US ex rel. Barry Rostholder v. Omnicare, Incorporated
Filing
PUBLISHED AUTHORED OPINION filed. Originating case number: 1:07-cv-01283-CCB. [999301169]. [12-2431]
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-2431
UNITED STATES ex rel. BARRY ROSTHOLDER; BARRY ROSTHOLDER,
individually,
Plaintiffs - Appellants,
and
STATE OF CALIFORNIA; STATE OF DELAWARE; STATE OF FLORIDA;
STATE OF HAWAII; STATE OF ILLINOIS; STATE OF INDIANA; STATE
OF LOUISIANA; STATE OF MASSACHUSETTS; STATE OF MICHIGAN;
STATE OF MONTANA; STATE OF NEW HAMPSHIRE; STATE OF NEW
MEXICO; STATE OF NEW YORK; STATE OF NEVADA; STATE OF
TENNESSEE; STATE OF TEXAS; STATE OF VIRGINIA; COOK COUNTY,
ILLINOIS; DISTRICT OF COLUMBIA; CITIES OF CHICAGO AND NEW
YORK; STATE OF GEORGIA; STATE OF NEW JERSEY; STATE OF
OKLAHOMA; STATE OF RHODE ISLAND; STATE OF WISCONSIN,
Plaintiffs,
v.
OMNICARE, INCORPORATED, a Delaware Corporation; OMNICARE
DISTRIBUTION CENTER, LLC, f/k/a Heartland Repack Services,
LLC, a Delaware Limited Liability Company, jointly and
severally,
Defendants – Appellees.
Appeal from the United States District Court for the District of
Maryland, at Baltimore.
Catherine C. Blake, District Judge.
(1:07-cv-01283-CCB)
Argued:
December 10, 2013
Decided:
February 21, 2014
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Before NIEMEYER, SHEDD, and KEENAN, Circuit Judges.
Affirmed by published opinion. Judge Keenan wrote the opinion,
in which Judge Niemeyer and Judge Shedd joined.
ARGUED: Gerald C. Robinson, GERALD ROBINSON LAW FIRM PLLC,
Minneapolis, Minnesota, for Appellants.
James Christopher
Martin, REED SMITH LLP, Pittsburgh, Pennsylvania, for Appellees.
ON BRIEF:
Jay P. Holland, JOSEPH, GREENWALD & LAAKE, PA,
Greenbelt, Maryland, for Appellants.
Colin E. Wrabley,
Pittsburgh, Pennsylvania, Eric A. Dubelier, Lawrence S. Sher,
Katherine J. Seikaly, REED SMITH LLP, Washington, D.C., for
Appellees.
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BARBARA MILANO KEENAN, Circuit Judge:
Relator
action
Barry
under
the
Rostholder
False
(relator)
Claims
Act
filed
(FCA),
31
this
qui
tam
U.S.C.
§§
3729
through 3733, against his former employer, Omnicare, Inc., and
its affiliated companies.
Relator alleged that the defendants
violated a series of Food and Drug Administration (FDA) safety
regulations requiring that penicillin and non-penicillin drugs
be
packaged
in
complete
isolation
from
one
another,
which
violations resulted in a legal presumption of penicillin crosscontamination.
According to relator, these contaminated drugs
were not eligible for reimbursement by Medicare and Medicaid
and,
therefore,
any
claims
presented
to
the
government
for
reimbursement for these drugs were false under the FCA.
The district court granted Omnicare’s motion to dismiss the
complaint
under
Federal
Rule
of
Civil
Procedure
12(b)(6).
Because relator already had filed two amended complaints, the
court denied any further leave to amend.
hold
that
relator’s
complaint
failed
Upon our review, we
to
allege
that
the
defendants made a false statement or that they acted with the
necessary scienter.
We also conclude that the district court
did not abuse its discretion in denying relator’s request to
file
a
third
amended
complaint.
district court’s judgment.
3
We
therefore
affirm
the
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I.
