United States v. King-Vassel

• Decision Date: 28 August 2013
• Docket Number: No. 12–3671.,12–3671.
• Citation: 728 F.3d 707
• Parties: UNITED STATES of America and State of Wisconsin, Plaintiffs, and Toby T. Watson, Plaintiff–Appellant, v. Jennifer KING–VASSEL, Defendant–Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

728 F.3d 707

UNITED STATES of America and State of Wisconsin, Plaintiffs,

and

Toby T. Watson, Plaintiff–Appellant,

v.Jennifer KING–VASSEL, Defendant–Appellee.

No. 12–3671.

United States Court of Appeals,Seventh Circuit.

Argued April 25, 2013.

Decided Aug. 28, 2013.

Jonathan H. Koenig, Attorney, Office of the United States Attorney, Milwaukee, WI, Wisconsin Department of Justice–Civil Litigation, Office of the Attorney General Wisconsin Department of Justice, Madison, WI, for Plaintiffs.

James Barry Gottstein (submitted), Attorney, Law Project For Psychiatric Rights, Anchorage, AK, Rebecca Lynn Gietman, Attorney, Gietman Law, Chilton, WI, for Plaintiff–Appellant.

Bradley S. Foley, Mark E. Larson, Attorneys, Gutglass, Erickson, Bonville & Larson, S.C., Milwaukee, WI, for Defendant–Appellee.

Before MANION and KANNE, Circuit Judges, and LEE, District Judge. ^*

KANNE, Circuit Judge.

After acquiring the medical records for N.B., a minor, Dr. Toby T. Watson initiated this qui tam False Claims Act suit against N.B's former treating psychiatrist, Dr. Jennifer King–Vassel. While in King–Vassel's care, N.B. received Medicaid assistance that covered N.B.'s prescription drug costs. Watson alleged that several of King–Vassel's off-label prescriptions to N.B. constituted false claims submitted to the United States government. The district court entered summary judgment in favor of King–Vassel due to Watson's failure to name expert witnesses. The court determined that expert testimony was required to prove essential elements of his case. Disagreeing with the district court's conclusion, we reverse.

I. Background

Dr. Toby T. Watson placed an advertisement in a Sheboygan, Wisconsin, newspaper soliciting minor Medicaid patients who had been prescribed any of a number of psychotropic medications. He placed the ad after researching qui tam actions and meeting the President of the Law Project for Psychiatric Rights (not coincidentally, the attorney who represented Watson before this court). Watson's ad offered the opportunity to “participate in a possible Medicaid fraud suit” and to share in any recovery from the litigation.

N.B.'s mother—Christine Maxwell Meyer—responded to the advertisement and eventually entered into an agreement with Watson to share the proceeds from the potential lawsuit. Though Watson had never treated, or apparently even met, N.B., Meyer agreed to procure a copy of N.B.'s medical records to facilitate the lawsuit. Toward this end, Meyer addressed to King–Vassel a signed authorization to disclose N.B.'s treatment records. The authorization stated that Meyer was requesting the records “[f]or the purpose of providing psychological services and for no other purpose whatsoever....” (R. 42–1 at 7.) The authorization did not mention litigation or any possible Medicaid fraud suit. ( Id. at 7–8.)

Rather than providing psychological services to N.B., however, Watson combed the records for so-called “off-label” prescriptions. An “off-label” prescription is one written for a purpose that has not been approved by the Food and Drug Administration (“FDA”). These purposes can, and often will, find support in scientific literature, but, for whatever reason, the drug's manufacturer either has not, or has not yet, gone through the FDA approval process for that specific use. Once a drug has been approved for one use, however, the FDA cannot prevent physicians from prescribing the drug for other uses. Cf. Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341, 349–50, 121 S.Ct. 1012, 148 L.Ed.2d 854 (2001) (discussing the parallel situation of off-label medical device use); see also United States ex rel. Franklin v. Parke–Davis, 147 F.Supp.2d 39, 44 (D.Mass.2001). Indeed, off-label prescriptions by physicians are quite common. Randall S. Stafford, Regulating Off–Label Drug Use–Rethinking the Role of the FDA, 358 New Eng. J. Med.1427,1427 (2008). The legality of the prescription, however, does not answer questions such as whether an individual off-label prescription is medically reasonable (generally a question for a medical malpractice suit) or whether the government is obligated to pay for a Medicaid patient's off-label prescriptions (a practice that Watson is attempting to police in this case). Unsurprisingly, given the ubiquity of off-label prescriptions, Watson found off-label prescriptions in N.B.'s medical record.

