US v. Purdue Pharma LP

• Decision Date: 24 March 2010
• Docket Number: No. 09-1202,09-1244.,09-1202
• Citation: 600 F.3d 319
• Parties: UNITED STATES of America, State of Delaware, Commonwealth of Virginia, State of California, State of Hawaii, State of Nevada, State of Tennessee, State of Illinois, State of New Hampshire, District of Columbia, State of Florida, State of Massachusetts, State of Texas, State of Louisiana Ex Rel. Mark Radcliffe, Plaintiff-Appellant, v. PURDUE PHARMA L.P.; Purdue Pharma, Incorporated, Defendants-Appellees. United States of America, Amicus Curiae. United States of America, State of Delaware, Commonwealth of Virginia, State of California, State of Hawaii, State of Nevada, State of Tennessee, State of Illinois, State of New Hampshire, District of Columbia, State of Florida, State of Massachusetts, State of Texas, State of Louisiana Ex Rel. Mark Radcliffe, Plaintiff-Appellee, v. Purdue Pharma L.P.; Purdue Pharma, Incorporated, Defendants-Appellants. United States of America, Amicus Curiae.
• Court: U.S. Court of Appeals — Fourth Circuit

600 F.3d 319

UNITED STATES of America, State of Delaware, Commonwealth of Virginia, State of California, State of Hawaii, State of Nevada, State of Tennessee, State of Illinois, State of New Hampshire, District of Columbia, State of Florida, State of Massachusetts, State of Texas, State of Louisiana Ex Rel. Mark Radcliffe, Plaintiff-Appellant, v. PURDUE PHARMA L.P.; Purdue Pharma, Incorporated, Defendants-Appellees.

United States of America, Amicus Curiae.

United States of America, State of Delaware, Commonwealth of Virginia, State of California, State of Hawaii, State of Nevada, State of Tennessee, State of Illinois, State of New Hampshire, District of Columbia, State of Florida, State of Massachusetts, State of Texas, State of Louisiana Ex Rel. Mark Radcliffe, Plaintiff-Appellee, v. Purdue Pharma L.P.; Purdue Pharma, Incorporated, Defendants-Appellants.

United States of America, Amicus Curiae.

Nos. 09-1202, 09-1244.

United States Court of Appeals, Fourth Circuit.

Argued: January 27, 2010.

Decided: March 24, 2010.

ARGUED: Mark Tucker Hurt, Abingdon, Virginia, for Appellant/Cross-Appellee. Jennifer O'Connor, Wilmerhale, Washington, D.C., for Appellees/Cross-Appellants. Henry Charles Whitaker, United States Department of Justice, Washington, D.C., for Amicus Curiae. ON BRIEF: Paul Wakefield Roop, II, Roop Law Office, LC, Beckley, West Virginia, for Appellant/Cross-Appellee. Howard M. Shapiro, Kimberly A. Parker, Christopher E. Babbitt, Robert A. Mays, Wilmerhale, Washington, D.C., for Appellees/Cross-Appellants. Tony West, Assistant Attorney General, Beth S. Brinkmann, Deputy Assistant Attorney General, Michael S. Raab, Civil Division, United States Department of Justice, Washington, D.C., for Amicus Curiae.

Before TRAXLER, Chief Judge, AGEE, Circuit Judge, and Catherine C. BLAKE, United States District Judge for the District of Maryland, sitting by designation.

Affirmed by published opinion. Judge AGEE wrote the opinion, in which Chief Judge TRAXLER and Judge BLAKE joined.

OPINION

AGEE, Circuit Judge:

The plaintiff-relator, Mark Radcliffe ("Radcliffe"), filed a qui tam suit in the United States District Court for the Western District of Virginia alleging that his former employer, Purdue Pharma, L.P. ("Purdue"), defrauded the government by marketing its pain-relief drug, OxyContin, as a cheaper alternative to the drug it replaced, MS Contin, which was also manufactured by Purdue. Radcliffe alleged that Purdue, through its sales agents and marketing materials, falsely claimed to physicians that OxyContin was less expensive than its predecessor, MS Contin, because the "2:1 equianalgesic ratio between OxyContin and MS Contin ... made OxyContin twice as potent and, as a result, cheaper per dose than MS Contin." J.A. 438. Radcliffe's suit alleged violations of the federal False Claims Act, 31 U.S.C. §§ 3729-3733 ("FCA"), as well as violations under various analogous state statutes.¹

While the complaint was under seal pursuant to the procedures outlined in the FCA, Radcliffe filed three separate amended complaints before serving the Third Amended Complaint on Purdue. Purdue then moved to dismiss on three grounds: (1) bar and release, (2) the public disclosure bar, and (3) the failure to satisfy Federal Rule of Civil Procedure 9(b), which requires that allegations of fraud be pled with particularity. The district court allowed limited discovery on the bar and release issue but subsequently ruled that a release Radcliffe gave Purdue was ineffective as a ground upon which to grant Purdue's motion to dismiss. The district court did, however, grant the motion to dismiss based on Radcliffe's failure to satisfy the pleading requirements of Rule 9(b). Radcliffe was given 30 days to amend his Complaint and he timely filed a Fourth Amended Complaint. Purdue again moved to dismiss and the district court again granted the motion for failure to satisfy the strict pleading requirements of Rule 9(b). The district court also dismissed the state law claims for failing to plead fraud with particularity and denied Radcliffe leave to file a Fifth Amended Complaint.