Omnicare provides certain pharmaceutical services to senior
citizens through its drug repackaging and pharmacy facilities.
As alleged in relator’s second amended complaint, Omnicare owned
Heartland Repack Services, LLC (Heartland), the drug repackaging
operation at issue in this case located in Toledo, Ohio (the
Toledo building).
Heartland repackaged drugs into convenient
units
use.
for
pharmacies
Toledo
patient
nationwide,
building
with
Omnicare
including
also
a
Heartland.
operated
pharmacy
Such
that
pharmacies
hundreds
of
shared
the
“primarily”
served nursing homes owned by Omnicare’s partner, Health Care
Resources.
Although
distribution,
Heartland
the
repackaged
Omnicare
non-penicillin
pharmacy
that
building processed penicillin products.
shared
drugs
the
for
Toledo
The pharmacy and the
repackaging operations were located in the Toledo building, and
were
separated
by
“rolling”
garage-type
doors.
Within
the
building, employees of both the repackaging and pharmacy units
shared “break” areas, entrances, and exits.
The Toledo building
also had a single ventilation and heating/cooling system.
From 1997 until 2006, relator, a licensed pharmacist, was
employed at Heartland.
Relator’s job responsibilities included
“overseeing repackaging, quality assurance, regulatory affairs,
and wholesale and distribution.”
4
In 2004, Omnicare executive
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and relator’s supervisor, Denis Holmes, suggested that Heartland
begin repackaging penicillin products.
that
any
repackaging
of
penicillin
Relator informed Holmes
drugs
would
constitute
a
violation of FDA regulations requiring the separate processing
of penicillin and non-penicillin products.
Relator
conducted
further
research
regarding
the
FDA’s
penicillin isolation requirements and stated his conclusions in
a memorandum that he provided to Holmes.
the
pharmacy
relator
manager
for
repackaged
the
in
first
penicillin,
Heartland’s
the
time
that
despite
non-penicillin
Heartland facility).
Toledo
Relator also contacted
building,
the
pharmacy
sharing
drug
who
the
informed
frequently
building
operation
packaging
with
(the
At Holmes’ request, relator researched and
recommended ways in which Heartland could repackage penicillin
in compliance with FDA regulations.
In February 2006, relator resigned from Heartland due to
his
concerns
about
the
facility’s
quality
control
efforts.
Several months after his resignation, relator notified the FDA
of Heartland’s “improper repackaging practices.”
information,
and
were
repackaged
FDA
advised
in
investigators
by
the
visited
employees
that
Repackaging
the
“no
Based on this
Heartland
penicillin
Division.”
Based
facility
was
being
on
these
representations, the investigators left the Heartland facility.
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Relator
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later
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participated
in
an
interview
with
FDA
officials, during which “[h]e described the specific details of
the
penicillin
summer
of
Heartland
exposure”
2006,
the
facility
repackaged
in
at
FDA
and
the
the
Heartland
conducted
discovered
Toledo
another
that
building.
facility.
In
of
inspection
penicillin
Testing
the
the
was
being
“revealed
the
presence of penicillin throughout the building,” including in
the Heartland facility.
letter
to
Omnicare
(the
As a result, the FDA issued a warning
warning
letter),
outlining
numerous
violations of FDA regulations, both related and unrelated to
Omnicare’s practices of handling penicillin.
The warning letter
explained that Omnicare’s failure to adhere to the FDA’s Current
Good Manufacturing Practice regulations (the CGMPs) caused the
drugs to be “adulterated.”
Rather
products,
inventory.
than
Omnicare
quarantining
disposed
and
of
conducting
nearly
$19
tests
million
on
its
worth
of
According to the complaint, Omnicare at that time
had not recalled any of its drugs due to suspected penicillin
contamination, nor had Omnicare reimbursed the government for
amounts already paid for the contaminated drugs.
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In May 2007, relator filed this action under the FCA, 31
U.S.C.
