The USA. v. Amgen Inc
| Decision Date | 23 April 2010 |
| Docket Number | Civil Action No. 06-10972-WGY. |
| Citation | 707 F.Supp.2d 123 |
| Parties | The UNITED STATES of America; and The States of California, Georgia, Hawaii, Illinois, Indiana, Michigan, New Mexico, New York, and Tennessee; and The Commonwealths of Massachusetts and Virginia; and The District of Columbia; ex. rel. Kassie WESTMORELAND, Plaintiffs,v.AMGEN, INC.; International Nephrology Network renamed Integrated Nephrology Network, a d/b/a of Dialysis Purchasing Alliance, Inc.; AmerisourceBergen Specialty Group; ASD Healthcare; and Amerisourcebergen Corporation, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
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Ann Burke, Ackil Massachusetts Attorney, Boston, MA, for Commonwealth of Massachusetts.
Nathan J. Andrisani, Morgan Lewis, Meredith S. Auten, Eric W. Sitarchuk, Morgan Lewis & Bockius LLP, James M. Becker, Buchanan Ingersoll & Rooney Peter E. Ball, Ryan M. Cunningham, Sally & Fitch LLP, Boston, MA, David J. Kessler, Drinker Biddle & Reath LLP, Thomas J. Sullivan, Morgan, Lewis & Bockius, Philadelphia, PA, for ASD Healthcare, AmerisourceBergen Corporation, AmerisourceBergen Specialty Group, International Nephrology Network, Integrated Nephrology Network.
Jeffrey Baltruzak, Jocelyn D. Francoeur, Holland M. Tahvonen, McDermott Will & Emery, LLP, Chicago, IL, Steven F. Barley, Hogan & Hartson, LLP, Lauren S. Colton, Hogan & Hartson, Daniel A. Curto, Michael Kendall, Lauren M. Papenhausen, McDermott, Will & Emery LLP, Kirsten V. Mayer, Brien T. O'Connor, Ropes & Gray One International Place, Boston, MA, William L. Webber, Howrey Simon Arnold & White, LLP, Washington, DC, Douglas E. Whitney, Morris, Nichols, Arsht, & Tunnell, Wilmington, DE, Joseph H. Young, Hogan & Hartson, LLP, Baltimore, MD, for Amgen Inc.
George S. Bell, III, Tennessee Attorney General's, North Nashville, TN, Peter M. Coughlan, Tennessee Attorney, Nashville, TN, for State of Tennessee.
Bryan A. Carey Kellogg, Huber, Hansen, Todd Evans & Figel, PLLC, Jessica S. Champa, United States Department of Justice, Joseph S. Hall, Mark C. Hansen, Derek Tam Ho, Jamil N. Jaffer, Silvija A. Strikis, Marc A. Wallenstein, Kellogg, Huber, Hansen, Todd Evans & Figel, PLLC, Washington, DC, Lawrence M. Isenberg, Charles F. Kester, Kester & Isenberg, Encino, CA, Shannon Kelley, United States Attorneys Office, Damian W. Wilmot, U.S. Attorney's Office, Boston, MA, for United States of America.
Joseph B. Chervin, Illinois Attorney General's Office, Chicago, IL, for State of Illinois.
Royston H. Delaney, Robert M. Thomas, Jr., Thomas & Associates, Boston, MA, Suzanne E. Durrell, Milton, MA, for United States of America, Commonwealth of Massachusetts, Commonwealth of Virginia, State of Hawaii, State of Illinois, State of Indiana, State of Michigan, State of New Mexico, State of Tennessee.
Jane Drummey, North Washington, DC, for District of Columbia.
Carolyn T. Ellis, Margot P. Schoenborn, New York State Attorney, New York, NY, for State of New York.
Jessica L. Harlan, Indiana Attorney General's Office, Indianapolis, IN, for State of Indiana.
Mark Matus, Michigan Department of Attorney General, Lansing, MI, for State of Michigan.
Michael L. Parrish, Dawn S. Shigezawa, Office of the Attorney General, Honolulu, HI, for State of Hawaii.
Eliseo Z. Sisneros, California Department of Justice, San Diego, CA, for State of California.
The Plaintiffs, Relator Kassie Westmoreland (“Relator”) and several States, bring this action against the Defendants, Amgen, Inc. (“Amgen”) and a group of affiliated enterprises including International Nephrology Network (“INN”); AmerisourceBergen Specialty Group (“ABSG”); ASD Healthcare (“ASD”); and AmerisourceBergen Corporation (“ABC”) (collectively, the “ABC Defendants”), alleging that the Defendants violated federal and state False Claims Acts. The Defendants move to dismiss Relator's and the States' complaints.
