United States of America ex rel. Joseph Ibanez and Jennifer Edwards, Relators-Appellants,
Bristol-Myers Squibb Company; Otsuka America Pharmaceutical, Inc., Defendants-Appellees.
Argued: December 6, 2016
from the United States District Court for the Southern
District of Ohio at Cincinnati. No. 1:11-cv-00029-William O.
Bertelsman, District Judge.
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
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, Circuit Judge.
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.
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
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.
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.
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
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. §
1320-7b(b); caused the use or creation of false records
material to false claims, 31 U.S.C. § 4729(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).
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.
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.
district court had jurisdiction over claims arising under the
False Claims Act claims pursuant to 28 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).
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.
district court's orders collectively ended the litigation
of relators' qui tam claims against Otsuka and
BMS, leaving only relators' personal, employment-based
retaliation claims against BMS. See R. 73, Dist. Ct.
Op. I, PID 1228; R. 97, Dist. Ct. Op. II, PID 2168. There was
no error in deeming these orders final. That is, no matter
how the record might develop in further proceedings on the
unresolved retaliation claims against BMS, there are no
grounds on which the dismissed claims would be subject to
reopening. Second, the district court did not abuse its
discretion in finding there was "no reason to
delay" appeal of the orders. As noted by the district
court in its certification order, "the qui tam
and employment-based retaliation claims are sufficiently
distinct, such that permitting immediate appeal will not
cause piecemeal appeals" and so allowing this appeal to
go forward would "create judicial and economic
efficiencies." See R. 102, Order, PID 2195-96.
Thus, the court weighed relevant considerations and did not
abuse its discretion in determining that there was no reason
for delay. See Lowery, 426 F.3d at 821-22. We now
consider the orders certified for appeal.
Standard of Review
Court reviews de novo a district court's
dismissal of a complaint for failure to state a claim,
including dismissal for failure to plead with particularity
under [Rule] 9(b)." United States ex rel. Eberhard
v. Physicians Choice Lab. Servs., LLC, 642 Fed.Appx.
547, 550 (6th Cir. 2016) (quoting United States ex rel.
Bledsoe v. Cmty. Health Sys., Inc. ("Bledsoe
II"), 501 F.3d 493, 502 (6th Cir. 2007)).
"Complaints alleging FCA violations must comply with
Rule 9(b)'s requirement that fraud be pled with
particularity because 'defendants accused of defrauding
the federal government have the same protections as
defendants sued for fraud in other contexts.'"
Chesbrough v. VPA, P.C., 655 F.3d 461, 466 (6th Cir.
2011) (quoting Yuhasz v. Brush Wellman, Inc., 341
F.3d 559, 563 (6th Cir. 2003)). Thus, "[w]here a relator
pleads a complex and far-reaching fraudulent scheme, "
she also must provide "examples of specific false claims
submitted to the government pursuant to that scheme" in
order to proceed to discovery on the scheme. United
States ex rel. Prather v. Brookdale Senior Living Cmtys.,
Inc., 838 F.3d 750, 768 (6th Cir. 2016) (quoting
Bledsoe II, 501 F.3d at 510). "In the qui
tam context, 'the Court must construe the complaint
in the light most favorable to the plaintiff, ...