)(5) (“When a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.”). We cited the Supreme Court's decision in Kellogg Brown & Root Servs. v. United States ex rel. Carter, 135 S.Ct. 1970, 1979 (2015), which held that a qui tam suit under the FCA is no longer deemed “pending” once it is dismissed. Pfizer, 2016 WL 807363, at *8. Since the first action, the Worsfold action had been dismissed, we granted Relators leave to file an amended complaint to assert claims that had previously been barred by the first-to-file rule. Id. Defendant argues, however, that an amended complaint does not cure the first-to-file jurisdictional bar. Defendant argues that if a case was barred by the FCA's first-to-file rule, a relator must file a new action.

         The First Circuit Court of Appeals is the only circuit court to have addressed this issue. See U.S. ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1 (1st Cir. 2015). In Gadbois, the relators filed a complaint in the District of Rhode Island; however, the district court dismissed the relator's claim for lack of subject matter jurisdiction. 809 F.3d at 3. The district court dismissed the claim pursuant to the FCA's first-to-file rule because there was already a similar case pending in the Eastern District of Wisconsin. Id. However, while the case was pending on appeal in the First Circuit, the case in the Eastern District of Wisconsin was dismissed. Id. at 4. Citing Kellogg, the First Circuit permitted the relators to supplement their complaint pursuant to Rule 15(d) in order to cure the jurisdictional defect. (Id. at 4-5.) The court justified its decision by stating that Rule 15 helps “courts and litigants to avoid pointless formality.” Id. at 4. The First Circuit also noted that courts are encouraged to allow parties to supplement their pleadings “when doing so will promote the economic and speedy disposition of the entire controversy between the parties, will not cause undue delay or trial inconvenience, and will not prejudice the rights of any of the other parties to the action.” Id. (internal quotation marks and citation omitted).[1] We agree with the reasoning of the First Circuit.

         Like the facts in Gadbios, the pending Worsfold case was dismissed, and therefore was no longer “pending” for purposes of the first-to-file rule under the FCA. We are satisfied that Relators were permitted to file the SAC as a cure for the jurisdictional defect present with the FAC. Accordingly, the SAC is not jurisdictionally barred under the FCA's first-to-file rule.

         2.Statute of Limitations

         Defendant argues that even if this Court determines that the SAC cures jurisdictional defects in light of the Worsfold dismissal, the Relators' claims are nonetheless time-barred. Defendant argues that the FCA has a six-year statute of limitations, and therefore Relators' pediatric and prophylactic claims are time-barred. Defendant states that Relators seek recovery for pediatric and prophylactic reimbursement claims submitted between 2002 and 2009. Relators filed the SAC on March 15, 2016. The original complaint was filed on December 29, 2005. Defendant contends that the operative complaint that courts should use when determining if a claim is time-barred under the FCA is the complaint filed following dismissal of the first-filed action. Here, that would be the SAC, which would result in Relators' pediatric and prophylactic claims being time-barred. Relators respond that for statute of limitations purposes, the SAC should relate back to the date of the original complaint. Defendant argues that the SAC cannot relate back to the original complaint because (1) the original complaint does not allege claims of off-label pediatric or prophylactic use of Vfend and (2) this Court lacked subject-matter jurisdiction over the original complaint.

         Rule 15(c) provides that “[a]n amendment to a pleading relates back to the date of the original pleading when . . . the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out-or attempted to be set out-in the original pleading.” See also ASARCO, LLC v. Union Pac. R. Co., 765 F.3d 999, 1004 (9th Cir. 2014) (“An otherwise time-barred claim in an amended pleading is deemed timely if it relates back to the date of a timely original pleading.”). The Supreme Court has held that “relation back depends on the existence of a common core of operative facts uniting the original and newly asserted claims.” Mayle v. Felix, 545 U.S. 644, 646 (2005). The Third Circuit has held that an amended complaint relates back “only where the opposing party is given fair notice of the general fact situation and the legal theory upon which the amending party proceeds . . . .” Glover v. F.D.I.C., 698 F.3d 139, 146 (3d Cir. 2012) (internal quotation marks and citation omitted). “If the amendment relates back to the date of the filing of the original complaint, the amended complaint is treated, for statute of limitations purposes, as if it had been filed at that time.” Garvin v. City of Phila., 354 F.3d 215, 220 (3d Cir. 2003) (citation omitted). The relation back provision “aims to ameliorate the harsh result of the strict application of the statute of limitations.” Id.

