Jordan v. State, A15A1733.

• Citation: 336 Ga.App. 345,785 S.E.2d 27
• Decision Date: 23 March 2016
• Docket Number: No. A15A1733.,A15A1733.
• Parties: JORDAN et al. v. STATE of Georgia.
• Court: Georgia Court of Appeals

336 Ga.App. 345

785 S.E.2d 27

JORDAN et al.

v.STATE of Georgia.

No. A15A1733.

Court of Appeals of Georgia.

March 23, 2016.

Harris Penn Lowry, Jeffrey R. Harris, Darren W. Penn, Stephen G. Lowry, Yvonne S. Godfrey, Jed D. Manton, Franklin Law, James B. Franklin, Clark, Oxendine & Sauls, Michael C. Clark, for appellants.

Samuel S. Olens, Atty. Gen., Nancy B. Allstrom, Sr. Asst. Atty. Gen., Sara E. Vann, Kevin D. Bradberry, Asst. Attys. Gen., for appellee.

BARNES

, Presiding Judge.

Eight individuals brought suit on behalf of the State of Georgia against three related pharmaceutical companies under the Georgia False Medicaid Claims Act (GFMCA), OCGA § 49–4–168 et seq.¹

The plaintiffs alleged that the companies fraudulently obtained millions of dollars in Medicaid payments for an anti-psychotic medication that the companies improperly marketed to healthcare providers for “off-label” uses, such as to calm elderly patients with dementia and help them sleep.

The State moved to dismiss the complaint based on an earlier-filed federal False Claims Act, 31 USC § 3729 et seq.,

suit against the same pharmaceutical companies for similar claims. The State became a plaintiff in the federal suit before this case was filed, and entered into a settlement agreement with the pharmaceutical companies after this case was filed. The trial court granted the State's motion to dismiss, and the plaintiffs have appealed.² For the reasons that follow, we affirm.

In 2007, the legislature enacted the GFMCA and created a procedure by which Georgia's Attorney General or its private citizens could sue people and entities for making false or fraudulent Medicaid claims that depleted the state treasury. OCGA § 49–4–168.2(a)

, (b). The Act provides for penalties and damages to be assessed against the defendants, and was designed to reward individuals “when their initiative results in civil recoveries for this state.” Ga. L. 2007, p. 355, § 2/HB 551. See Michael A. Sullivan, A “False Claims Act” Is Finally Enacted in Georgia, Ga, Bar J., October 2007 at 12. Private citizens must file the action under seal in the name of the State, and must first serve a copy of the complaint and any material supporting evidence on the Attorney General. OCGA § 49–4–168.2(c)(1), (2). The case remains under seal for at least 60 days “to allow the Attorney General to investigate the allegations of the complaint” and either elect to intervene or move the court to extend the time under which the complaint remains sealed. OCGA § 49–4–168.2(c)(2), (3). Before the expiration of the time during which the case is sealed, the statute directs that the Attorney General shall either proceed with the action and prosecute the case or decline to take over the action; if the latter, the private citizens have the right to proceed with the action on their own. OCGA § 49–4–168.2(c)(4)

. The trial court may then unseal the complaint and the defendant may be served. OCGA § 49–4–168.2(c)(2), (5).

If the Attorney General elects to intervene, he may seek to limit the participation of the individuals who initiated the action, may move to dismiss the complaint, or may settle the complaint over the individual objections if the court determines the settlement would be fair, adequate, and reasonable under all the circumstances. OCGA § 49–4–168.2(d)(1)–(3)

. Even if the Attorney General initially elects not to intervene, he retains the right to intervene “at a later date for any purpose, including, but not limited to, dismissal of the civil action notwithstanding the objections of the person initiating the civil action,” as long as the person has been notified by the Attorney General that a motion to dismiss has been filed and is given an opportunity for a hearing on the motion. OCGA § 49–4–168.2(f).

Additionally, the GFMCA has a “first to file” provision, specifying that “[w]hen a person brings a civil action under this subsection, no person other than the Attorney General may intervene or bring a related civil action based on the facts underlying the pending civil action.” OCGA § 49–4–168.2(c)(6)

. The Act also provides that “[i]n no event may a person bring a civil action under this article which is based upon allegations or transactions which are the subject of a civil or administrative proceeding to which the State of Georgia is already party.” OCGA § 49–4–168.2(j).