§ 3729(a)(1),
(a)(2),
and
(a)(7)
(2006), 1
and
similar
state statutes, against Omnicare and its affiliated companies
Omnicare). 2
(collectively,
“knowingly
building]
and/or
in
recklessly
violation
of
Relator
alleged
repackaged
that
Omnicare
drugs
laws,
applicable
at
[the
Toledo
including
[the
CGMPs], which rendered [the drugs] presumptively unsafe under
[the
CGMPs],
and
therefore
adulterated
and
misbranded,
and
therefore not in their FDA-approved form, and thus ineligible
for
coverage
under
government
programs.”
The
government
declined to intervene in the action.
The district court granted Omnicare’s motion to dismiss,
holding that relator had failed to allege that Omnicare made a
false
statement
conduct.
to
the
government
or
engaged
in
fraudulent
The court also held that relator had not adequately
alleged the details of any false claims that had been submitted
to the government for reimbursement.
After the court denied
relator’s
his
motion
for
leave
to
amend
complaint,
relator
timely appealed.
1
The 2009 amendments to the FCA resulted in a renumbering
of these sections.
See Fraud Enforcement and Recovery Act of
2009, Pub. L. No. 111-21, 123 Stat. 1617. We refer to the preamendment numbering system as cited in the complaint.
2
The second amended complaint was filed in October 2010.
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II.
A.
Before
addressing
the
merits
of
relator’s
arguments
on
appeal, we first consider Omnicare’s assertion that the district
court lacked subject matter jurisdiction over this action due to
the
“public
disclosure
jurisdictional
question
bar”
de
in
novo,
the
FCA.
and
We
examine
review
the
this
district
court’s jurisdictional findings of fact for clear error.
U.S.
ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 350 (4th Cir. 2009);
U.S. ex rel. Grayson v. Advanced Mgmt. Tech., Inc., 221 F.3d
580, 582 (4th Cir. 2000);
see also Gaines Motor Lines, Inc. v.
Klaussner Furniture Indus., 734 F.3d 296, 301 (4th Cir. 2013)
(noting
our
“obligation
to
assure
ourselves
of
our
jurisdiction”).
The version of the public disclosure bar in place at the
time of the relevant events 3 provided:
3
The public disclosure bar provision was amended in 2010.
See Patient Protection and Affordable Care Act, Pub. L. No. 111148, 124 Stat. 119 (2010).
The disclosures at issue in this
case occurred in 2006, and relator filed the original complaint
in 2007.
The amendments to the public disclosure bar are not
retroactive, and neither party argues that the amended statute
should apply. See Graham Cnty. Soil & Water Conservation Dist.
v. U.S. ex rel. Wilson, 559 U.S. 280, 283 n.1 (2010).
Accordingly, like the district court, we apply the pre-amendment
version of the statute and our precedent interpreting that
version.
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(A) No court shall have jurisdiction over an action
under this section based upon the public disclosure of
allegations or transactions in a criminal, civil, or
administrative
hearing,
in
a
congressional,
administrative, or Government [General] Accounting
Office report, hearing, audit, or investigation, or
from the news media, unless the action is brought by
the Attorney General or the person bringing the action
is an original source of the information.
(B) For purposes of this paragraph, ‘original source’
means an individual who has direct and independent
knowledge of the information on which the allegations
are based and has voluntarily provided the information
to the Government before filing an action under this
section which is based on the information.
31 U.S.C. § 3730(e)(4) (2006) (emphasis added).
Omnicare argues
that the public disclosure bar divested the district court of
jurisdiction
warning
because
letter
and
relator’s
complaint
Omnicare’s
“Form
is
10-Ks”
Securities and Exchange Commission (SEC). 4
“based
upon”
the
filed
with
the
Omnicare also asserts
that relator is not an “original source” of the information in
the complaint.
We disagree with Omnicare’s arguments.
