United States of America et al v. GE Healthcare, Inc. et al

Filing 83

ORDER granting 78 GE's Unopposed Request for Judicial Notice, granting 77 GE's Motion to Dismiss the Third Amended Complaint as set forth more specifically herein, and denying GE's request for oral argument. Patel may file a Fourth Amended Complaint on or before October 26, 2017. Signed by Judge Virginia M. Hernandez Covington on 9/28/2017. (KM)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

UNITED STATES OF AMERICA,
et al., ex rel. SUNIL PATEL,
Plaintiffs,
v.

Case No. 8:14-cv-120-T-33TGW

GE HEALTHCARE, INC.,
Defendant.
______________________________/
ORDER
This matter comes before the Court upon consideration of
Defendant GE Healthcare, Inc.’s (“GE”) Motion to Dismiss the
Third Amended Complaint and request for oral argument, filed
on August 25, 2017 (Doc. # 77), GE’s Unopposed Request for
Judicial Notice, also filed on August 25, 2017 (Doc. # 78),
and Relator Sunil Patel’s (“Patel”) Response in Opposition,
filed on September 6, 2017 (Doc. # 80).

The Request for

Judicial Notice and the Motion to Dismiss are GRANTED as set
forth more specifically below.

The request for oral argument

is DENIED.
I.

Background
GE operates 31 nuclear pharmacies in the United States.

(Doc. # 73 at ¶ 7). Patel is a board-certified nuclear
pharmacist who worked at GE’s nuclear pharmacy in Tampa. (Id.
at ¶ 6).

In this action, Patel alleges that GE violated the

False Claims Act, 31 U.S.C. § 3729(a)(1), and parallel state
statutes,

by

selling

diluted

and

expired

drugs

and

artificially inflating the price of certain drugs.

by
The

relevant facts follow.
A.

Drug allegations
A majority of Patel’s allegations relate to the manner in

which GE compounded and labeled radiopharmaceuticals.

In the

practice of pharmacy, “compounding” refers to “incorporating
ingredients to create a finished product for dispensing to a
patient or for administration by a practitioner.”

(Doc. # 73

at ¶ 28 (citing Fla. Admin. Code § 64B16-27.700)).
here,

the

term

“includes

pharmaceuticals[.]”

the

preparation

of

Relevant
nuclear

(Id.).

Patel alleges that GE’s nuclear pharmacies produce the
radiopharmaceuticals at issue by “compounding an NDA reagent
kit with an NDA radionuclide or an elution from an NDA
generator.” (Id. at ¶ 27). For instance, GE manufactures the
drug Myoview by injecting radioactive Technetium 99 into cold
vials to activate the drug.

(Id. at ¶ 51).

Unit doses are

drawn from the vials, which are then sent to physicians and
hospitals for use in cardiac imaging scans.

(Id.).

The FDA-approved package insert for Myoview requires that
the radioactivity injected into Myoview kits be limited to “up
to 240 mCi [millicuries].”

(Id. at ¶ 52).

2

Nonetheless, GE

routinely injects radioactivity of up to and greater than 500
millicuries into Myoview kits.

(Id. at ¶ 54).

Patel raises similar allegations with respect to six
other radiopharmaceuticals that are also used as imaging
agents: Sestamibi, MAG3, MAA, MDP, Mebrofenin, and HDP.
at ¶¶ 68, 80, 88, 98, 106, 124).

(Id.

Patel maintains that GE’s

motive for injecting excess radioactivity is profit; the
practice allows GE to obtain extra doses from each kit to sell
to physicians and hospitals.

(E.g., Id. at ¶ 55).

GE also routinely labels radiopharmaceuticals with an
expiration time that is well beyond the time specified by the
package insert, including the drugs Myoview, Sestamibi, MAG3,
MAA, MDP, Sulfur Colloid, and HDP.

(Id. at ¶¶ 68, 80, 88, 98,

114, 124, 143). In a similar vein, Patel alleges that GE uses
expired Iodine-131 stock solution to make diagnostic capsules
for thyroid uptake tests.

(Id. at ¶ 133).

