United States District Court, E.D. Pennsylvania
THE UNITED STATES OF AMERICA, et al., ex rel. CATHERINE A. BROWN and BERNARD G. VEZEAU
BARCLAY SURRICK, J.
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.
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
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.
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.
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
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,
Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.
2009) (quoting Iqbal, 129 S.Ct. at 1949).
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
Subject Matter Jurisdiction
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.
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). We agree with the reasoning of the First
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
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
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.
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.
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.
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.
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.