Under this Court’s precedent, “a qui tam action is based
upon
publicly
disclosed
allegations
only
if
the
qui
tam
plaintiff’s allegations were actually derived from the public
4
Publicly traded companies must submit to the SEC a “Form
10-K” annually. The form “provides a comprehensive overview of
the company’s business and financial condition and includes
audited financial statements.”
U.S. Securities and Exchange
Commission,
Form
10-K,
available
at
http://www.sec.gov/answers/form10k.htm (last accessed Feb. 20,
2014).
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disclosure itself.”
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U.S. ex rel. Wilson v. Graham Cnty. Soil &
Water Conservation Dist., 528 F.3d 292, 308 (4th Cir. 2008),
rev’d
on
other
original).
A
grounds
qui
by
U.S.
280
action
tam
559
will
“not
(2010)
be
(emphasis
barred
if
in
the
plaintiff’s claims are similar or even identical to the publicly
disclosed allegations, so long as the plaintiff had independent
knowledge of the facts and did not derive his allegations from
the public disclosure itself.” 5
Id.
We conclude that relator’s FCA complaint was not “based
upon”
the
objection
warning
to
letter
the
or
SEC
filings,
“substantial
despite
similarities”
Omnicare’s
between
the
allegations in the complaint and the public disclosures.
The
complaint makes clear that relator discovered the penicillinrelated
violations
of
the
CGMPs
during
his
employment
at
Heartland.
Relator’s knowledge was based on his conversations
with
employees
other
familiarity
with
the
independent
research.
in
the
Toledo
repackaging
Relator
building,
operations,
also
alleged
his
and
that
personal
his
he
own
twice
informed the FDA of the penicillin exposure issues at Heartland,
5
We note that under the amended version of the statute, the
public disclosure bar applies “if substantially the same
allegations or transactions as alleged in the action or claim
were publicly disclosed,” unless the plaintiff was an original
source. 31 U.S.C. § 3730(e)(4).
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which precipitated the FDA investigations and resulted in the
FDA’s issuance of the warning letter.
Also
in
his
complaint,
relator
alleged
that
Omnicare
supplied drugs to patients residing in nursing care facilities
who primarily were insured by government health care programs.
These
allegations
illustrate
relator’s
independent
knowledge,
apart from the SEC filings regarding Omnicare’s revenue, that
Omnicare caused claims to be submitted to the government for
payment.
See Vuyyuru, 555 F.3d at 353.
For
the
sufficiently
knowledge
of
same
reasons,
alleged
that
the
we
he
information
conclude
had
on
that
“direct
which
and
the
relator
has
independent
allegations
based,” thereby entitling him to original source status.
are
See 31
U.S.C. § 3730(e)(4)(B) (2006).
Accordingly, we hold that the
public
divest
disclosure
bar
did
not
the
district
court
of
jurisdiction over relator’s FCA claims.
B.
We
next
consider
relator’s
primary
argument
on
appeal,
namely, that the district court erred in dismissing relator’s
complaint on the ground that he did not adequately allege a
false statement or a fraudulent course of conduct as required
for
an
FCA
claim.
We
review
de
novo
the
district
dismissal of relator’s complaint under Rule 12(b)(6).
11
court’s
U.S. ex
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rel. Nathan v. Takeda Pharms. N. Am., Inc., 707 F.3d 451, 455
(4th Cir. 2013).
The FCA is designed to prevent fraud and reflects Congress’
broad
goal
“to
government.”
protect
the
funds
and
property
of
the
U.S. ex rel. Owens v. First Kuwaiti Gen. Trading &
Contracting Co., 612 F.3d 724, 728 (4th Cir. 2010) (citation and
quotation
person
marks
is
“knowingly
omitted).
liable
to
presents,
the
or
Under
31
United
causes
to
U.S.C.
