The district court granted the defendant’s motion to dismiss a qui tam complaint alleging it fraudulently marketed one of its pharmaceuticals for off-label uses and paid kickbacks to encourage referrals. The court found the relator failed to connect the alleged schemes to any false claims for payment and failed to provide even reliable indicia that any claims were submitted. The court also found the relator failed to provide the specifics of the alleged false statements made by the defendant and failed to show how these statements ensured that fraudulent payments would be obtained. The court also dismissed the relator’s claim of employment retaliation, finding that he failed to specify what misconduct he reported to his employer and never indicated he warned his employer about potential false claims.
Prometheus Laboratories Inc. moved to dismiss a qui tam complaint alleging it fraudulently marketed one of its pharmaceuticals for uses that were not approved by the Food and Drug Administration and engaged in an unlawful kickback scheme to encourage use of its drug.
From August 2014 to January 2018, relator James Pepio was employed by Prometheus as a strategic account manager. According to the complaint, Prometheus unlawfully promoted its drug Proleukin for uses that were not approved by the FDA, caused the drug to be misbranded, and intentionally misled doctors and patients into believing Proleukin was comparable to newer drugs, when they knew it was not.
The relator alleged that Prometheus directed employees to distribute and emphasize non-promotional and non-FDA approved publications; directed sales employees to emphasize off-label and unapproved information; funded promotional programs and paid spokespeople to promote off-label use of the drug; and targeted physicians who were not experts in renal cancer. The relator also alleged Prometheus instructed providers to use incorrect diagnosis-related group codes in order to obtain higher reimbursement from government healthcare programs, and engaged in a kickback scheme, through which it provided physicians with free marketing services to induce them to make more referrals.
Finally, the relator alleged that when he reported this activity internally, his employment was terminated.
The United States and state of Florida declined to intervene in the case. After the amended complaint was unsealed, the defendant moved to dismiss.
First, the defendant moved to dismiss Count I, for presentment of false claims, for a lack of particularity. The court agreed, finding the evidence presented in the complaint alleged that Prometheus caused the presentment of false claims, but did not assert that Prometheus itself presented false claims to the United States. The relator alleged that the off-label marketing and other schemes caused physicians to submit false claims for reimbursement and that Prometheus instructed hospital employees to incorrectly code does of Proleukin. However, he did not provide any information about specific fraudulent claims, their dates, or which healthcare providers might have submitted them.
Even though Pepio was employed as an account manager, his complaint lacked proof of any providers’ billing practices, and therefore the court found the complaint lacked reliable indicia that false claims were submitted. Given that the relator had already amended his complaint twice, the court found it would be futile to allow another opportunity, and dismissed this count with prejudice.
Next, Prometheus moved to dismiss Count II, Pepio’s claim for making and using false records and statements to ensure payment of false claims, again arguing the relator failed to plead his allegations with the required particularity. The court agreed, finding that the relator failed to specifically identify the false statements upon which his claim relied, even though he’d had two chances to amend. Even if the court were able to determine which false records or statements applied to Count II, it held that those statements were not pled with particularity and were causally attenuated.
For example, Pepio alleged Prometheus instructed providers to deliberately miscode their billings, but did not provide any details of what fraudulent statement was made. He also alleged that another account manager distributed pamphlets with off-label information, but never said what that information contained. Further, he failed to allege facts that showed how or why these alleged statements affected a physician’s decision to prescribe Proleukin, to the extent that the false statements were material to the subsequent claims. The court also dismissed this count with prejudice.
Next, Prometheus moved to dismiss Count III, Pepio’s claim for retaliation, arguing that the relator failed to show he was terminated for attempting to report or prevent fraud and that off-label promotion of a drug does not equate to fraud against the government.
The court agreed that Pepio failed to state a claim. In the complaint, he claimed that he documented his concerns about the fraudulent activity in a field report that he intended to submit to his supervisor, but that supervisor told him not to submit such a report. Pepio then reported his concerns to two corporate officers and an outside consultant, and was told that additional compliance training would be provided. The relator was later terminated, before he filed his qui tam complaint.
The court noted that Pepio’s complaint did not specify which scheme he brought to his employer’s attention or if he alerted them to any false claims, or otherwise provided notice of his protected activity. Accordingly, the court found he had not plausibly pled his retaliation claim. The court dismissed this count without prejudice.
Finally, because the federal claims were all dismissed, the court dismissed the state claims, as they were based on the same alleged facts.