Radcliffe now appeals the district court's grant of the motion to dismiss and the denial of leave to amend. Purdue cross-appeals, asserting that the district court erred in refusing to enforce the "Agreement and General Release" Radcliffe signed on August 1, 2005 ("the Release"), prior to filing the qui tam suit. For the reasons that follow, we agree with Purdue that the district court erred in refusing to enforce the Release.²

I. Background and Proceedings Below

A. Radcliffe's Communications with Purdue and the Government

The district court determined that between 1996 and 2005 Radcliffe, on behalf of Purdue, marketed "OxyContin to individual physicians and became familiar with Purdue's marketing claims about OxyContin's relative cost and potency, including the claim that there is a 2:1 equianalgesic ratio between OxyContin and MS Contin." United States ex rel. Radcliffe v. Purdue Pharma L.P., 582 F.Supp.2d 766, 774 (W.D.Va.2008). During this period, Radcliffe was employed by Purdue as a district sales manager, directly marketing Purdue products like OxyContin to physicians. The district court found that some physicians were skeptical of the claimed 2:1 ratio, but Radcliffe's supervisor reassured Radcliffe that it was correct. Id. Despite these assurances, Radcliffe sought independent legal advice in 2004 about the OxyContin claims. Id.

In January 2005, using the alias "John Femaledeer," Radcliffe sent an email to a Purdue director and to Purdue's General Counsel offering to settle a "`whistleblower' suit against Purdue for fraud based on `deceptive pharmacology'". In a subsequent email "John Femaledeer" (Radcliffe) sought to "settle" his qui tam claims with Purdue if the company would invest $40 million in his business startup project. Purdue rejected the offer.

Around that same time Radcliffe anonymously contacted an Assistant United States Attorney for the Western District of Virginia to determine whether there was any interest in a claim against Purdue, but did not reveal the particulars of his claims during those discussions. Radcliffe, 582 F.Supp.2d at 774. The district court determined it was "undisputed that Radcliffe did not disclose the nature of his qui tam allegations to the government prior to the filing of his Complaint" on September 27, 2005. Id. at 775.³

B. The Government's Investigation of Purdue

The government had been investigating Purdue prior to the filing of Radcliffe's suit. According to a declaration executed by an Assistant United States Attorney, "one area of investigation concerned whether Purdue falsely marketed OxyContin as being twice as potent as morphine and, accordingly, less expensive than MSContin." Id. at 775. In the same declaration, the Assistant United States Attorney stated that "the 2:1 comparison of OxyContin to MSContin sicwas one of the areas under investigation." Id. "Beginning in 2002 and continuing for the next several years, the government sought millions of documents from Purdue and conducted hundreds of interviews, some of which pertained to the relative potency and cost of OxyContin and MS Contin." Id.

On June 24, 2005, an attorney representing several Purdue employees spoke with a lawyer from the Department of Justice regarding topics to be discussed during those employees' grand jury testimony. Id. The Justice Department attorney indicated that she intended to (and subsequently did) ask the employees "about the dispute over the relative potency of OxyContin and MS Contin, among other topics, explaining that this related to the marketing and cost implications of the relative potencies." Id. Around that same time, the government began drafting a subpoena that "included requests for all documents discussing relative analgesic potency or safety of OxyContin and MS Contin." Id. Other documents under seal also reflect that prior to the filing of Radcliffe's suit, the government had made an additional request for the identity of "the author and source of different versions of a document... already in the government's possession" that questioned the 2:1 ratio between MS Contin and OxyContin. Radcliffe, 582 F.Supp.2d at 775.

The government's investigation of Purdue's marketing claims continued after Radcliffe's execution of the Release. Indeed, on August 2, 2005, the day after Radcliffe signed the Release, the government subpoenaed Radcliffe to testify before the grand jury. Id. at 776. In September 2005, the Department of Justice provided Purdue's counsel with electronic search terms designed to identify documents pertaining to the potency/cost issue. Id. Radcliffe filed his qui tam suit on September 27, 2005.⁴

On May 7, 2007, the government filed a notice that it would not intervene in the qui tam suit filed by Radcliffe. Two days later,

the government filed a criminal information against a related Purdue entity and several Purdue executives, along with executed plea agreements for all the criminal defendants. Although the criminal charges did relate to the misbranding of OxyContin, these charges focused on Purdue's marketing of OxyContin as "less addictive, less subject to abuse and diversion, and less likely to cause tolerance and withdrawal than other pain medications."

Id. (quoting Information ¶ 20, United States v. Purdue Frederick Co., No 1:07-CR-00029 (W.D.Va.)). The misbranding charges did not pertain to the 2:1 ratio and although the plea agreements settled certain civil claims by the government, they did not address the claims made in the qui tam suit. Radcliffe, 582 F.Supp.2d at 776.

C. Execution of the Release

In late June 2005, as part of a workforce restructuring that substantially reduced Purdue's sales force, Radcliffe was offered the option of transferring to a new position or accepting a severance package. Radcliffe opted to leave Purdue and, in exchange for his execution of the...