Relator filed the original qui tam action in June 2006, and subsequently filed her Third Amended Complaint (“Relator's Complaint”) in December 2009, bringing claims on behalf of herself, the United States, Georgia, and New Mexico. In September 2009, the United States filed a Notice of Non-Intervention At This Time. Fifteen States and the District of Columbia (collectively, the “States”), filed a separate complaint in intervention in October 2009, and filed a First Amended Complaint in December 2009 (“States' Complaint”). Since then, several states have voluntarily dismissed their claims, including Delaware, Florida, Louisiana, Nevada, New Hampshire, and Texas.
In February 2010, the Court granted Amgen's motion to stay and sever Counts VII and VIII of Relator's Complaint. The Defendants also moved to dismiss Counts I-VI of Relator's Complaint and the States' Complaint. At oral argument on March 11, 2010, the Court dismissed the States' Complaint and made other tentative rulings. Afterwards, the Defendants submitted a Motion for Clarification and Reconsideration Regarding the Court's March 11, 2010 Ruling, asking the Court to consider dismissing Counts I and II of Relator's Complaint. In response, the Plaintiffs filed an Opposition and the United States filed a Statement of Interest. The Defendants also filed a Motion for Clarification With Respect to Count II of Relator's Complaint, to which Relator filed an Opposition.
The Plaintiffs allege that the Defendants violated state and federal False Claims Acts by causing providers to present false Medicare and Medicaid claims to the government and by conspiring to get false claims paid by the government. The Plaintiffs' complaints each contains parallel allegations, and each complaint incorporates the other by reference.
First, the Plaintiffs claim that the Defendants used various types of kickbacks to induce providers to purchase Aranesp, a drug manufactured by Amgen intended for treatment of anemia associated with chronic kidney disease and chemotherapy. One such kickback took the form of “excess overfill,” i.e., dosages of liquid Aranesp that Amgen included in its single-dose vials, which were in excess of the amount necessary to withdraw the labeled dosage or the amount recommended by the United States Pharmacoepia (“USP”). This excess overfill was akin to a built-in free sample for which the Defendants encouraged providers all over the country to bill, even when the extra Aranesp was either never administered or was administered in medically unnecessary cases. The free overfill created the potential for providers to profit from excess reimbursement and constituted an illegal kickback.
The Plaintiffs also allege that the Defendants gave kickbacks to providers in the form of sham consulting agreements, all-expense paid retreats, free services, and price concessions. Amgen funded these kickbacks by paying monies to INN, disguised as Group Purchasing Organization (“GPO”) administrative fees. INN and ASD would then pass such monies to providers as various forms of kickbacks. The Defendants' provision of all such kickbacks caused providers falsely to certify that they were in compliance with federal and state anti-kickback statutes when seeking reimbursement, and caused federal and state governments to pay claims they otherwise would not have paid.
Second, the Plaintiffs claim that Amgen reported an inflated Average Sales Price (“ASP”) for Aranesp to the Medicare and Medicaid programs. The federal and state governments base the reimbursement rate for a particular drug on a pharmaceutical company's reported ASP. Although companies are not required to discount bona fide fees (such as GPO administrative fees) in their ASP calculation, they are required to discount price concessions given to customers. The fees Amgen paid to INN and ASD did not constitute bona fide fees and should have been discounted from Aranesp's ASP because they were passed through to providers as price concessions. Amgen failed to discount the price concessions, thereby causing federal and state governments to overpay for Aranesp claims.
Third, the Plaintiffs claim that the Defendants conspired to violate federal and state False Claims Acts by agreeing to engage in the above fraudulent conduct with an intent to cause false claims to be presented to the government.
Finally, several of the States bring state claims against the Defendants, including common law fraud and unjust enrichment.
The Defendants move to dismiss the Plaintiffs' complaints, arguing that the first-to-file rule bars Relator's claims and that the Plaintiffs fail to state a claim upon which relief may be granted. For the reasons discussed infra, the Defendants' motions to dismiss both complaints are allowed.1
The federal False Claims Act (the “Act”), 31 U.S.C. §§ 3729 et. seq., prohibits false or fraudulent claims for payment to the federal government and permits civil actions based on such claims to be brought by the Attorney General or by private individuals, called “relators,” acting in the government's name, 31 U.S.C. § 3730(a)-(c). Where the government elects not to intervene, the so-called qui tam plaintiff may proceed with the action as the government's assignee. Under the Act, liability attaches to a “false or fraudulent claim for payment,” a “false record or statement [made] to get a false or fraudulent claim paid,” or a “conspir[acy] to defraud the Government by getting a false or fraudulent claim ... paid.” 31 U.S.C. § 3729(a)(1)-(a)(3)(2008) amended by 31 U.S.C. § 3729(a)(2009).
As an initial matter, the Defendants claim that the Court lacks subject matter jurisdiction over Counts I and II of Relator's Complaint because her federal claims are barred by the first-to-file rule.
“The threshold question in a False Claims Act case is whether the statute bars jurisdiction.” United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720, 727 (1st...
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