Patel maintains that the radiopharmaceuticals subject to
the foregoing practices are not reimbursable by government
programs because the drugs are compounded in violation of GE’s
state license (Id. at ¶¶ 41-43), the drugs are not safe,
effective, or FDA-approved (Id. at ¶¶ 9, 12, 18, 46-47), and
the drugs are “misbranded” and “adulterated” in violation of
the Food, Drug and Cosmetic Act, 21 U.S.C. § 352(a) (Id. at
¶¶ 32, 34).
Because the radiopharamceuticals are not reimbursable,
Patel alleges in Count I of the Third Amended Complaint that
3

GE caused physicians and hospitals to submit “false claims”
for the drugs, in violation of 31 U.S.C. § 3729(a)(1)(A).
(Doc. # 73 at ¶¶ 153-255).

In Count II, Patel alleges that

GE’s labels and invoices falsely indicated that the drugs were
FDA-approved, which constitutes a “false record or statement”
material

to

a

false

§ 3729(a)(1)(B).
B.

claim,

in

violation

of

31

U.S.C.

(Doc. # 73 at ¶¶ 256-267).

Pricing allegations
Within

Count

I,

Patel

further

alleges

that

GE

artificially inflated the reimbursement rate for Myoview and
other drugs by providing false sales data to Medicare.

(Doc.

# 73 at ¶¶ 168, 183, 196, 210, 224, 235, 254).
Medicare

determines

the

reimbursement

rate

for

radiopharmaceuticals “based on the lower of the billed charge
or

95

percent

of

the

average

wholesale

price

(AWP)

as

reflected in published sources (e.g., Red Book, Price Alert,
etc.).”

(Id. at ¶ 148).

According to Patel, GE submitted

false AWP data for Myoview to the Red Book.

(Id. at ¶¶

148-149). GE also provided false information about the number
of unit doses obtained from a Myoview kit, which is used to
calculate the per-unit reimbursement rate.
II.

(Id. at ¶ 150).

Procedural History
On January 17, 2014, Patel filed this action under seal

as relator for the United States and Florida, California,

4

Colorado,

Connecticut,

Delaware,

District

of

Columbia,

Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland,
Massachusetts,

Michigan,

Minnesota,

Montana,

Nevada,

New

Hampshire, New Jersey, New Mexico, New York, North Carolina,
Oklahoma,

Rhode

Island,

Tennessee,

Texas,

Virginia,

Washington, and Wisconsin (collectively, “the States”). (Doc.
# 1).
On March 23, 2017, the United States and the States
declined to intervene.

(Doc. ## 23, 25).

After the Court

lifted the seal, GE filed a Motion to Dismiss the Second
Amended Complaint.

(Doc. ## 24, 49).

Before the Court ruled

on the Motion, Patel requested and was granted leave to amend.
(Doc. ## 70, 71).
On

August

16,

2017,

Patel

filed

the

Third

Amended

Complaint (“TAC”), which is the operative pleading. (Doc.
## 71, 73).

As noted, the TAC asserts two counts, each of

which is brought pursuant to the federal False Claims Act and
the States’ parallel false claims acts. (Doc. # 73 at ¶¶ 153267).
On August 25, 2017, GE filed the instant Motion to
Dismiss with Prejudice.
opposition.

(Doc. # 80).

(Doc. # 77).

Patel responds in

On September 7, 2017, the Court

denied GE’s request to file a reply.

(Doc. ## 81, 82).

Accordingly, the Motion to Dismiss is ripe for review.

5

III. Legal Standard
On a motion to dismiss, the Court accepts as true all
allegations in the complaint and construes the facts in the
light most favorable to the plaintiff.

Jackson v. Bellsouth

Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004).

Further,

the Court favors the plaintiff with all reasonable inferences
from the allegations in the complaint.

Stephens v. Dep’t of

Health & Human Servs., 901 F.2d 1571, 1573 (11th Cir. 1990).
However, the Supreme Court explains that:
While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide
the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action
will not do. Factual allegations must be enough to
raise a right to relief above the speculative
level.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
citations omitted).

A court is not “bound to accept as true

a legal conclusion couched as a factual allegation.”

Papasan

v. Allain, 478 U.S. 265, 286 (1986).
Rule 9(b) of the Federal Rules of Civil Procedure imposes
more stringent pleading requirements on claims alleging fraud.
Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301, 1305 (11th
Cir. 2002).
place,

and

specifically

The complaint must allege “facts as to time,
substance
the

of

details

the
of

defendant’s
the

6

alleged

defendant[’s]

fraud,

allegedly

fraudulent acts, when they occurred, and who engaged in them.”
Hopper v. Solvay Pharm., Inc., 588 F.3d 1318, 1324 (11th Cir.
2009).
IV.

