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United States ex rel. Bawduniak v. Biogen Idec Inc.

United States District Court, D. Massachusetts

April 27, 2018

UNITED STATES OF AMERICA, et al., ex rel. MICHAEL BAWDUNIAK, Plaintiffs-Relators,
BIOGEN IDEC, INC., Defendant.



         Plaintiff-Relators Michael Bawduniak and Fernando Villegas's Third Amended Complaint (“Complaint”) [#132] charged Defendant Biogen Idec, Inc. (“Biogen”) with causing health care providers to file fraudulent Medicare and Medicaid reimbursement claims in violation of the False Claims Act, 31 U.S.C. § 3729, et seq., and various state laws, by paying kickbacks to influence them to prescribe of Biogen's multiple sclerosis (“MS”) products (the qui tam claims), and with retaliating against Villegas in violation of 31 U.S.C. § 3730(h). The court allowed in part Defendant's Motion to Dismiss [#137] for lack of subject matter jurisdiction, dismissing Villegas's (but not Bawduniak's) claim under 31 U.S.C. § 3730(b). Mem. & Order [#166].[1] Now before the court is Biogen's Motion to Dismiss Relators' Third Amended Complaint Pursuant to Rules 8, 9(b), and 12(b)(6) [#139]. For the reasons set forth below, the motion is ALLOWED as to Villegas's retaliation claim and as to certain state qui tam claims, but is otherwise DENIED.

         I. Overview of the Allegations

         The court's recitation of the facts is limited to a brief overview of Relators' substantive allegations, with further details provided as relevant below.

         Relators allege that Biogen paid illegal kickbacks to healthcare providers by retaining providers in sham consulting and speaking programs, in order to increase prescriptions of Biogen's MS drugs Avonex, Tysabri, and Tecfidera. With regard to the sham consulting programs, Biogen held dozens of consulting meetings with hundreds of physicians, “liberally paying consulting fees to the physicians who attended.” Compl. ¶ 9. The physicians were selected based on their prescribing volume and ability to influence peers rather than expertise on the topic of the consulting meeting. Id. ¶¶ 9-10. Relators allege that Biogen “retained far more consultants than it required, and never did anything with the expensive ‘consulting product' that it received.” Id. ¶ 10.

         With regard to the alleged sham speaking programs, Biogen trained physicians to speak to other physicians about Biogen's products. Id. ¶ 11. Biogen paid physicians both when they obtained training and again when they gave presentations. Id. Biogen “constantly” trained speakers, though most would present only twice, or less, a year, and many presented only to a single person. Id. Relators allege that like the consultants, speakers were selected based on prescribing ability, not speaking ability. According to the Complaint, “[g]iven that there was no demand for additional presentations . . . and that there were many experienced speakers who could handle what little demand existed, the expansion of the speaking program was a complete sham operated solely to pay physicians to remain loyal to Biogen.” Id.

         In 2009 and 2010, Biogen paid $18 million to 1, 500 physicians and nurses, who collectively wrote prescriptions totaling approximately 60% of the MS market. Id. ¶ 2. Relators allege that though Biogen's internal Compliance Department routinely expressed concerns that there were too many meetings, too many consultants, and too many payments, these concerns were disregarded by Biogen's marketing executives. Id. ¶ 13.

         II. Standard

         In reviewing a motion to dismiss, the court “accept[s] as true all well-pleaded facts, analyzing those facts in the light most hospitable to the plaintiff's theory, and drawing all reasonable inferences for the plaintiff.” U.S. ex. rel. Kelly v. Novartis Pharm. Corp., 827 F.3d 5, 11 (1st Cir. 2016) (quoting U.S. ex rel. Hutcheson v. Blackstone Med. Inc., 647 F.3d 377, 383 (1st Cir. 2011)).

