Posted by Kristin Graham Koehler and Meghan Delaney Berroya
In a decision released late last week, Judge Davis of the District Court of Minnesota dismissed the False Claims Act suit brought by a former employee against Bayer Healthcare Pharmaceuticals, Inc., Bayer Corporation and Bayer AG (collectively “Bayer”). See U.S. ex rel. Simpson v. Bayer Healthcare, Case No. 08-5758 (MJD/SRN). The former employee, Laurie Simpson, alleged that Bayer utilized kickbacks and misbranding to cause various government funded health insurance programs, including Medicare and Medicaid, to pay claims for its cholesterol drug, Baycol. Bayer marketed Baycol in the late 1990s and voluntarily withdrew the drug from market in 2001 after its use was linked to Rhabdomyolysis, a rare muscle disorder.
Simpson originally filed her FCA suit against Bayer on October 5, 2006 and was permitted to amend her complaint on two previous occasions. The Court dismissed Simpson’s Second Amended Complaint (“SAC”) with prejudice for failure to satisfy Rule 9(b)’s requirement to plead fraud with specificity. According to the Court: “As Relator has filed three complaints in this case, she will not be given leave to amend.”
Simpson’s case hinged on the theory that the government would not have paid any claims for Baycol had it been aware of the alleged deceptive marketing practices described by Simpson in the SAC. In its opinion, the District Court reaffirmed the Eighth Circuit’s previous holding that “particularized allegations of representative false claims are required to properly assert a claim under the FCA.” (Opinion at 13). In other words, “even where a relator alleges a systematic practice of submitting fraudulent claims, the FCA complaint must nonetheless include representative examples of the alleged fraudulent conduct.” (Opinion at 14).
Simpson’s allegations fell short of Rule 9(b)’s strict requirements in several respects. Simpson failed to allege that particular claims submitted to the government for payment of Baycol contained false information and what specific portion of the claims were false. (Opinion at 11). Moreover, the SAC did not contain any allegations linking the government’s decision to pay for Baycol to any alleged fraud, nor did Simpson allege that Baycol failed to work for all patients. (Opinion at 15). The Court emphasized that a “claim under the FCA focuses on the claims, not the underlying fraudulent activity.” (Opinion at 16). Importantly, the Court reached these conclusions even where relator had included in her SAC examples of patient-level claims and various summaries of payments made by the government for Baycol.
Lawyers from Sidley Austin, including blog post author Kristin Koehler, represented Bayer in its defeat of Simpson’s FCA suit.