Discussion
Enacted in 1863, the False Claims Act (“FCA”), 31 U.S.C.

§§

3729,

et

seq.,

“was

originally

aimed

principally

at

stopping the massive frauds perpetrated by large contractors
during the Civil War.”

Universal Health Servs., Inc. v. U.S.

ex. rel. Escobar, 136 S. Ct. 1989, 1996 (2016) (internal
quotation

marks

omitted).

“Since

then,

Congress

has

repeatedly amended the Act, but its focus remains on those who
present

or

directly

fraudulent claims.”

induce
Id.

the

submission

of

false

or

The FCA’s civil penalties are

“essentially punitive in nature” and subject defendants to
treble damages plus penalties of up to $10,000 per claim. Id.
(internal quotation marks omitted).
The FCA may be enforced by the government or by a relator
through

a

qui

Government.”

tam

action

brought

“in

the

name

of

the

31 U.S.C. § 3730(b); Kellogg Brown & Root

Servs., Inc. v. U.S. ex rel. Carter, 135 S. Ct. 1970, 1973
(2015).

If a qui tam action results in recovery for the

government, the relator shares in the award.
A.

Public-disclosure bar
A relator’s ability to bring an FCA action is subject to

certain limitations, including the public-disclosure bar in 31
7

U.S.C. § 3730(e)(4), which endeavors “to strike a balance
between encouraging private persons to root out fraud and
stifling parasitic lawsuits.”

Schindler Elevator Corp. v.

U.S. ex rel. Kirk, 563 U.S. 401, 413 (2011).
In its current iteration, the public-disclosure bar
requires a court to dismiss an FCA action “if substantially
the

same

allegations

or

transactions”

were

previously

disclosed in a prior federal action, in the news media, or in
other specified sources.

31 U.S.C. § 3730(e)(4)(A) (2016).

The current version applies to FCA claims that arise from
billing on or after March 23, 2010.

U.S. ex rel. Saldivar v.

Fresenius Med. Care Holdings, Inc., 841 F.3d 927, 932 n.1
(11th Cir. 2016).
A

number

of

Patel’s

allegations

pertain

to

conduct

commencing as early as 2004, and therefore implicate the prior
version of the statute.

(E.g., Doc. # 73 at ¶¶ 165, 183).

That version imposes a jurisdictional bar when an FCA action
is

“based

upon

transactions”
§

in

3730(e)(4)(A)

the

public

similar
(2009).

disclosure

enumerated
Because

of

allegations

sources.
the

prior

31

or

U.S.C.

version

is

jurisdictional, the Court addresses the public-disclosure bar
at the outset of this analysis.

U.S. ex rel. Osheroff v.

Humana Inc., 776 F.3d 805, 810 (11th Cir. 2015).
To determine whether the public-disclosure bar applies
under either version of the statute, the Court considers:
8

(1) whether the allegations made by the relator have been
publicly disclosed; (2) if so, whether the allegations are
based on (or substantially the same as) the publicly-disclosed
allegations;

and

(3)

if

so,

whether

the

relator

is

an

“original source” of the information as that term is defined
in the FCA.

Id. at 812, 814.

GE argues that Patel’s allegations overlap with a federal
action filed by relator James Wagel in 2006.

(Doc. # 77 at

24). In the earlier action, Wagel, a sales representative for
a competing pharmaceutical company, alleged that GE encouraged
various healthcare providers to inject excess Technetium into
Myoview when the providers prepared doses on-site.
# 78-2 at ¶¶ 7, 45-47, 52, 60, 67-74).

(Doc.

Wagel alleged that GE

artificially inflated the reimbursement rate for Myoview by
failing to report the extra doses yielded by this practice.
(Id. at ¶¶ 59-60).
Ultimately, the United States settled Wagel’s action for
$30 million. (Doc. # 78-4 at 1). The Department of Justice
issued a press release stating that GE violated the FCA “by
causing Medicare to overpay for Myoview.”