States
be
§ 3729(a)(1),
government
presented,
fraudulent claim for payment or approval.”
a
a
if
he
false
or
To plead an FCA
claim, a relator must plausibly allege four distinct elements:
“(1) [] there was a false statement or fraudulent course of
conduct; (2) made or carried out with the requisite scienter
[knowledge];
(3)
that
was
material;
and
(4)
that
caused
the
government to pay out money or to forfeit moneys due (i.e., that
involved a ‘claim’).” 6
Harrison v. Westinghouse Savannah River
Co., 176 F.3d 776, 788 (4th Cir. 1999).
Relator contends that he adequately alleged the elements of
an FCA claim in this case.
He asserts that by failing to comply
with the CGMPs, Omnicare’s repackaged drugs were “adulterated”
6
These elements similarly apply to FCA claims brought under
§ 3729(a)(2) and (a)(7). See Harrison v. Westinghouse Savannah
River Co., 176 F.3d 776, 784-88 (4th Cir. 1999); U.S. ex rel.
Sanders v. N. Am. Bus Indus. Inc., 546 F.3d 288, 297, 299 (4th
Cir. 2008).
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prohibited
from
Pg: 13 of 20
interstate
commerce
and,
therefore,
ineligible for reimbursement by Medicare and Medicaid.
Relator
thus maintains that any claim for reimbursement for these drugs
under government programs was false or fraudulent within the
meaning of the FCA.
To determine whether relator’s allegations in his second
amended complaint were sufficient to withstand Omnicare’s motion
to dismiss under Rule 12(b)(6), we first consider the general
regulations and the statutory provisions on which relator’s FCA
claim is based.
FDA regulations set forth the “Current Good
Manufacturing Practices” related to the handling of penicillin.
The
CGMPs
require
manufacture,
that
processing,
“[o]perations
and
packing
relating
of
to
penicillin”
the
be
“performed in facilities separate from those used for other drug
products for human use,” and additionally mandate “completely
separate” “air-handling systems” for such operations involving
penicillin
and
other
types
of
drugs.
21
C.F.R.
§§
211.42,
211.46(d).
The regulations require that non-penicillin drugs be tested
for the presence of penicillin “[i]f a reasonable possibility
exists”
that
the
non-penicillin
penicillin cross-contamination.
drug
has
been
exposed
21 C.F.R. § 211.176.
to
The non-
penicillin drug may not be marketed “if detectable levels [of
penicillin] are found when tested.”
13
Id.
Drugs that do not
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comply with the CGMPs are considered “adulterated” within the
meaning of the Food, Drug, and Cosmetic Act (FDCA), and are not
permitted
in
interstate
commerce.
21
U.S.C.
§§
331,
351(a)(2)(B); see also 21 C.F.R. 210.1 (failure to comply with
the CGMPs renders a drug “adulterated”).
Relator’s assertion that Omnicare fraudulently made claims
for payment for “adulterated” drugs is based on the statutes
governing
reimbursement
under
Medicare
and
Medicaid.
Those
statutes define “covered outpatient drugs” as those “approved
for safety and effectiveness” under the FDCA, 21 U.S.C. § 355.
See
42
U.S.C.
§
1396r-8(k)(2)(A)(i)
(Medicaid);
42
U.S.C.
§
1395w-102(e) (Medicare Part D); see also 42 C.F.R. § 423.100
(defining Medicare “Part D” drug).
The FDA’s approval process
for new drugs under 21 U.S.C. § 355 requires that an application
for approval describe “the methods used in, and the facilities
and controls used for, the manufacture, processing, and packing”
of
the
drug.
application
or
21
U.S.C.
withdraw
a
§
355(b).
The
previously
FDA
approved
may
refuse
an
application
if
these methods or facilities “are inadequate to preserve [the
drug’s] identity, strength, quality, and purity.”
(e).
Id. § 355(d),
A new drug may not be introduced into interstate commerce
unless
an
approved
application
355(a).
14
is
in
effect.
21
U.S.C.
