United States ex rel. Wilson v. Bristol-Myers Squibb, Inc.

• Decision Date: 30 April 2014
• Docket Number: No. 13–1948.,13–1948.
• Citation: 750 F.3d 111
• Parties: UNITED STATES ex rel. Michael A. WILSON, Relator, Appellant, v. BRISTOL–MYERS SQUIBB, INC.; Sanofi–Aventis U.S. LLC, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

750 F.3d 111

UNITED STATES ex rel. Michael A. WILSON, Relator, Appellant,

v.BRISTOL–MYERS SQUIBB, INC.; Sanofi–Aventis U.S. LLC, Defendants, Appellees.

No. 13–1948.

United States Court of Appeals,First Circuit.

April 30, 2014.

Alastair J.M. Findeis, with whom Milberg LLP and David Pastor and Pastor Law Office, LLP were on brief, for appellant.

Catherine E. Stetson, with whom Jessica L. Ellsworth, Mitchell J. Lazris, Mary Helen Wimberly, Hogan Lovells U.S. LLP, Robert Keefe, and WilmerHale were on brief, for appellee Bristol–Myers Squibb, Co.

Robert J. McCully, with whom Elizabeth C. Burke and Shook, Hardy & Bacon LLP were on brief, for appellee Sanofi–Aventis U.S. LLP.

Before LYNCH, Chief Judge, TORRUELLA and HOWARD, Circuit Judges.

LYNCH, Chief Judge.

This appeal primarily involves the scope of the first-to-file rule of the federal False Claims Act (“FCA”), 31 U.S.C. § 3730(b)(5), and the application of the “essential facts” test to determine whether a later-filed complaint is barred by earlier-filed complaints under this provision. See United States ex rel. Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13, 32–33 (1st Cir.2009).

Relator Michael A. Wilson, a former Bristol–Myers Squibb, Co. (“BMS”) sales representative, alleged that BMS and SanofiAventis U.S., LLC (“Sanofi”) unlawfully promoted Plavix for off-label uses, that BMS also unlawfully promoted Pravachol and Monopril, and that both companies “knowingly” caused the submission of false claims to the government in violation of the FCA. See United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 380 (1st Cir.2011). After the government (and Wilson) benefitted from the settlement of certain claims Wilson brought in his original complaint against BMS, the government declined to intervene in the litigation of the remaining claims. The district court dismissed the remaining FCA claims as expressed in a Second Amended Complaint because they ran afoul of the first-to-file rule.

Wilson now appeals from the dismissal, as well as from the denial of his motion to file a Third Amended Complaint and from denial of his follow-up motion to reconsider. We affirm.

I.

A. Background and First Amended Complaint

Wilson's employment at BMS was terminated in September 2004. In September 2006, he filed his original FCA complaint in the Central District of California under seal, to allow the United States time to review the complaint and to decide whether to intervene in the action, 31 U.S.C. § 3730(b)(2). He filed an amended complaint (“First Amended Complaint” or “FAC”) in October 2006, which alleged, inter alia,¹ that BMS violated the federal criminal Anti–Kickback Statute, 42 U.S.C. § 1320a–7b(b)(2)(B), and engaged in off-label promotion of Monopril, Plavix, and Pravachol, and that these actions caused false claims to be submitted to the government in violation of the FCA. Physicians may prescribe Plavix, Pravachol, and Monopril for non-FDA-approved indications, but the Food, Drug and Cosmetic Act, 21 U.S.C. § 321 et seq., prohibits companies from marketing medications for such “off-label” uses,² and Medicaid generally does not reimburse patients for off-label prescriptions. See42 U.S.C. § 1396r–8(k)(3), (k)(6); United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720, 723 (1st Cir.2007), overruled in part by Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662, 128 S.Ct. 2123, 170 L.Ed.2d 1030 (2008).

In December 2006, while the government's investigation was ongoing and the FAC was still under seal, the case was transferred to the District of Massachusetts.

On September 28, 2007, Wilson entered into a partial settlement agreement with BMS that concluded part of the case. Under the agreement, Wilson voluntarily dismissed with prejudice all federal FCA claims against BMS “ except for claims relating to off-label promotion, retaliation, and wrongful termination to the extent they are alleged in Paragraphs 3–6, 9–60, 161–174, 176–178, 180, and 190–191 of the [FAC].” In the settlement, BMS denied any liability or wrongdoing related to Wilson's allegations, but agreed to execute an agreement with the United States, under which BMS would pay the government $317,436,081, plus 4.5% per year interest from January 1, 2007 until the settlement amount was paid in full. Wilson received a portion of that sum.

On October 22, 2008, the government declined to intervene in what remained of the case.