(Id.).1

The pleadings from Wagel’s case and the press release are
public

disclosures

within

the

1

meaning

of

§

3730(e)(4).

GE submits an Unopposed Request for Judicial Notice of
Wagel’s pleadings and the news articles. (Doc. # 78). GE’s
request is granted. Osheroff, 776 F.3d at 811-812.
9

However, the Court finds that Patel’s allegations are not
“based on” or “substantially the same as” the allegations in
the prior public disclosures.
Wagel’s
manufacturer.

action

challenged

GE’s

practices

as

a

Specifically, Wagel alleged that GE encouraged

healthcare providers to inject excess radioactivity into
Myoview

at

the

additional doses.

providers’

offices

in

order

to

obtain

By contrast, this action alleges that GE

itself injected excess radioactivity, in GE’s capacity as a
nuclear pharmacy. As a result, the public-disclosure bar does
not apply because the prior action did not allege that GE “in
its capacity as a [pharmacy] actually engaged in wrongdoing.”
Cooper v. Blue Cross & Blue Shield of Fla., Inc., 19 F.3d 562,
567 (11th Cir. 1994) (holding that action against primary
insurer was not barred by prior allegations against insurer in
its role as payment intermediary).
Because

Patel’s

allegations

are

not

based

on,

or

substantially the same as, the publicly-disclosed allegations,
the Court is not required to reach the third question of
whether Patel is an original source. U.S. ex rel. Williams v.
NEC Corp., 931 F.2d 1493, 1500 (11th Cir. 1991).
the

original-source

inquiry

were

But even if

determinative,

Patel

qualifies as an original source.
The prior version of the FCA defined an “original source”
as “an individual who has direct and independent knowledge of
10

the

information

on

which

the

31 U.S.C. § 3730(e)(4)(B) (2009).

allegations

are

based.”

The Eleventh Circuit has

interpreted the phrase “direct and independent knowledge” to
require first-hand knowledge.

Saldivar, 841 F.3d at 936.

Here, the TAC demonstrates Patel’s first-hand knowledge of
GE’s nuclear pharmacy scheme based on Patel’s first-hand
experience as a GE nuclear pharmacist.

(E.g., Doc. # 73 at

¶¶ 54, 69-73, 80, 90, 133, 142-144).
The current version of the FCA defines an original source
as someone “who has knowledge that is independent of and
materially adds to the publicly disclosed allegations or
transactions[.]”
added).

31 U.S.C. § 3730(e)(4)(B) (2016) (emphasis

The Court finds that Patel’s allegations “materially

add” to Wagel’s action in part because Patel alleges that GE
effectively continued the fraudulent scheme — through its own
nuclear pharmacies — after settling Wagel’s action. Jacobs v.
Bank of Am. Corp., No. 1:15-CV-24585-UU, 2017 WL 2361943, at
*7 (S.D. Fla. Mar. 21, 2017) (holding that allegations of
continuing violations following a consent judgment materially
added

to

prior

public

disclosures).

Moreover,

the

TAC

includes extensive allegations relating to GE’s sale and use
of expired radiopharmaceuticals, which is a separate pharmacy
scheme that was not at issue Wagel’s case.
Based on the foregoing, the Court holds that the instant
action is not subject to the public-disclosure bar.
11

B.

Statute of limitations
GE alternatively moves to dismiss a portion of the TAC as

time-barred.

Because this action was not filed until January

17, 2014, GE argues that claims prior to January 17, 2008 are
barred pursuant to the FCA’s six-year statute of limitations.
(Doc. # 77 at 7-8); see 31 U.S.C. § 3731(b)(1) (stating that
an FCA action may not be brought “more than 6 years after the
date on which the violation of section 3729 is committed.”).
In response, Patel contends that the FCA’s ten-year
tolling provision governs. (Doc. # 80 at 18-20). Pursuant to
31 U.S.C. § 3731(b)(2), an FCA action may be brought within:
3 years after the date when facts material to the
right of action are known or reasonably should have
been known by the official of the United States
charged with responsibility to act in the
circumstances, but in no event more than 10 years
after the date on which the violation is
committed[.]
31 U.S.C. § 3731(b)(2).
Courts are split as to whether the tolling provision
applies to cases in which the government has declined to
intervene, such as the instant case. United States v. Cochise
Consultancy, Inc., No. 5:13-CV-02168-RDP, 2016 WL 1698248, at
*2-3 (N.D. Ala. Apr. 28, 2016) (identifying a three-way split
in authority); U.S. ex rel. Wood v. Allergan, Inc., No.
10-CV-5645 (JMF), 2017 WL 1233991, at *16-18 (S.D.N.Y. Mar.
31, 2017) (same); see also Stephen S. Stallings, Laura E.
Caravello, Wait Not, Want Not: The Importance of the Statute
12

of Limitations in Qui Tam False Claims Act Cases, 7 Pitt. J.
Envtl. Pub. Health L. 245, 259-272 (2013).

