The opinion of the court was delivered by: Patti Saris, District Judge
In this qui tam action, Relator Dr. David Franklin brings a claim under the False Claims Act, 31 U.S.C. § 3729 et seq., alleging that Defendant Parke-Davis (Franklin's former employer) promoted the drug Neurontin for uses not approved by the Food and Drug Administration, resulting in federal reimbursement payments for Neurontin prescriptions that were ineligible under Medicaid. Parke-Davis moves for summary judgment. The government, which has not intervened, has filed a Statement of Interest. After hearing, Parke-Davis's motion is DENIED. [ Page 2]
In its earlier opinion on Parke-Davis's motion to dismiss, the Court canvassed the history of this suit, the complaint's factual allegations, and the relevant law. United States v. Parke-Davis, 147 F. Supp.2d 39 (D. Mass. 2001). Presuming familiarity with that opinion, the Court here will limit the discussion to the select legal and factual issues upon which summary judgment turns.
1. Double-Falsehood Requirement under the FCA?
The False Claims Act ("FCA") imposes liability on any person who, inter alia:
(1) knowingly presents, or causes to be presented,
to an officer or employee of the United States
Government or a member of the Armed Forces of the
United States a false or fraudulent claim for
payment or approval; [or]
(2) knowingly makes, uses, or causes to be made or
used, a false record or statement to get a false or
fraudulent claim paid or approved by the Government
31 U.S.C. § 3729(a).
Parke-Davis argues that it can only be held liable under the FCA if Relator proves that Parke-Davis intentionally made a material false statement that led to the filing of a false claim. Under Parke-Davis's interpretation, the FCA contains a double falsehood requirement: An FCA plaintiff must prove a false statement that led to a false claim. Parke-Davis contends that [ Page 3]
Relator has failed to show that Parke-Davis made any material false statements.
Parke-Davis's legal argument is inconsistent with the text of the FCA. While § 3729(a)(2) contains a double-falsehood requirement ("knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government") (emphasis added), FCA liability under § 3729(a)(1) arises when a defendant "knowingly presents, or causes to be presented . . . a false or fraudulent claim" (emphasis added). Thus, there is no double falsehood requirement under § 3729(a)(1): One will suffice. See Shaw v. AAA Eng'g & Drafting, Inc., 213 F.3d 519, 531 (10th Cir. 2000) ("Section 3729(a)(1) . . . requires only the presentation of a `false or fraudulent claim for payment or approval' without the additional element of a `false record or statement.'"); United States ex rel. Fallon v. Accudyne Corp., 921 F. Supp. 611, 627 (W.D. Wis. 1995) ("The primary distinction between a claim under section 2 and a claim under section 1 is that section 2 requires an affirmative false statement. To provide any distinct meaning to section 1 it is clear that no such express false statement is required.").
Because Relator has not limited his FCA claim to § 3729(a)(2), he need not show two falsehoods to prevail. Under § 3729(a)(1), Relator is not required to present evidence that [ Page 4]
Parke-Davis lied to physicians about Neurontin's off-label efficacy or safety to induce them to prescribe Neurontin for uses ineligible under Medicaid. Though such evidence would be probative as to whether Parke-Davis caused to be presented false Medicaid claims, truthful off-label marketing (ineligible for federal safe harbors) and financial incentives like kickbacks would suffice.
To be sure, the Court's earlier opinion on Parke-Davis's motion to dismiss focused on allegations of false statements under § 3729(a)(2):
Defendant argues that an impermissible off-label
promotion [i.e., a promotion that violates the Food
and Drug Administration's ("FDA's") strictures on
off-label marketing] does not necessarily include a
false statement or fraudulent conduct. For example, it
points out, off-label promotion of a drug might simply
consist of a representative of a pharmaceutical
company distributing the finding of one doctor's
experience with an off-label use of a particular drug
to other physicians. However, Relator alleges more
than a mere technical violation of the FDA's
prohibition on off-label marketing. The gravamen of
Relator's claim is that Parke-Davis engaged in an
unlawful course of fraudulent conduct including
knowingly making false statements to doctors that
caused them to submit claims that were not eligible
for payment by the government under Medicaid. Thus,
the alleged FCA violation arises — not from
unlawful off-label marketing activity itself —
but from the submission of Medicaid claims for
uncovered off-label uses induced by Defendant's
fraudulent conduct. Cf. United States ex rel. Marcus
v. Hess, 317 U.S. 537, 543-44, 63 S.Ct. 379, 87 L.Ed.
443 (1943) (payments under government contract that
was executed as a result of collusive bid constituted
actionable false claims). A much closer question would
be presented if the allegations involved only the
unlawful — yet truthful — promotion of
off-label uses to physicians who provide services to
patients who are
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covered by Medicaid, as well patients who are
not, without any fraudulent representations by the
Parke-Davis, 147 F. Supp.2d at 52 (emphasis added). With the benefit of a more fulsome factual record, it is now apparent that the "much closer question" can no longer be ducked. Under § 3729(a)(1), the only issue is whether Parke-Davis "caused to be presented" a false claim, and § 3729 does not require that the "cause" be fraudulent or otherwise independently unlawful.
2. Existence of a False Claim
Parke-Davis contends that Relator cannot prove the sine qua non of a False Claims Act violation: the existence of a false claim. In the early phases of this litigation, "Defendant d[id] not dispute that an off-label prescription submitted for reimbursement by Medicaid is a false claim within the meaning of the FCA." Parke-Davis, 147 F. Supp.2d at 51. Now Parke-Davis argues that forty-two state Medicaid programs permit reimbursement for off-label, non-compendium drug prescriptions, and that therefore claims for Medicaid reimbursement for off-label Neurontin prescriptions in those states were not false claims. Parke-Davis contends that the Medicaid statute gives states the discretion to provide reimbursement for such prescriptions; in particular, Parke-Davis points to 42 U.S.C. § 1396r-8(d)(1)(B): "A state may exclude or otherwise restrict coverage of a covered outpatient drug if — (i) the prescribed use [ Page 6]
is not for a medically accepted indication. . . ." Parke-Davis argues that the language "may exclude or otherwise restrict" indicates that states have the option not to exclude (i.e., may provide) coverage for drugs for which the prescribed use is not for a medically accepted indication.
Relator contends that Parke-Davis is wrong as to the scope of Medicaid coverage in the forty-two states. Indeed, Relator argues that the Medicaid statute does not authorize states to provide such broad coverage. Relator emphasizes that the Medicaid statute allows states to "exclude or otherwise restrict coverage of a covered outpatient drug," 42 U.S.C. § 1396r-8(d)(1)(B) (emphasis added), implying that states are given discretion only within the category of "covered outpatient drugs." The Medicaid statute defines this category to exclude drugs for which the prescribed use is not a medically accepted indication. Parke-Davis, 147 F. Supp.2d at 45 ("Covered outpatient drugs do not include drugs that are `used for a medical indication which is not a medically accepted indication.'") (quoting 42 U.S.C. § 1396r-8(k)(3)). Thus, in Relator's view, § 1396r-8(d)(1)(B)(i) is simply superfluous, giving states the ...