         Relators argue that the pediatric and prophylactic off-label claims alleged in the SAC arise out of the conduct alleged in the original complaint. Relators cite to their allegations in the original complaint, which state that Defendant engaged in illegal off-label promotion of Vfend. Relators argue that this behavior arises out of a common set of operative facts-namely off-label promotion of Vfend (original complaint) and, more specifically, off-label promotion of Vfend for pediatric and prophylactic use (SAC). Defendant argues that Relators' SAC does not relate back to their original complaint because the original complaint does not specifically mention off-label promotion of Vfend for pediatric or prophylactic use.

         As noted above, Relators filed the original complaint on December 29, 2005. (Compl., ECF No. 1.) Relators' original complaint alleged Defendant's violations under the FCA, pointing to Defendant's off-label promotion of Vfend. (Id. ¶¶ 12, 14-15.) Relators stated that Vfend was not approved to treat patients with Candida infections, and that physicians were only permitted to prescribe Vfend to non-neutropenic patients. (Id. ¶ 24.) Relators pled that Defendant promoted Vfend illegally, specifically that Defendant alleged that “Vfend is equally efficacious against all species of Candida, despite having irrefutable evidence that it is not.” (Id. ¶ 152.) These pleadings support allegations that Defendant engaged in illegal off-label promotion of Vfend, in violation of the FCA. While Relators did not allege that Defendant promoted Vfend off-label for pediatric and prophylactic purposes specifically, they did plead that Defendant “marketed Vfend off-label for empiric therapy . . . .” (Id. ¶ 171.) Relators' original complaint also contained allegations that Defendant provided misleading information to the FDA. Relators' allegations in the SAC state more specifically that Defendant promoted Vfend off-label for pediatric and prophylactic use. We find that Relators' allegations in the SAC arise out of the conduct that Relators alleged in their original complaint, namely that Pfizer promoted Vfend for impermissible off-label uses. We also find that Relators' original complaint gave Defendant fair notice of the general fact situation that Relators allege in the SAC.

         Defendants also argue that this Court did not have subject-matter jurisdiction over the original complaint because of the first-to-file rule. We reject this argument because “a district court does not lack subject matter jurisdiction over an action that may be barred on the merits by the first-to-file rule.” United States ex rel. Hayes v. Allstate Ins. Co., No. 16-705, 2017 WL 1228551, at *3 (2d Cir. Apr. 4, 2017). Interpreting the FCA, the Second Circuit in Hayes noted that “[b]ecause the FCA ‘clearly state[s]' that other limitations on qui tam actions are jurisdictional, but does not ‘clearly state[]' that the first-to-file rule is jurisdictional, we must treat the first-to-file rule ‘as nonjurisdictional in character.'” Id. (quoting Sebelius v. Auburn Reg'l Med. Ctr., 133 S.Ct. 817, 824 (2013)). The D.C. Circuit also held that the first-to-file bar “does not speak in jurisdictional terms or refer in any way to the jurisdiction of the district courts.” U.S. ex rel. Heath v. AT & T, Inc., 791 F.3d 112, 120 (D.C. Cir. 2015), cert. denied sub nom. AT&T, Inc. v. U.S. ex rel. Heath, 136 S.Ct. 2505 (2016) (quoting Arbaugh v. Y & H Corp., 546 U.S. 500, 515 (2006)); see also Allergan, 2017 WL 1233991, at *11 (“[T]he first-to-file rule bears only on whether a qui tam plaintiff has properly stated a claim, rather than on the scope of courts' jurisdiction.” (citation and internal quotation marks omitted)). But see, U.S. ex rel. Branch Consultants v. Allstate Ins. Co., 560 F.3d 371, 376-77 (5th Cir. 2009); Walburn v. Lockheed Martin Corp., 431 F.3d 966, 970 (6th Cir. 2005). Since we did not lack subject-matter jurisdiction over Relators' original complaint, we reject Defendant's argument that the SAC cannot relate back to the original complaint for lack of jurisdiction.

         Accordingly, we conclude that the SAC relates back to the date of the original complaint-December 29, 2005-and therefore Relators' clams are not time-barred by the FCA's six-year statute of limitations.

         B. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.