B. Second Amended Complaint

On April 9, 2009, Wilson filed his Second Amended Complaint (“SAC”), also under seal. The SAC expanded upon Wilson's earlier (not settled) allegations against BMS, and added Sanofi as a defendant for the first time. The SAC alleged that BMS engaged in schemes to promote Plavix, Pravachol, and Monopril for certain off-label uses, and that Sanofi participated in those schemes that related to the promotion of Plavix only. It is the dismissal of this complaint which is primarily at issue.

More specifically, the SAC alleged that (1) BMS promoted Pravachol, a drug the FDA had approved for lowering cholesterol, for off-label uses related to diabetes or insulin resistance syndrome; (2) BMS and Sanofi promoted Plavix, a drug the FDA had approved for lowering the risk of stroke and heart attack for patients with atherosclerosis or acute coronary syndrome, for off-label use by diabetic patients to prevent peripheral arterial disease (“PAD”); and (3) BMS engaged in the off-label promotion of Monopril, which the FDA approved to treat hypertension.

As to the mechanisms of the off-label promotions, Wilson alleged that BMS used the following schemes to promote Plavix and Pravachol: (1) sponsoring and promoting off-label research for these drugs; (2) training its sales force to promote off-label prescriptions, including using altered “fax back” requests; ³ and (3) promoting off-label uses in continuing medical education programs. He alleged that Sanofi used the same methods to promote off-label use of Plavix. Finally, Wilson alleged that BMS trained its representatives to promote off-label prescriptions of Monopril.

In August 2009, the court granted a motion to unseal the case. At this point, the parties agreed, with court approval, that because Wilson intended to amend his complaint again, BMS and Sanofi did not need to answer it until the court determined which complaint would govern.

C. Denial of Leave to File Third Amended Complaint

On June 24, 2010, Wilson filed a Motion for Leave to Amend and File a Third Amended Complaint, and attached his Proposed Third Amended Complaint (“TAC”) to the motion. The TAC sought to add a second relator, Lucius O. Allen, Jr., also a former BMS employee, and to substantially expand the allegations in the SAC. The court (Gertner, J.) denied Wilson's motion on June 16, 2011, reasoning in a thoughtful opinion that the TAC did not meet the requirements for amendment of Fed.R.Civ.P. 15, and further, that the substance of the TAC did not, in any event, meet the requirements of the FCA. As to Rule 15, the district court noted that the SAC came almost three years after the original complaint, with the TAC following almost a year after the SAC, and found that Wilson “ha[d] not adequately explained” either set of delays.

The district court relied more heavily on its FCA inadequacy holding. It found that to the extent Allen's allegations replicated claims that Wilson made in the SAC, the TAC violated the “first-to-file” rule, 31 U.S.C. § 3730(b)(5), or the “public disclosure” bar, id. § 3730(e)(4)(B), of the FCA. By contrast, to the extent that the TAC added substantively new allegations not previously disclosed to the government (regardless of which relator provided the information), the district court held that those allegations violated the qui tam filing and service requirements, id. § 3730(b)(2).⁴

D. Denial of Motion to Reconsider

In anticipation of Judge Gertner's retirement, the case was reassigned to Judge Wolf on June 21, 2011. Wilson filed a Motion for Reconsideration of the denial of his motion to file the TAC. This motion disputed the Rule 15 ruling, but did not dispute the earlier ruling that new allegations based on Allen's knowledge could not be added to the TAC. Instead, Wilson requested that the court allow the SAC to be amended by “adding certain paragraphs” from the Proposed TAC that were, Wilson represented, based on his own knowledge and investigation.⁵

The court denied the motion on March 7, 2012, finding that this was not one of the “limited number of circumstances,” United States v. Allen, 573 F.3d 42, 53 (1st Cir.2009), in which reconsideration was warranted. The district court ordered both BMS and Sanofi to respond to the SAC.

E. Motion to Dismiss the FCA Claims in the SAC

BMS and Sanofi moved to dismiss the FCA counts in the SAC. At a hearing on February 7, 2013, the district court granted the motions as to Wilson's federal FCA claims. The court dismissed the FCA claims relating to Plavix and Pravachol for lack of subject matter jurisdiction, Fed.R.Civ.P. 12(b)(1), because they violated the FCA's first-to-file rule, see31 U.S.C. § 3730(b)(5). It dismissed the Monopril allegations for failure to plead fraud with particularity. Fed.R.Civ.P. 9(b). Wilson does not appeal the district court's dismissalof the FCA claims related to Monopril.

The court's dismissal on first-to-file grounds was based on two complaints that were filed before Wilson filed his original complaint in September 2006. On May 4, 2006, Daniel C. Richardson, a Senior District Business Manager for BMS, had filed a complaint under seal in the District Court for the District of Columbia. The Richardson Complaint alleged that BMS and Sanofi engaged in broad, nationwide schemes to promote and prescribe Plavix and Pravachol for off-label uses. His allegations extended from “1999 through at least 2003, and probably thereafter.”

More specifically, the Richardson Complaint alleged that BMS and Sanofi promoted Plavix for off-label...