United States: First Circuit Affirms Summary Judgment For Defendant, Rejecting The Use Of Aggregate Data To Prove False Claims And Clarifying The Limited Scope Of Conduct Protected By The FCA's Anti-Retaliation Provision
The First Circuit has issued an opinion affirming a complete
grant of summary judgment for Pfizer, Inc. in United States ex
rel. Booker v. Pfizer Inc., No. 16-1805 (1st Cir. Jan. 30,
2017), a False Claims Act (“FCA”) lawsuit in which
Ropes & Gray led Pfizer’s defense. The First
Circuit’s opinion addressed several recurring issues in FCA
litigation. First, the Court held that aggregate data reflecting
government expenditures is insufficient to support an FCA claim in
the absence of evidence of specific allegedly false claims. Second,
the Court emphasized that employee complaints concerning regulatory
or statutory violations are not protected under the FCA’s
anti-retaliation provision unless the employee complaints
specifically concern the submission of false claims.
In August 2009, Pfizer settled a number of cases alleging FCA
violations concerning several drugs, including an antipsychotic
drug called Geodon. Less than a year later, two former Pfizer sales
representatives (“Relators”) filed a qui tam
complaint in the District of Massachusetts alleging that Pfizer was
continuing to promote Geodon for a number of uses not approved by
the FDA and paying kickbacks to doctors in the form of speaker
program payments to induce those doctors to prescribe Geodon. One
relator also alleged that Pfizer had violated the anti-retaliation
provision of the FCA by terminating him because he objected to
Pfizer’s supposed instructions to promote Geodon for
off-label uses. Following a district court decision granting
summary judgment to Pfizer on all claims, Relators appealed.
The First Circuit’s Decision
In affirming summary judgment on Relators’ off-label
promotion based claim, the Court found that Relators had failed to
produce any evidence of an actual false claim. Relators sought to
rely on the First Circuit’s Neurontin cases to argue
that aggregate NDTI data reflecting government expenditures for
off-label prescriptions proves that false claims were submitted,
and therefore evidence of specific false claims is not required.
The Court rejected this argument, noting that more is required to
plead allegedly false claims with sufficient particularity to
survive a motion to dismiss under Rule 9(b), and held that evidence
of specific false claims is required to survive summary judgment in
an FCA case. The Court explained that the Neurontin cases
held only that aggregate data, when accompanied by strong
circumstantial evidence, could be used as proof of a causal link
between promotion and prescriptions in a civil RICO context; those
cases did not hold that aggregate data could be used to prove the
existence of false claims in an FCA case. Indeed, the First Circuit
in the Booker case held that aggregate data alone could
not support a jury finding that false claims were submitted.
Although the First Circuit based its affirmance on
Relators’ failure to produce competent evidence of a false
claim, the Court also suggested that summary judgment may have been
independently warranted on falsity grounds. Specifically, the Court
acknowledged the undisputed evidence that several state Medicaid
programs had chosen to reimburse for the off-label uses of Geodon
at issue. The Court noted that Relators’ inability to show
that any off-label Geodon claims were filed in a non-reimbursing
state might render Relators unable to demonstrate that any claims
filed were ineligible for reimbursement and, thus, false.
Finally, the Court affirmed summary judgment for Pfizer on
Relators’ retaliation claim. The First Circuit held that
complaining or “whistleblowing” about an alleged
regulatory or legal violation is not protected conduct under the
FCA unless the complaint itself concerned the knowing submission of
false claims. In this case, the Court held that voicing concerns
about supposed off-label promotion did not qualify as protected
conduct. This holding substantially clarified the applicable
standard in the First Circuit for FCA protected conduct.
The First Circuit’s decision reaffirms that evidence of
actual false claims is required to prove a violation of the FCA,
and establishes that aggregate data cannot substitute for that
fundamental element of an FCA cause of action. The decision is also
important for FCA defendants because it sets a strict limit to the
type of conduct protected under the FCA’s anti-retaliation
provision. The decision makes clear that the FCA does not protect
conduct that merely concerns regulatory violations, including
alleged off-label promotion. Rather, the FCA protects employees who
raise concerns about alleged fraudulent conduct in connection with
the submission of false claims for government payment.
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