The complaint and exhibits in this case were filed on March 20, 2013. The exhibits included affidavits from the individual plaintiffs, six of whom are healthcare workers who were or had been employed at Pleasant View Nursing Home and two of whom were sales representatives for the defendants. On March 26, 2013, the plaintiffs filed with the trial court a copy of the disclosure statement given to the Attorney General, which included the complaint, exhibits, and a detailed summary of the evidence supporting their claim. The plaintiffs contended that the defendant pharmaceutical companies had caused false claims to be submitted to the State Medicaid program “as a direct result of their false and misleading marketing of the prescription drug Risperdal

regarding its efficacy and safety profile, as well as their promotion of Risperdal for ‘off-label’ uses not approved by the U.S. Food and Drug Administration.”

On May 21, 2013, the State requested a four-month extension of the time during which it could elect to intervene, and asked the trial court to partially lift the seal to disclose the complaint to other state attorneys general who were members of the National Medicaid Fraud Control Units and to the U.S. Department of Justice (DOJ). The plaintiffs consented to the extension and partial lifting of the seal.

The State submitted an in camera memo supporting its request for an extension and to partially lift the seal, explaining that both the Fraud Control Units and the DOJ had teams assigned to multiple federal cases involving the same allegations of fraud against the same defendants, and that the State of Georgia was a named plaintiff in those federal cases. The State sought to share the complaint so it would be able to “evaluate the allegations with the government entities that have already invested substantial resources into investigation of the same claims,” and thus make an informed decision about whether to intervene in this action. The trial court granted the extension and partially lifted the stay as requested.

The next pleading in the record is the State's motion to dismiss the complaint with prejudice, filed on March 19, 2014. The State argued that this action is jurisdictionally barred by the GFMCA because a federal lawsuit with identical claims was filed almost ten years earlier, and because the State had already settled those claims, precluding the trial court from obtaining jurisdiction to consider these claims. Included with the motion was a copy of the fourth amended federal complaint filed by Victoria Starr against these defendants on March 3, 2010, alleging complaints that mirror those alleged in the case at bar.³ The State of Georgia was a named plaintiff in the amended federal complaint, which contained detailed factual allegations about the defendants' illegal kickbacks and fraudulent promotion of Risperdal

for use in “elderly patients, children and prisoners ... [who] suffer from a wide spectrum of psychiatric mood disorders not normally considered by the FDA to be appropriate for treatment with the highly sedating drug Risperdal.” Count 5 of the federal complaint alleged that the defendants violated the GFMCA. The federal complaint was dismissed on December 31, 2013, with an order that also unsealed itself, the amended complaint, and the parties' joint stipulation of dismissal.

The State also submitted as an exhibit to its motion to dismiss this case a copy of the settlement agreement between the State and the pharmaceutical companies, which acknowledged the State's claims against the companies for their conduct in marketing Risperdal

for off-label use and paying illegal remuneration to healthcare and pharmacy providers to induce them to promote and prescribe the drug. The agreement provided that Janssen Pharmaceuticals, Inc., would plead guilty to a federal criminal charge of introducing misbranded drugs into interstate commerce and that the defendants, while admitting no further wrongdoing, would pay to the United States and participating States a total of $1,273,024,000 plus interest accrued until the money was disbursed. Participating States, that is, those that signed the agreement and agreed to dismiss with prejudice any similar pending state law claims they had the authority to dismiss, were each allocated $33,435,877 plus interest, with $13,285,638 payable directly to the States and the difference payable to the federal government. The settlement agreement was signed by a representative of Georgia's Attorney General on September 3, 2013.

The plaintiffs objected to the State's motion to dismiss, arguing that the State failed to file notice of its intention to intervene or not in this case before the expiration of the extension of time granted by the trial court. They also argued that their case was the first filed because the unsealed federal documents do not show that the federal plaintiffs had served the State with a copy of the complaint and all material supporting information as required by OCGA § 49–4–168.2(c)(1)

, or that the State investigated the Starr complaint and elected to intervene within the time frame set out in the Act at OCGA § 49–4–168.2(c)(2)–(4). Finally, they argued that the Starr complaint failed to state the Georgia claim with the specificity required by the Act.

Following a hearing in May 2014, the trial court granted the State's motion to dismiss in July 2014, finding that the State had settled the Starr case in November 2013. As a condition for recovery, the State agreed to release with prejudice claims that the defendants

knowingly ... (a) promoted the sale and use of Risperdal

for conditions...