The Eleventh

Circuit has not issued a published decision addressing the
issue.
GE fails to acknowledge, let alone address, the tolling
provision.

GE also concedes that some of the State’s false

claims acts include at least a ten-year limitations period.
(Doc. # 77 at 8 n.10).

Accordingly, absent a more focused

challenge, the Court declines to dismiss at this juncture.
C.

Presentment of a false claim (Count I)
GE next moves to dismiss Count I for failure to state a

claim.

In Count I, Patel alleges that GE violated 31 U.S.C.

§ 3729(a)(1)(A), which creates a right of action against any
person who “knowingly presents, or causes to be presented, a
false or fraudulent claim for payment or approval.”

To

establish a violation of § 3729(a)(1)(A), Patel must prove
three elements: “(1) a false or fraudulent claim, (2) which
was presented, or caused to be presented, for payment or
approval, (3) with the knowledge that the claim was false.”
U.S. ex rel. Phalp v. Lincare Holdings, Inc., 857 F.3d 1148,
1154 (11th Cir. 2017).
The key issue under § 3729(a)(1)(A) is whether the
defendant “presented or caused to be presented” a false claim.
Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039, 1052 (11th Cir.

13

2015) (quoting Hopper, 588 F.3d at 1325-26).
allege

the

actual

presentment

of

a

claim

Patel “must
.

.

.

with

particularity, meaning particular facts about the ‘who,’
‘what,’ ‘where,’ ‘when,’ and ‘how’ of fraudulent submissions
to the government.”

Id. at 1052 (internal quotation marks

omitted).
“Providing exact billing data — name, date, amount, and
services rendered — or attaching a representative sample claim
is one way a complaint can establish” presentment of a false
claim. U.S. ex rel. Mastej v. Health Mgmt. Assocs., Inc., 591
F. App’x 693, 704 (11th Cir. 2014). “However, there is no per
se rule that an FCA complaint must provide exact billing data
or

attach

a

representative

sample

Clausen, 290 F.3d at 1312 & n.21).

claim.”

Id.

(citing

Rather, a complaint must

contain “some indicia of reliability” that a false claim was
actually submitted. Clausen, 290 F.3d at 1311. For instance,
a relator with first-hand knowledge of the defendant’s billing
practices may possess a sufficient basis for alleging that the
defendant submitted false claims.

Mastej, 591 F. App’x at

704.
At its most detailed, the TAC alleges that Patel spoke
with two nuclear technicians who worked for two of GE’s
physician

customers.

(Doc.

#

73

at

¶¶

60,

62).

One

technician, Renee, worked for Dr. Ramulu Eligetti in Ocala.
(Id. at ¶ 60). Renee told Patel that approximately 85% of Dr.
14

Eligetti’s patients were comprised of Medicare and Medicaid
beneficiaries.

(Id.).

Another technician, Toni, who worked

for Dr. Sami Elchahal in North Tampa, told Patel that a
“majority”

of

Dr.

Elchahal’s

patients

Medicare and Medicaid beneficiaries.

were

comprised

of

(Id. at ¶ 62).

Both Dr. Eligetti and Dr. Elchahal purchased Myoview from
GE’s Tampa pharmacy, and Patel alleges that the Myoview
contained

excess

radioactivity

because

compounded with excess radioactivity.

all

Myoview

was

(Id. at ¶¶ 61, 63).

Because Dr. Eligetti and Dr. Elchahal purchased Myoview for
patients, and because a substantial number of their patients
were Medicare or Medicaid beneficiaries, Patel argues that
false

claims

were

necessarily

Medicare and Medicaid.

presented

for

payment

to

(Doc. # 80 at 8-9).