§
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According
to
relator,
Pg: 15 of 20
because
the
Medicare
and
Medicaid
statutes refer to the FDCA’s requirements for new drug approval
and marketing set forth in Section 355, Medicare and Medicaid do
not authorize reimbursement for any drugs that are “adulterated”
due to non-compliance with the CGMPs.
however,
expressly
that
prohibit
adulterated.
with
the
the
Medicare
and
reimbursement
Relator acknowledges,
Medicaid
for
drugs
statutes
that
do
have
not
been
Moreover, those statutes do not require compliance
CGMPs
or
any
other
FDA
safety
regulations
as
a
precondition to reimbursement.
To qualify as a “covered outpatient drug” as defined in the
Medicare and Medicaid statutes, a drug merely must be approved
by the FDA.
The relevant statutes do not provide that when an
already-approved drug has been produced or packaged in violation
of FDA safety regulations, that particular drug may not be the
proper subject of a reimbursement request under Medicare and
Medicaid.
Therefore, we conclude that once a new drug has been
approved by the FDA and thus qualifies for reimbursement under
the
Medicare
and
Medicaid
statutes,
the
submission
of
a
reimbursement request for that drug cannot constitute a “false”
claim under the FCA on the sole basis that the drug has been
adulterated as a result of having been processed in violation of
FDA safety regulations.
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Relator
pleaded
a
Filed: 02/21/2014
maintains,
false
claim
Pg: 16 of 20
nevertheless,
because
that
compliance
he
adequately
with
the
has
CGMPs
is
material to the government’s decision to provide reimbursement
for
regulated
materiality
drugs.
and
a
However,
“false
relator
statement
or
must
allege
fraudulent
both
course
of
conduct” as distinct elements of an FCA claim.
See Harrison,
176
Here,
F.3d
at
compliance
Medicare
788;
with
and
Owens,
the
612
F.3d
is
not
CGMPs
Medicaid,
Omnicare
has
at
729.
required
not
for
falsely
because
payment
stated
compliance to the government, as contemplated by the FCA. 7
by
such
Thus,
relator’s allegations of regulatory violations fail to support
FCA liability.
See Harrison, 176 F.3d at 786-87 (discussing
U.S. ex. rel. Thompson v. Columbia/HCA Healthcare Corp., 125
F.3d 899, 902 (5th Cir. 1997), and stating that FCA liability
based on a false certification to the government “will lie only
if
compliance
with
prerequisite
to
affirmatively
certified
the
gaining
such
statutes
a
or
benefit,
compliance”).
7
regulations
and
was
a
the
As
defendant
we
previously
Because adulterated drugs are subject to reimbursement by
Medicare and Medicaid and therefore any claim for payment cannot
be “false,” we do not separately address relator’s arguments for
FCA liability under “implied certification” or “worthless
services” theories.
See generally United States v. Sci.
Applications Int'l Corp., 626 F.3d 1257, 1266-71 (D.C. Cir.
2010) (discussing various versions of the implied certification
theory); U.S. ex. rel. Mikes v. Straus, 274 F.3d 687, 702-03 (2d
Cir. 2001) (describing worthless services theory).
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have
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explained,
the
Pg: 17 of 20
correction
of
regulatory
problems
is
a
worthy goal, but is “not actionable under the FCA in the absence
of actual fraudulent conduct.”
Mann v. Heckler & Koch Def.,
Inc., 630 F.3d 338, 346 (4th Cir. 2010) (emphasis added and
citation
omitted).
identified
any
In
the
false
present
statement
case,
or
relator
other
has
not
fraudulent
misrepresentation that Omnicare made to the government.
Were
we
to
accept
relator’s
theory
of
liability
based
merely on a regulatory violation, we would sanction use of the
FCA as a sweeping mechanism to promote regulatory compliance,
rather than a set of statutes aimed at protecting the financial
resources of the government from the consequences of fraudulent
conduct.
