The district court mostly denied the defendants’ motion for summary judgment in a case alleging violations of the Anti-Kickback Statute and False Claims Act. The relator alleged the defendants used paid participation in advisory boards and speaker programs, educational grants, and incentives such as gifts and meals to induce physicians to continue or increase their habit of prescribing their cancer drugs. The court found most of the claims adequately pled, as a reasonable jury could find that the gifts, grant funds, and other payments could be considered improper kickbacks. The court held the relator demonstrated scienter based on the defendants’ own internal guidance, which prohibited the practices alleged in the complaint, and had shown that concealment of the alleged ASK violations was material to the government’s decision to pay claims. The court granted the motion to dismiss some claims, finding that the submission of some claims was too far removed from the date of the alleged improper kickback to show inducement or causation.
Sanofi U.S. Services Inc. moved for summary judgment in a qui tam case alleging it engaged in an illegal kickback scheme that induced doctors to increase prescriptions of its cancer drug. The court previously denied cross-motions for summary judgment regarding an alleged scheme involving a reimbursement assistance program, and in these proceedings address the defendants’ motion for summary judgment on multiple other claims.
When approved by the FDA, the defendants’ cancer drug, Taxotere, faced several competitive disadvantages, due to its higher price and more narrow approval for treatment. According to the complaint, the defendant—then named Aventis—implemented an aggressive marketing scheme that involved paying kickback to physicians to encourage them to prescribe Taxotere. The complaint set out five distinct schemes.
First, the relator alleged the defendants’ created advisory boards through which medical oncologists could discuss relevant issues, clinical data, and patient care, and to comment on future clinical development plans and marketing strategies. Aventis’s internal compliance policies stated that advisory board attendees were to be chosen based on their qualifications—not their volume of business or favorable opinion of Taxotere— and compensated at fair market value.
However, according to the complaint, Aventis used the boards to increase sales. The relator alleged the defendants paid doctors to attend all-expenses paid advisory boards in desirable locations and offered valuable entertainment. Attendees were required to sign documents attesting that these payments amounted to fair market value and had been offered without respect to the volume or value of any referrals. However, a 2004 audit found that Aventis had such signed agreements for two of nine attendees who were audited. Further, Aventis targeted specific doctors for inclusion and advised regional managers not to invite anyone who might be antagonistic.
The relator also alleged the defendants paid selected physicians to deliver presentations about the benefits of off-label use of Taxotere. The defendants also eliminated Q&A sessions at the events and placed friendly physicians in the audience who could “shut-down” attendees who were being difficult. The relator also provided internal communication indicating that Aventis considered the advisory boards as marketing events.
Second, the relator alleged Aventis misused speaker programs, through which it paid physicians to present information about Taxotere. Again, the defendants’ internal policies stated that speakers could not be selected based on business volume and could not be paid more than fair market value for engagements. However, in practice, the relator alleged Aventis chose doctors based on prescription volume and provided all-expenses paid trips, desirable entertainment, and honoraria to these select doctors. According to the relator, much of the program budget was allocated for speaker training and development workshops, which doctors were paid to attend, while physicians participated in very few actual speaking engagements.
The relator alleged that the speaking engagements were thinly-disguised marketing events. The relator provided a letter from a physician invited to speak at one such program, in which the physician questioned the ethics of having community practitioners present content dictated by a pharmaceutical manufacturer.
Next, the relator alleged a scheme involving education grants, which were funded by the defendants for the purported purpose of supporting bona fide educational programs for patients, consumers, and/or health care professionals. While Aventis’ policies stated grants could not be awarded based on the recipient’s volume of business, in practice, the regional sales directed stated that grants should be limited to beneficial accounts and used as a thank-you for support. Managers were specifically instructed to consider the amount of sales generated by an account before awarded the account any grants and to consider the return on investment. The relator provided another letter from a physician who felt pressured by an Aventis education manager to convert a meeting into a two-day sales pitch for Taxotere. According to this physician, the education manager “strongly suggested” that only speakers from Aventis’ speaker bureau should be invited and implied that future funding could be comprised if this weren’t done.
Next, the relator alleged a scheme involving preceptorships, through which Aventis sales representatives were able to shadow a medical oncologist to learn more about how that oncologist treated cancer. Although internal guidance stated that promotional activities could not occur during preceptorships, in practice, Aventis used the meetings as a marketing opportunity. The defendants arranged preceptorships with low-prescribing doctors to expose them to Taxotere and its uses.
Finally, the relator alleged Aventis engaged in ad hoc kickbacks, despite company policy prohibiting gifts and business courtesies conditioned on Taxotere sales and prescriptions. According to the complaint, Aventis provided gifts to physicians who reached certain sales levels and participated in speaker programs. The defendants also provided gifts to doctors as a sales tactic. These gifts were often tailored to a physician’s specific interests.
Gohil argued that each of these schemes violated the False Claims Act, which tainted any resulting claims for reimbursement for Taxotere. Aventis moved for summary judgment on each of these claims.
As a threshold matter, the parties disputed the proper standard for imputing AKS scienter to Aventis. Aventis argued that Gohil must produce evidence to show either (1) the employees with the requisite scienter had sufficiently authority to render their actions indistinguishable from those of the corporation and that senior management was aware that Aventis employees were engaged in unlawful conduct. The relator maintained that he merely needed to show that the employees with the requisite scienter were acting within the scope of their employment or with apparent authority. The court held that regardless of which standard was used, the matter of AKS scienter should be resolved by the jury, not on summary judgment.
