874 F.3d 905 (6th Cir. 2017), 16-3154, United States ex rel. Ibanez v. Bristol-Myers Squibb Co.

Docket Nº:16-3154
Citation:874 F.3d 905
Opinion Judge:McKEAGUE, Circuit Judge.
Party Name:UNITED STATES OF AMERICA ex rel. JOSEPH IBANEZ and JENNIFER EDWARDS, Relators-Appellants, v. BRISTOL-MYERS SQUIBB COMPANY; OTSUKA AMERICA PHARMACEUTICAL, INC., Defendants-Appellees
Attorney:ARGUED: William C. Meyers, GOLDBERG KOHN LTD., Chicago, Illinois, for Relators. Jessica L. Ellsworth, HOGAN LOVELLS U.S. LLP, Washington, D.C., for Appellee Bristol-Myers Squibb. Jennifer L. Spaziano, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Washington, D.C., for Appellee Otsuka. ON BRIEF: Willi...
Judge Panel:Before: McKEAGUE, KETHLEDGE, and STRANCH, Circuit Judges. McKEAGUE, J., delivered the opinion of the court in which KETHLEDGE, J., joined, and STRANCH, J., joined in part. STRANCH, J. (pp. 19-23), delivered a separate opinion concurring in part and dissenting in part. JANE B. STRANCH, Circuit Jud...
Case Date:October 27, 2017
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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Page 905

874 F.3d 905 (6th Cir. 2017)

UNITED STATES OF AMERICA ex rel. JOSEPH IBANEZ and JENNIFER EDWARDS, Relators-Appellants,

v.

BRISTOL-MYERS SQUIBB COMPANY; OTSUKA AMERICA PHARMACEUTICAL, INC., Defendants-Appellees

No. 16-3154

United States Court of Appeals, Sixth Circuit

October 27, 2017

Argued December 6, 2016.

Appeal from the United States District Court for the Southern District of Ohio at Cincinnati. No. 1:11-cv-00029--William O. Bertelsman, District Judge.

United States ex rel. Ibanez v. Bristol-Myers Squibb Co., (S.D. Ohio, Mar. 27, 2015)

ARGUED: William C. Meyers, GOLDBERG KOHN LTD., Chicago, Illinois, for Relators.

Jessica L. Ellsworth, HOGAN LOVELLS U.S. LLP, Washington, D.C., for Appellee Bristol-Myers Squibb.

Jennifer L. Spaziano, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Washington, D.C., for Appellee Otsuka.

ON BRIEF: William C. Meyers, David J. Chizewer, Emily D. Gilman, GOLDBERG KOHN LTD., Chicago, Illinois, Jennifer M. Verkamp, Frederick M. Morgan, Jr., Chandra Napora, MORGAN VERKAMP LLC, Cincinnati, Ohio, for Relators.

Jessica L. Ellsworth, Mitchell J. Lazris, Eugene A. Sokoloff, HOGAN LOVELLS U.S. LLP, Washington, D.C., for Appellee Bristol-Myers Squibb.

Jennifer L. Spaziano, Mitchell S. Ettinger, Caroline Van Zile, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Washington, D.C., Daniel E. Izenson, Thomas F. Hankinson, KEATING MUETHING & KLEKAMP, PLL, Cincinnati, Ohio, for Appellee Otsuka.

Before: McKEAGUE, KETHLEDGE, and STRANCH, Circuit Judges. McKEAGUE, J., delivered the opinion of the court in which KETHLEDGE, J., joined, and STRANCH, J., joined in part. STRANCH, J. (pp. 19-23), delivered a separate opinion concurring in part and dissenting in part.

OPINION

McKEAGUE, Circuit Judge.

Relators Joseph Ibanez and Jennifer Edwards, former employees of Bristol-Myers Squibb Co. (BMS), bring this qui tam action alleging that BMS, together with Otsuka America Pharmaceutical, Inc. (Otsuka), engaged in a complex, nationwide scheme to improperly promote the antipsychotic drug Abilify. Relators assert that this scheme caused claims for reimbursement for the drug to be submitted to the government, in violation of the False Claims Act (FCA), 31 U.S.C. § 3729 et seq., and several state-law analogues. The district court dismissed the complaint in part and subsequently denied relators' motion to amend. Because neither the second amended complaint nor the proposed third amended complaint satisfies Rule 9(b)'s pleading requirements, we affirm the district court's orders.

I

A. Factual Background

Since 1999, BMS and Otsuka have sold and marketed the drug Abilify. Both relators Joseph Ibanez and Jennifer Edwards worked as BMS sales representatives marketing Abilify from 2005 to 2010.

