Circuit Reinstates FCA Claims Against Amgen

The U.S. Court of Appeals for the First Circuit has reinstated claims under a number of state False Claims Acts against Amgen Inc. 

The case reached the First Circuit when whistleblower Kassie Westmoreland and state government intervenors appealed from the dismissal of their pendent state False Claims Act ("FCA") causes of action against Amgen, Inc., International Nephrology Network ("INN"), and ASD Healthcare ("ASD"). The district court exercised jurisdiction over the action, which also alleged violations of the federal FCA, 31 U.S.C. § 3729 et seq., pursuant to 31 U.S.C. § 3732(b), 28 U.S.C. § 1331, and 28 U.S.C. § 1367.
 
The plaintiffs in this case alleged that the defendants caused the submission of false or fraudulent claims for government payment. They alleged that the claims were false or fraudulent because the claims misrepresented that healthcare professionals had not received certain kickbacks and that as a result the defendants caused the submission of false or fraudulent claims to state Medicaid agencies in violation of state FCAs.
        
The plaintiffs alleged that Amgen, acting in concert with INN and ASD, employed an elaborate kickback scheme to induce medical providers to prescribe Aranesp, a drug Amgen manufactures to treat anemia. This kickback scheme, plaintiffs alleged, contained two prongs. First, they alleged that Amgen included extra Aranesp in its single-dose vials of the drug and encouraged providers to bill this free product to Medicaid. Second, they alleged that Amgen, INN, and ASD channeled improper benefits to providers through sham consulting agreements, honoraria, retreats, and the like to encourage them to purchase Aranesp. The plaintiffs argued that these kickbacks rendered the reimbursement claims at issue in this litigation ineligible for payment, and that for this reason they have stated a claim under the seven relevant state FCAs.
 
The district court held that the plaintiffs could not survive a 12(b)(6) motion to dismiss because they had failed to identify a false or fraudulent claim for Medicaid payment within the meaning of those state FCAs. In so holding, the district court employed the same legal framework to analyze state FCA claims as it did to analyze federal FCA claims in United States ex rel. Hutcheson v. Blackstone Medical, Inc., 694 F. Supp. 2d 48 (D. Mass. 2010).
 
The First Circuit, however, rejected that framework to the extent that it was inconsistent with its decision in Hutcheson, 2011 WL 2150191, concerning what constituted a false or fraudulent claim for government payment. On the merits, it then reversed the district court's dismissal of the plaintiffs' claims under six of the seven state FCAs at issue and affirmed on different grounds the district court's dismissal of the plaintiffs' claims under the remaining state FCA. According to the circuit court, the plaintiffs “more than adequately alleged” that providers submitted claims that misrepresented compliance with a precondition of Medicaid payment in New York, Massachusetts, California, Illinois, Indiana, and New Mexico. With respect to the claims under Georgia's FCA, the circuit court decided that the plaintiffs had not adequately alleged that the providers submitted claims to Georgia's Medicaid program that did not comply with a precondition of payment.
 
The case is New York v. Amgen Inc., No. 10-1629 (1^st Cir. July 22, 2011).
 
Attorneys involved include:
 
Steven C. Wu, Assistant Solicitor General, with whom Eric T. Schneiderman, Attorney General, Barbara D. Underwood, Solicitor General, Richard Dearing, Deputy Solicitor General, Carolyn T. Ellis, Special Assistant Attorney General, Medicaid Fraud Control Unit, Margot Schoenborn, Special Assistant Attorney General, Medicaid Fraud Control Unit, of New York; Eliseo Z. Sisneros, Deputy Attorney General, Kamala D. Harris, Attorney General, Nicholas P. Paul, Deputy Attorney General, of California; Joseph B. Chervin, Assistant Attorney General, Lisa Madigan, Attorney General, of Illinois; Jessica L. Harlan, Deputy Attorney General, Medicaid Fraud Control Unit, Greg Zoeller, Attorney General, of Indiana; Ann B. Ackil, Assistant Attorney General, Medicaid Fraud Division, and Martha Coakley, Attorney General, of Massachusetts; were on brief, for State of New York, Commonwealth of Massachusetts, State of California, State of Illinois, and State of Indiana, appellants.
 
Derek T. Ho, with whom Silvija A. Strikis, Joseph S. Hall, Andrew S. Oldham, Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC, Suzanne E. Durrell, Robert M. Thomas, Jr., and Royston H. Delaney were on brief, for Kassie Westmoreland, appellant.
 
Charles W. Scarborough, Appellate Staff, Civil Division, Department of Justice, with whom Tony West, Assistant Attorney General, Carmen Ortiz, United States Attorney, and Douglas N. Letter, Appellate Staff, Civil Division, Department of Justice, were on brief, for the United States, amicus curiae.
 
Michele Odorizzi, with whom Kenneth S. Geller, Andrew Tauber, Mayer Brown LLP, Brien T. O'Connor, Kirsten V. Mayer, William Dunn, Ropes & Gray LLP, Daniel A. Curto, Michael D. Kendall, and McDermott Will & Emery LLP were on brief, for Amgen Inc., appellee.
 
James M. Becker, with whom Buchanan Ingersoll Rooney PC, Eric W. Sitarchuk, Morgan Lewis & Bockius, LLP, Peter Ball, Ryan M. Cunningham, and Sally & Fitch were on brief, for International Nephrology Network and ASD Healthcare, appellees.