These allegations fall well short of alleging “exact
billing data.” Mastej, 591 F. App’x at 704. Patel identifies
no “particular facts about the ‘who,’ ‘what,’ ‘where,’ ‘when,’
and

‘how’

of

fraudulent

submissions

to

the

government.”

Urquilla-Diaz, 780 F.3d at 1052 (quoting Hopper, 588 F.3d at
1325-26).
Instead, Patel contends that his allegations possess
other

“indicia

of

reliability”

because

participated in GE’s fraudulent scheme.

he

personally

(Doc. # 80 at 9).

Yet, the Eleventh Circuit has repeatedly held that knowledge
of an underlying scheme – even detailed knowledge — is not
15

sufficient to allege presentment.

E.g., U.S. ex rel. Atkins

v. McInteer, 470 F.3d 1350, 1358-59 (11th Cir. 2006); Clausen,
290 F.3d at 1311-12.
Patel relies on two other Eleventh Circuit cases, but
each is readily distinguishable.
Circuit

held

requisite

that

indicia

a

relator’s

of

In Matheny, the Eleventh
allegations

reliability

because

possessed
the

the

relator

“personally participated in the manipulation” of account data
submitted

to

the

government,

and

the

relator

provided

“detailed allegations of the accounting records . . . and his
involvement with the patient accounts.”

U.S. ex rel. Matheny

v. Medco Health Sols., Inc., 671 F.3d 1217, 1221, 1230 (11th
Cir. 2012). Likewise, in Walker, the relator alleged that she
received direct instructions about how to bill services and
also

had

at

least

one

personal

conversation

about

the

defendant’s billing practices with an office manager. U.S. ex
rel. Walker v. R&F Props. of Lake Cty., Inc., 433 F.3d 1349,
1360 (11th Cir. 2005).

But in this case, the TAC pleads no

similar facts demonstrating that Patel is familiar with the
claims and billing process.
Perhaps recognizing the deficiency of his allegations
under Eleventh Circuit precedent, Patel suggests that a “more
flexible” pleading standard should apply when a qui tam
defendant causes a third party to file false claims, as GE
allegedly did in this case.

(Doc. # 80 at 8).
16

Patel relies

on cases from the First Circuit holding that a relator can
satisfy

Rule

evidence

to

9(b)

“by

providing

strengthen

possibility.”

the

factual

inference

or

of

statistical

fraud

beyond

U.S. ex rel. Duxbury v. Ortho Biotech Prods.,

579 F.3d 13, 29 (1st Cir. 2009) (internal quotation marks
omitted).
Patel fails to acknowledge that the Eleventh Circuit has
rejected this approach.
the

defendant’s

In Hopper, the relators alleged that

illegal

marketing

campaign

for

the

drug

Marinol induced physicians to write off-label prescriptions,
which in turn caused pharmacies to submit false claims for
reimbursement.

588 F.3d at 1326.

Although the relators

possessed no billing or claims data, they presented what they
described as a “highly-compelling statistical analysis [that]
renders inescapable the conclusion that a huge number of
claims for ineffective off-label uses of Marinol resulted”
from the illegal marketing campaign.

Id.

The Eleventh

Circuit acknowledged the First Circuit line of cases, but held
that the relators’ failure to identify a single prescription
or claim with particularity was fatal to their cause of
action.

Id. at 1326-27; accord U.S. ex rel. Keeler v. Eisai,

Inc., 568 F. App’x 783, 796-798 (11th Cir. 2014).
Patel identifies no basis for this Court to depart from
Hopper by applying a more lenient standard.2
2

For

this

same

reason,
17

the

Court

Moreover, even

rejects Patel’s
(continued...)

under the First Circuit’s more flexible pleading standard,
Patel’s allegations are insufficient.

In a recent case, the

First Circuit emphasized that a relator must generally plead
“specific medical providers who allegedly submitted false
claims, the rough time periods, locations, and amounts of the
claims, and the specific government programs to which the
claims were made.”

U.S. ex. rel. Kelly v. Novartis Pharm.

Corp., 827 F.3d 5, 13 (1st Cir. 2016).

The First Circuit

rejected as speculative a claim which – similar to Count I in
this case — was premised on the bare facts that certain
doctors received services from the defendants, the doctors
were enrolled in federal reimbursement programs, and the
doctors prescribed the drug at issue.