         Federal Rule of Civil Procedure 9(b) requires that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake, ” while “[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally.” Relators are “required to set forth with particularity the who, what, when, where, and how of the alleged fraud.” U.S. ex rel. Ge v. Takeda Pharm. Co., Ltd., 737 F.3d 116, 123 (1st Cir. 2013) (internal citation and quotation marks omitted); see also Lawton ex rel. U.S. v. Takeda Pharm. Co., Ltd., 842 F.3d 125, 130 (1st Cir. 2016).

         There is, however, “a difference between qui tam actions alleging that the defendant made false claims to the government and those alleging that the defendant induced third-parties to file false claims with the government.” U.S. ex rel. Nargol v. DePuy Orthopaedics, Inc., 865 F.3d 29, 39 (1st Cir. 2017) (quoting Lawton, 842 F.3d at 130). In the latter, indirect type of action, the court must “apply a more flexible standard.” Id. “[W]here the defendant allegedly induced third parties to file false claims with the government a relator could satisfy Rule 9(b) by providing factual or statistical evidence to strengthen the inference of fraud beyond possibility without necessarily providing details as to each false claim.” Id. (quoting U.S. ex rel. Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13, 29 (1st Cir. 2009)) (internal quotation marks and omission omitted).

         III. Pleading Anti-Kickback Statute Violations with Particularity

         Defendant contends that the purported underlying violations of the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b, on which Relator's fraudulent claims reimbursement allegations are based, have not been pled with the specificity required by Rule 9(b).

         The Anti-Kickback Statute prohibits the knowing and willful offer or payment of “any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person” to “purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program.” 42 U.S.C. § 1320a-7b(b)(2) (emphasis added). These provisions were “intended to strengthen the capability of the Government to detect, prosecute, and punish fraudulent activities under the [M]edicare and [M]edicaid programs, . . . because fraud and abuse among practitioners . . . is relatively difficult to prove and correct.'” U.S. ex rel. Greenfield v. Medco Health Solutions, Inc., 880 F.3d 89, 96 (3d Cir. 2018) (quoting H.R. Rep. No. 95-393, at 1, 27 (1977)) (quotation marks omitted).

         Relator alleges throughout the Complaint that Biogen identified and paid top prescribers to keep prescriptions at profitable levels, and did so by retaining the prescribers as consultants and hiring them as speakers. See, e.g., Compl. ¶ 1 (“The goal of [Biogen's] kickback scheme was . . . to preserve the eroding market share of Biogen's . . . product Avonex; increase the market share of its . . . product Tysabri, and to ensure that its new oral MS drug, Tecfidera, once approved, would be prescribed at a high rate. Biogen knowingly identified the top prescribers and paid them millions of dollars to keep their prescriptions at profitable levels.”); id. ¶ 8 (“Biogen expanded [its mechanisms for retaining physicians as consultants and hiring them as speakers] so that its . . . consulting and speaking schemes were . . . conduits for the channeling of illegal payments to . . . high prescribers.”); id. ¶ 10 (“Biogen did not pay doctors to consult unless they were high prescribers[] . . . .[Biogen] retained far more consultants than it required, and never did anything with the expensive ‘consulting product' that it received.”); id. ¶ 11 (“Speakers are paid when they obtain training and paid again when they present, even if no one attends the scheduled meeting. Biogen constantly trained speakers . . . even though most speakers would only present twice (or less) a year and many presented only to a single person . . . . Biogen selected all speakers based on their prescribing ability, not their speaking ability.”); id. ¶ 53 (“Just 300 neurologists . . . write 30% of all [MS treatment] prescriptions. 1, 200 prescribers write 60% of [MS treatment] prescriptions. Biogen devised a way to identify and target the doctors who wrote 60% of prescriptions for MS . . . and thus would provide the ‘most bang for the buck.'”); id. ¶ 73 (“None of the feedback from any of the [consulting] meetings was ever used by Biogen. After an Executive Summary was prepared, no one expressed any interest in the opinions of Biogen's expensive consultants.”).

         Biogen responds that its payments to physicians were exactly the kind of personal services contracts protected by the statutory safe harbor adopted by Congress and that the Complaint fails to plead with specificity Defendant's failure to comply with the safe harbor requirements. ...

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