4th Circuit Court of Appeals Affirms Dismissal under Rule 9(b) for Failure to “Plausibly” Allege Submission of False Claims


In United States ex rel. Nathan v. Takeda Pharms. N. Am., Inc., No. 11-2077, 2013 U.S. App. LEXIS 765 (4th Cir. Jan. 11, 2013), the U.S. Court of Appeals for the Fourth Circuit ruled that, when a defendant’s alleged conduct “could have led, but need not necessarily have led” to the presentment of false claims to the government in violation of the False Claims Act (FCA), 31 U.S.C. §§ 3729 et seq., then the relator “must allege with particularity that specific false claims actually were” submitted to the government.  Nathan, 2013 U.S. App. LEXIS 765, at *14.  The decision, written by Judge Barbara Milano Keenan, emphasized that this standard does not foreclose FCA cases when the relator “plausibly pleads that specific, identifiable claims actually were presented.”  Id. at *15.

Allegations and Procedural History: The relator, a sales manager for defendants, filed an FCA action against the drug manufacturers Takeda Pharmaceuticals North America, Inc., and Takeda Pharmaceuticals America, Inc. (Takeda), alleging that Takeda marketed its drug Kapidex, a proton pump inhibitor used to treat various gastric conditions, for uses not approved by the Food and Drug Administration (FDA).  Takeda allegedly marketed the drug to rheumatologists, who do not typically treat patients with conditions for which the FDA has approved the drug, and marketed higher dosages of the drug (by providing only high dosage samples to doctors) for conditions for which the FDA has only approved lower dosages.  The United States declined to intervene in the case.

Ruling on Applicable Rule 9(b) Standard:  On appeal, the Fourth Circuit held that the relator’s allegations regarding the presentment of false claims were insufficient under Rule 9(b), and affirmed the district court’s dismissal of the relator’s complaint.

The Fourth Circuit declined to apply a “relaxed” Rule 9(b) standard to the relator’s allegations and declined to find that a relator could meet Rule 9(b)’s requirement by alleging “a fraudulent scheme, in the absence of an assertion that a specific false claim was presented to the government for payment.”  Id. at *10.  The court explained that “Rule 9(b) requires that ‘some indicia of reliability’ must be provided in the complaint to support the allegation that an actual false claim was presented to the government” and that, “without such plausible allegations of presentment, a relator not only fails to meet the particularity requirement of Rule 9(b), but also does not satisfy the general plausibility standard” required  of plaintiffs by the U.S. Supreme Court’s decision in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).   Id. at *11-*12 (quoting United States ex rel. Clausen v. Lab. Corp. of Am., 290 F.3d 1301, 1311 (11th Cir. 2002)).

The court ruled: “[W]hen a defendant’s actions, as alleged and as reasonably inferred from the allegations could have led, but need not necessarily have led, to the submission of false claims, a relator must allege with particularity that specific false claims actually were presented to the government for payment.”   Id. at *14.  The court emphasized, however, that the “standard does not foreclose claims under the Act when a relator plausibly pleads that specific, identifiable claims actually were presented to the government for payment” and that “whether such factual allegations in a given case meet the required standard must be evaluated on a case-specific basis.”  Id. at *15.

Ruling on Whether Particular Alleged, Conduct “Plausibly” Alleges False Claims: Applying the above standard, the court rejected as a basis for plausible allegations of false claims the following allegations:  i)  that Takeda marketed Kapidex to doctors who “typically” do not prescribe the drug for uses approved by the FDA; ii) that Takeda provided samples of the drug at a non-approved dosage to 16 primary care physicians who subsequently wrote 98 prescriptions for beneficiaries of government health programs; iii) that 9,000 claims for the drug had been submitted to the government for reimbursement in two of Takeda’s sales district during certain one-year periods; and iv) that three doctors prescribed the drug for Medicare beneficiaries at an unapproved dosage because they were unaware that the drug was available at a lower dose due to Takeda’s sampling practices.   The court rejected these allegations as a plausible basis for alleging false claims because:  i) the relator did not allege that any of the doctors in the specialties that did not typically prescribe the drug for on-label uses actually “wrote any off-label prescriptions that were submitted to the government for payment,” id. at *17; ii) the relator did not allege that the  16 primary care physicians provided the samples in unapproved dosage levels ended up writing off-label prescriptions at these dosage levels, id. at *18-*19 ; iii) the relator did not allege that the 9,000 claims to government health programs were for off-label uses of the drug and the result of specific off-label marketing activity, id. at *21-*22; and iv) the relator failed to allege the specifics of the off-label prescriptions written by the three physicians, including whether they were ever filled by the patient or reimbursed by the government, id. at *22.