UNITED STATES OF AMERICA, ex rel. GERASIMOS PETRATOS, GERASIMOS PETRATOS, ex rel. UNITED STATES OF AMERICA; STATE OF CALIFORNIA; STATE OF COLORADO; STATE OF CONNECTICUT; STATE OF DELAWARE; STATE OF FLORIDA; STATE OF GEORGIA; STATE OF HAWAII; STATE OF ILLINOIS; STATE OF INDIANA; STATE OF LOUISIANA; STATE OF MARYLAND; COMMONWEALTH OF MASSACHUSETTS; STATE OF MICHIGAN; STATE OF MINNESOTA; STATE OF MONTANA; STATE OF NEVADA; STATE OF NEW HAMPSHIRE; STATE OF NEW JERSEY; STATE OF NEW MEXICO; STATE OF NEW YORK; STATE OF NORTH CAROLINA; STATE OF OKLAHOMA; STATE OF RHODE ISLAND; STATE OF TENNESSEE; STATE OF TEXAS; COMMONWEALTH OF VIRGINIA; DISTRICT OF COLUMBIA, Appellants
GENENTECH INC; ROCHE GROUP; HOFFMAN LA ROCHE, INC.; ROCHE HOLDINGS, LTD.; F HOFFMAN - LA ROCHE, LTD
November 1, 2016
Appeal from the United States District Court for the District
of New Jersey (D.C. No. 2-11-cv-03691) District Judge:
Honorable Madeline C. Arleo.
Michael J. DeBenedictis Debenedictis & Debenedictis, LLC,
Adam Gutride Seth Safier Anthony Patek Matthew T. McCrary
[Argued] Gutride Safier LLP Counsel for Plaintiffs-Appellants
Lawrence S. Lustberg Gibbons P.C. Matthew J. O'Connor
Mark W. Mosier [Argued] Matthew F. Dunn David M. Zionts
Covington & Burling LLP Counsel for Defendants-Appellees
Michael S. Raab Weili J. Shaw [Argued] Counsel for United
States of America as Amicus Curiae in support of neither
Before: HARDIMAN and SCIRICA, Circuit Judges, and ROSENTHAL,
HARDIMAN, Circuit Judge.
appeal arising under the False Claims Act involves a
multi-billion dollar cancer drug, Avastin, which was
developed by Appellee Genentech. Relator Gerasimos Petratos,
who was head of healthcare data analytics for Genentech,
filed a qui tam action soon after leaving the
company. He alleged that Genentech suppressed data that
caused doctors to certify incorrectly that Avastin was
"reasonable and necessary" for certain at-risk
Medicare patients. The District Court dismissed
Petratos's suit for failure to state a claim. Although we
disagree with the District Court's grounds for dismissal,
we will affirm because Petratos failed to satisfy the False
Claims Act's materiality requirement.
widely prescribed cancer drug that has accounted for $1.13
billion a year in Medicare reimbursements, Avastin is
approved by the FDA to treat several types of cancer.
Petratos alleged that Genentech concealed information about
Avastin's health risks. Specifically, he claimed the
company ignored and suppressed data that would have shown
that Avastin's side effects for certain patients were
more common and severe than reported. According to Petratos,
such analyses would have required the company to file
adverse- event reports with the FDA, and could have resulted
in changes to Avastin's FDA label. Genentech also
allegedly suppressed information regarding Avastin's side
effects for patients with renal failure despite a request to
disclose that information by a "Key Opinion Leader,
" a recognized industry expert who "influence[s]
peers' medical practice, including but not limited to
prescribing behavior." John Mack, A KOL by Any Other
Name, 14-03 Pharm. Mktg. News 1, 1 (2015).
claimed Genentech's data suppression was part of a formal
campaign, dubbed "Optimizing Data Value, " during
which the company avoided certain analyses and data sets that
might yield negative results to mitigate its "business
risk." App. 324-26. Petratos asserted that he tried to
bring the safety risks inherent in this strategy to the
attention of upper management, but was told "to stop any
further work in [the] area, " App. 318, and had his job
"threatened, " App. 314.
consequence of Genentech's data-suppression strategy,
Petratos claimed the company caused physicians to submit
Medicare claims that were not "reasonable and
necessary." In the opinion of one oncologist, if
Genentech had properly disclosed Avastin's side-effects
for certain at-risk patients, "the standard of care
would have been to prescribe a lower dose of Avastin, a lower
frequency of doses, or no dose at all." App. 341.
filed in 2011, this case was heard by three judges of the
United States District Court for the District of New Jersey.
Soon before his retirement, Judge Cavanaugh dismissed
Petratos's initial complaint in part, but granted a stay
of the order so Petratos could amend his complaint. The case
was reassigned to Judge Wigenton, who rejected
Genentech's argument that an amendment would be futile
and held that Petratos "sufficiently alleged causes of
action" under the False Claims Act. App. 56. Finally,
the case was transferred to Judge Arleo, who took a different
tack than Judge Wigenton and reasoned that "medically
'reasonable and necessary' is a determination made by
the relevant agency, not individual doctors." App.
16-17. Because Petratos's theory relied on the doctors as
part of the "reasonable and necessary"
determination, Judge Arleo deemed the complaint fatally
deficient and dismissed all claims. App. 18-19. Petratos
filed this timely appeal.
District Court had subject-matter jurisdiction over
Petratos's federal claim under 28 U.S.C. § 1331 and
supplemental jurisdiction over his state-law claims under 28
U.S.C. § 1367. We have appellate jurisdiction under 28
U.S.C. § 1291. We "exercise plenary review of the
District Court's order granting appellees' motion to
dismiss for failure to state a claim." United States
ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d
295, 302 (3d Cir. 2011). We review for abuse of discretion
both the District Court's decision to reconsider a
predecessor judge's ruling, Fagan v. City of
Vineland, 22 F.3d 1283, ...