The court considered the merits of each alleged scheme in turn. First, the court found the relator adequately alleged the advisory board scheme. While the defendants argued the boards were carried out according to internal compliance guidelines, the court found Gohil presented enough evidence to put those facts in dispute. The court found Gohil adequately pled the underlying AKS violation, which would render false all claims to the government for Taxotere reimbursement. For example, the court found Gohil presented facts showing Aventis did not follow its internal guidelines when selecting physicians for the boards, and that the remuneration offered to physicians was excessive and provided with no apparent exchange of value.
Aventis argued that the advisory boards served multiple purposes, including providing an opportunity for oncologists to share knowledge and experience. However, the court noted that Gohil did not need to prove that the only purpose of the boards was to induce physicians to prescribe Taxotere; rather, he need only show that this was one of the purposes. The court found Gohil had provided compelling evidence to that effect, including internal communications showing that management expected the boards to amount to marketing presentations.
The court also found a genuine dispute over scienter. Aventis argued that it did not have AKS scienter because it enacted an internal compliance program for its advisory boards before any OIG guidance was issued and because the OIG guidance documents that were eventually issued largely mirrored the compliance policies that Aventis already enacted. However, the court found that Gohil’s evidence showed that as early as 1994, Aventis knew that its advisory boards implicated the AKS. Aventis’s internal compliance guidelines confirmed this understanding, but this guidance was ignored and employees were not subject to any meaningful discipline for violations. For example, while some employees were cited for violations, they were not terminated or demoted and were not blocked from promotions. Further, performance bonuses were paid in full or docked by a minimal amount. The court found that a reasonable jury could find that Aventis knew that its advisory boards were run in a manner that violated the AKS.
Considering causation, the court found the relator had shown that at least one claim had been submitted to the government seeking reimbursement for Taxotere prescriptions tainted by kickbacks. The relator provided expert reports showing how financial and gift incentives could influence physicians’ prescription writing habit for at least two years after the incentive was provided. As an example, the relator showed that one physician had attended four advisory boards between March 2002 and July 2002, and submitted 100 Medicare claims for Taxotere, extending from March 2002 and January 2003.
In its motion, Aventis argued that the relator’s unsworn expert was not competent to testify on this issue, such that the evidence should be considered at the summary judgment stage. Rather, the defendants argued that an affidavit or declaration used to support or oppose a summary judgment motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated. However, the court noted that the relator had corrected this deficiency by submitting a sworn declaration from his witness, and held that evidence should not be excluded when such an error is correctible.
Next, Aventis challenged the expert’s conclusions, but the court held the resolution of this dispute was for the jury. Finally, Aventis argued that the relator had shown the temporal proximity of the incentives to the physicians’ prescription habits, but not causation. The court disagreed, finding that Gohil’s causal chain was adequate, showing that incentive payments were made, prescriptions were written, patients used Taxotere, and claims to the government were submitted. The court found the evidence in support of each link of the causal chain was sufficient to preclude summary judgment.
The court also found that Gohil adequately pled scienter regarding the advisory board scheme. In short, because Gohil survived summary judgment on AKS scienter, he also survived summary judgment on FCA scienter. The court also found the alleged conduct was material to the government’s decision to pay the claims for Taxotere. Aventis argued that the government continued to pay claims for the drug despite knowing of Gohil’s allegations, while the relator argued that AKS compliance is a condition of payment for healthcare claims. The court sided with the relator, finding that a reasonable jury could find the conduct material.
Next, the court considered the claims of impropriety regarding the defendants’ speaker programs, and agreed that the relator had produced sufficient evidence to survive summary judgment. As with the advisory board claim, the court found the relator had raised a genuine dispute of material fact as to falsity, causation, scienter, and materiality. The court held that a reasonable jury could find that the speaker programs were remuneration under the AKS, and that one purpose of the program was to encourage prescriptions. As with the advisory programs, the court found Gohil had created a genuine dispute about scienter, because Aventis management did not follow the company’s compliance guidelines and did not discipline employees who violated the guidance. Because he demonstrated AKS scienter, the court held the relator had also adequately pled the FCA scienter element. The court also found the relator satisfied the causation and materiality elements, generally on the same grounds as before.
The court came to similar conclusions on the claims regarding the education grants, but found that Gohil failed to state his claim regarding the preceptorship claim, which alleged that Aventis used “shadowing” opportunities to convince low-prescribing doctors to increase their use of Taxotere. The court found this claim did not adequately plead causation. Gohil submitted evidence regarding two doctors who allegedly participated in Aventis’s preceptorship program and subsequently submitted claims. While a jury might credit Gohil’s expert and find that a kickback influences prescribing behavior for up to two years, the court found the alleged scheme exceeded that timeline. For example, one physician was paid $500 for a preceptorship that occurred on May 6, 1999, but Gohil alleged the physician submitted claims for Taxotere from January 1998 to December 2004. Because the relator did not allege which—if any—claims were submitted in the two-year window beginning May 1999, the court held that the relator had failed to show causation.
Finally, the court found only some of the ad hoc kickback allegations survived summary judgment. The court found the allegations about meals and gift baskets were sufficient, but the other claims were not. In connection to Aventis’s provision of meals and gift baskets to physicians, the court found the relator adequately alleged that the gifts amounted to illegal kickbacks, and therefore demonstrated falsity. The court held that a reasonable jury could find that the gifts and meals were provided to induce prescriptions, because they were given based on sales volume. In particular, the court noted the relator provided internal communication noting that a dinner provided to one physician with a high level of prescriptions had “opened the door” to further access to that practice.
The court found the relator provided evidence that Aventis was aware of OIG notices alerting healthcare entities to the risk of fraud in such gift arrangements, and yet ignored its internal compliance guidance. The court also found Gohil adequately pled causation, based on the dates of the gifts and the two-year window of influence. Finally, the court agreed that a reasonable jury could find the AKS violations material to the government’s payment decision.