King–Vassel treated N.B. between 2004 and 2008 and prescribed a number of psychotropic medications. Watson identified forty-nine individual prescriptions that he alleged constituted false claims to the United States government. Under the applicable interlocking provisions of the False Claims Act and laws governing Medicaid,the federal government generally will not pay for medications prescribed for purposes not approved by the FDA or “supported” by any of several pharmaceutical reference books (called “compendia”). Watson theorized that the forty-nine prescriptions fit that description and filed suit in the Eastern District of Wisconsin against King–Vassel (as well as several other parties who have been dismissed) under the qui tam provision of the False Claims Act (“FCA”). Although the Department of Justice declined to intervene in the suit (as is its right in a qui tam action, though often indicative of a lower chance of success), Watson pressed ahead with the case.

On July 16, 2012, King–Vassel moved for summary judgment. King–Vassel's summary judgment motion focused on two primary issues: whether Watson had “direct and independent knowledge” of the alleged Medicaid fraud (a prerequisite for qui tam standing), (R. 29 at 5), and whether the fraud allegations were based on publicly available information (a disqualifying factor for a qui tam FCA suit), ( id. at 10). At the very end of her supporting brief, King–Vassel included a short, two-paragraph section arguing that the case should “be dismissed with prejudice” because Watson had failed to name an expert who could “discuss, among other things, how claims for reimbursement for medications are presented to Medicaid programs, and how payments are made by those Medicaid programs.” ( Id. at 15.)

Watson's brief in opposition to the summary judgment motion focused on the two primary issues that King–Vassel identified. (R. 42 at 2–6.) Watson also responded to the argument about expert testimony by arguing (1) that experts should not be required to explain the Medicaid payment system; and (2) that experts would not be required to explain the pharmaceutical aspects of the case (which relate, for reasons described below, to whether the claims would truly be “false” within the meaning of the FCA). (R. 42 at 6–8.) Again, this issue did not factor heavily in the briefing.

The district court ruled against King–Vassel on her primary summary judgment arguments. United States ex rel. Watson v. King–Vassel, No. 11–CV–236, 2012 WL 5272486, *3–*5 (E.D.Wis. Oct. 23, 2012). However, the court also analyzed both strands of the failure to name an expert argument—that an expert would be needed to explain Medicaid (King–Vassel's argument) and that an expert would be required to explain some of the pharmaceutical data (which only appeared in Watson's opposition brief). Id. at *5–*8. The court held that Watson's failure to name an expert for either reason entitled King–Vassel to summary judgment. Id. Watson timely filed this appeal. (Dkt.1.)

II. Analysis

The district court granted summary judgment for King–Vassel on the issue of whether Watson was required to present expert witnesses with regard to two distinct parts of his case: (1) the Medicaid claim process, and (2) whether the claims Watson sued over were “false” within the meaning of the False Claims Act. Both of these issues are intimately entangled with the operation of the False Claims Act and Medicaid. Thus, we think a brief description of both will be helpful to the reader. We will proceed to address the issues in the order the district court analyzed them—the Medicaid process first, followed by the falsity of the claims—and delve deeper into Medicaid and the FCA at the appropriate times. For the reasons detailed below, we disagree with the district court's entry of summary judgment.

The False Claims Act makes it unlawful for a person to “knowingly present[ ], or cause[ ] to be presented, a false or fraudulent claim for payment or approval” to the United States government. 31 U.S.C. § 3729(a)(1)(A). The Act establishes civil penalties for those who violate its terms; the penalties range from $5,000 to $10,000, “plus 3 times the amount of damages which the Government sustains.” 31 U.S.C. § 3729(a)(1)(G). Although the Attorney General can enforce these provisions, the Act also provides for enforcement through the empowerment of “private attorneys general.” Stalley v. Methodist Healthcare, 517 F.3d 911, 917 (6th Cir.2008). The FCA allows for these private citizens, called relators, to bring qui tam suits against alleged fraudsters on behalf of the United States government. 31 U.S.C. § 3730. The United States may, if it chooses, intervene in these suits, 31 U.S.C. § 3730(b)(2), or, if the United States declines, as happened in this case, the relator may then prosecute the case on his own (although still technically on behalf of the United States). 31 U.S.C. § 3730(c)(3). Under either option, if the prosecution of the alleged fraudster is successful, the relator can receive a substantial award for bringing the false claim to light. 31 U.S.C. § 3730(d)(1)-(2); United States ex rel. Gear v. Emergency Med. Assocs. of Ill., Inc., 436 F.3d 726, 727 (7th Cir.2006).

Medicaid provides “medical assistance on behalf of families with dependent children and of ... individuals[ ] whose income and resources are insufficient to meet the costs of necessary medical services.” 42 U.S.C. § 1396–1. Although the federal government ultimately foots much of the bill, the administration of the program is left to the states. In the case of...