Abilify is an antipsychotic drug approved for various prescriptive uses by the FDA. It has three approved adult uses. It was approved to treat schizophrenia in 2002; to treat symptoms related to Bipolar I Disorder in 2004; and as a supplemental treatment for major depressive disorder in 2007. Abilify also has three approved uses for pediatrics. It was approved to treat schizophrenia in 13 to 17 year-olds in 2007; to treat symptoms associated with Bipolar I Disorder in patients 10 to 17 years old in 2008; and to treat irritability associated with autistic disorder for patients 6 to 17 years old in 2009. There are no expressly disapproved treatments for elderly patients, but the FDA has included a warning since 2007 that Abilify is associated with increased mortality rate in elderly patients with dementia-related psychosis.

Relators' FCA complaint boils down to two separate theories. First, relators allege that defendant pharmaceutical companies engaged in a scheme to encourage providers to prescribe Abilify for unapproved (" off-label" ) uses and that some of those off-label prescriptions were paid for by government programs. Second, relators assert that defendants improperly induced providers to prescribe Abilify through remunerations and benefits in violation of the Anti-Kickback Statute. Relators assert that requests for government reimbursement for off-label prescriptions and prescriptions induced by kickbacks constitute false claims under the FCA.

These allegations come on the heels of a set of nearly identical allegations leveled against BMS and Otsuka some nine years earlier. In 2007, BMS entered into a five-year Corporate Integrity Agreement as part of a settlement of a qui tam action which also involved improper promotion of Abilify. In 2008, Otsuka entered into its own five-year Corporate Integrity Agreement as a result of yet another qui tam action alleging the same misconduct. The two agreements used similar language to require Otsuka and BMS to adopt procedures and programs designed to ensure compliance with the FCA, the Anti-Kickback Statute, and cease off-label promotion of Abilify. The relators allege that, despite those agreements, the two companies continued to promote Abilify off-label and offer kickbacks to physicians who prescribed it.

B. Procedural Background

Relators brought this action under the False Claims Act, 31 U.S.C. § 3729 et seq., and twenty-eight state-law analogues after disclosure to the government, which declined to intervene. Specifically, the complaint alleges that defendants' illegal promotion of Abilify caused the government to pay off-label prescriptions in violation of 31 U.S.C. § 3729(a)(1)(A). The complaint further alleges that, as part of these fraudulent schemes, defendants violated the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b); caused the use or creation of false records material to false claims, 31 U.S.C. § 3729(a)(1)(B); failed to reimburse the United States for overpayments, id. § 3729(a)(1)(G); conspired to violate the FCA, id. § 3729(a)(1)(C); and that BMS retaliated against Ibanez and Edwards for internally reporting the company's alleged failure to comply with federal and state laws and the Corporate Integrity Agreements, id. § 3730(h).

In response to relators' second amended complaint, defendants filed motions to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). The district court granted Otsuka's motion to dismiss, and granted in part and denied in part BMS's motion, dismissing all of the qui tam claims. As a result, the only claims that survived were the retaliation claims brought against BMS and Edwards' Arizona-employment claim analogue. The court declined to exercise supplemental jurisdiction over the remaining state law claims. Proceedings continued in the district court on the retaliation claims.

However, relators moved to file a third amended complaint under Fed.R.Civ.P. 15(a)(2), and attached the proposed complaint. The district court directed the parties to address changes made in the complaint that it saw as potentially implicating the FCA's public-disclosure bar. Following responsive filings, the court found the public-disclosure bar precluded many of the amendments and that the amended complaint otherwise failed to plead presentment with adequate particularity to survive a Rule 12(b)(6) motion. Accordingly, the court denied relators' motion to file a third amended complaint on the basis of futility. The court subsequently granted a Rule 54(b) motion staying litigation on the retaliation claims and granting final judgment certification on both the order resolving the partial motion to dismiss and the order denying the motion to amend. Relators now timely appeal those certified orders.

II

A. Jurisdiction

The district court had jurisdiction over claims arising under the False Claims Act claims pursuant to 31 U.S.C. § 3732(a). The district court certified its order partially granting defendants' Rule 12(b)(6) motion and its order denying relators' Rule 15(a)(2) motion under Fed.R.Civ.P. 54(b). " Although Rule 54(b) relaxes the traditional finality requirement for appellate review, it does not tolerate immediate appeal of every action taken by a district court." Gen. Acquisition, Inc. v. GenCorp, Inc., 23 F.3d 1022, 1026 (6th Cir. 1994). Neither party challenges this court's jurisdiction to hear the certified orders on appeal. Nonetheless, we must still satisfy ourselves that the certification was proper. Otherwise, appellate jurisdiction is lacking. Lowery v. Fed. Express Corp., 426 F.3d 817, 820 (6th Cir. 2005).

The district court's determination that certification was proper has two components. First, entry of final judgment as to one or more but fewer than all of the claims or parties; and second, that there is no just reason for delay. The first component is reviewed de novo and the second for abuse of discretion. Id. at 821.

The district court's orders collectively ended the litigation of relators' qui tam claims against...

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