When an agency has broad powers to enforce its own
regulations,
liability
as
based
the
on
FDA
does
in
regulatory
this
case,
allowing
non-compliance
could
FCA
“short-
circuit the very remedial process the Government has established
to address non-compliance with those regulations.”
U.S. ex rel.
Wilkins v. United Health Grp., Inc., 659 F.3d 295, 310 (3d Cir.
2011).
Under the provisions of the FDCA, the Secretary of Health
and Human Services may suspend or withdraw FDA approval of a
drug
if
the
packaging
process
is
“inadequate
to
assure
and
preserve [the drug’s] identity, strength, quality, and purity.”
21
U.S.C.
§
355(e).
In
the
present
17
case,
the
FDA
pursued
Appeal: 12-2431
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numerous
Filed: 02/21/2014
regulatory
actions
multiple
Pg: 18 of 20
inspections
conducting
issuing the warning letter.
Heartland
products,
recommending
use
of
Omnicare,
the
Toledo
including
building
and
The FDA also threatened seizure of
of
“disapproval
against
injunctive
of
any
remedies,
new
[Heartland] as a manufacturer of drugs.”
and
action
applications
listing
The existence of these
significant remedial powers of the FDA buttresses our conclusion
that
Congress
did
regulatory-compliance
statement
or
not
intend
mechanism
fraudulent
that
in
conduct
the
the
FCA
be
absence
directed
used
of
at
a
the
as
a
false
federal
government.
For the same reasons that relator has failed to plead the
existence of a false statement or fraudulent conduct, he cannot
plausibly allege that Omnicare acted with the requisite scienter
when
submitting
claims
to
compliance with the CGMPs.
that
the
requires
defendant
actual
acted
knowledge,
the
government
for
drugs
in
Liability under the FCA requires
“knowingly,”
deliberate
which
by
ignorance,
definition
or
disregard of the truth or falsity of the information.
§ 3729(a), (b)(1).
not
reckless
31 U.S.C.
Because the Medicare and Medicaid statutes
do not prohibit reimbursement for drugs packaged in violation of
18
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Pg: 19 of 20
the CGMPs, Omnicare could not have knowingly submitted a false
claim for such drugs. 8
We also conclude that the district court did not abuse its
discretion in denying relator’s request to file a third amended
complaint.
In seeking leave to amend, relator did not comply
with the District of Maryland’s local rules, which require that
a plaintiff attach to a motion to amend “the proposed amended
pleading.”
D. Md. Local Rule 103(6)(a).
Relator’s failure to
comply with this rule justified the district court’s denial of
leave to amend.
See Francis v. Giacomelli, 588 F.3d 186, 197
(4th Cir. 2009).
Moreover, any amendment would have been futile
in light of our holding that adulterated drugs are not barred
from
reimbursement
by
Medicare
and
Medicaid
and,
therefore,
claims for reimbursement for these drugs cannot be “false” under
the FCA.
Finally, we emphasize that we do not condone Omnicare’s
disregard of FDA safety regulations that apparently occurred in
this
case.
submission
Nevertheless,
of
claims
for
we
payment
8
remain
for
convinced
drugs
that
packaged
at
the
the
Because we conclude that relator failed to plead the
existence of a false statement and the scienter required for an
FCA claim, we do not address Omnicare’s alternative argument
that relator did not allege the presentment of a false claim
with particularity under Federal Rule of Civil Procedure 9(b)
and our decision in Nathan, 707 F.3d 451.
19
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Filed: 02/21/2014
Pg: 20 of 20
Heartland facility did not constitute fraud on the government,
and
we
are
enforcement
confident
powers
may
that
be
the
FDA’s
exercised
use
of
its
regulatory
fully
to
ensure
further
compliance with applicable safety standards.
III.
In
sum,
we
conclude
that
the
district
court
properly
exercised jurisdiction over this action, but that relator failed
to plead the existence of a false statement and scienter as
required
by
the
FCA.
Accordingly,
we
affirm
the
district
court’s judgment.
AFFIRMED
20
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