Id. at 15.

Patel attempts to buttress his claim by alleging that two
of the drugs at issue, Myoview and Sestamibi, are used for
cardiac tests and “heart disease is the leading cause of death
for Americans over the age of 65, the point at which Medicare
coverage begins.”

(Doc. # 73 at ¶ 64).

Patel also submits a

report from the U.S. Government Accountability Office, which
states

that

Myoview

and

Sestamibi

2

were

the

two

(...continued)
reliance on a Fifth Circuit case, U.S. ex rel. Grubbs v.
Kanneganti, 565 F.3d 180, 192 (5th Cir. 2009), which also
announced a more lenient pleading standard. See Keeler, 568
F. App’x at 797 n.19 (“Although the Fifth Circuit in Grubbs
criticized the stringent requirements of Clausen, subsequent
cases decided by the Eleventh Circuit emphatically reaffirms
the holding as binding precedent.”)
18

radiopharmaceuticals that Medicare spent the most money on
between 2003 and 2004.
4).

(Doc. # 80 at 10 n.5; Doc. # 80-1 at

Based on these facts, Patel argues that “many, if not

most,” of the Myoview and Sestamibi doses sold to Dr. Eligetti
and Dr. Elchahal “likely were for Medicare beneficiaries and
were billed to the Medicare program.”

(Doc. # 80 at 10).

To state a plausible claim under § 3729(a)(1)(A), Patel
must do more than allege that it is “likely” that false claims
were submitted to the government.

Clausen, 290 F.3d at 1313.

Once again, Patel’s argument rests on “mere conjecture” and is
not sufficient to allege presentment under Rule 9(b) pleading
standards.

Id.

Based on the foregoing, Count I is due to be dismissed.
Because Patel fails to allege the presentment of any claim
with

particularity,

the

Court

is

unable

to

meaningfully

address whether Patel adequately alleges that such a claim was
“false” under the Ninth Circuit’s recent decision in United
States ex rel. Campie v. Gilead Sciences, Inc., 862 F.3d 890
(9th Cir. 2017), or based on another theory of falsity.

The

Court therefore declines to reach GE’s alternative arguments
regarding the element of falsity.

(See Doc. # 77 at 12-16).

GE requests that Count I be dismissed with prejudice.
(Doc. # 55 at 17-18).
amend.

In response, Patel requests leave to

(Doc. # 80 at 6 n.3).

19

Pursuant to Fed. R. Civ. P. 15(a)(2), “[t]he court should
freely give leave [to amend] when justice so requires.”

In

light of the liberal policy favoring amendment, and because
this Court has not previously issued any substantive ruling in
this action, the Court will grant Patel one – and very likely
only one – opportunity to amend.

However, Patel is cautioned

that he may only amend Count I if he is able to allege
presentment of actual claims in good faith under Eleventh
Circuit pleading standards.
D.

False statement material to a false claim (Count II)
In Count II, Patel alleges a violation of 31 U.S.C.

§ 3729(a)(1)(B), which was formerly codified at 31 U.S.C.
§ 3729(a)(2). The prior version applies to claims for payment
submitted before June 7, 2008, and therefore covers a portion
of Patel’s claim. Hopper, 588 F.3d at 1327 n.3. That version
creates a cause of action against any person who “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)(2) (2008).

Under this version of the statute, a relator is not
required to allege presentment because the statutory language
includes no express presentment requirement. Hopper, 588 F.3d
at 1328.

But a relator is required to allege that (1) the

defendant intended that the government pay a false claim, and

20

(2) the government actually paid a false claim.

Id. at 1327-

28.
GE argues that Patel fails to allege with particularity
either intent or actual payment of a false claim.
at 17-19).

(Doc. # 77

On the element of payment, Patel correctly points

out that in Hopper, the Eleventh Circuit suggested that the
First Circuit’s more lenient pleading standard could apply to
allegations of payment.

588 F.3d at 1329 (holding that

Clausen and its progeny “do not necessarily foreclose the
possibility that, for claims under subsection (a)(2), general
allegations of improper government payments to third parties,
supported by factual or statistical evidence to strengthen the
inference of fraud . . . could satisfy the particularity
requirements of Rule 9(b)”).
But here, similar to Hopper, the Court need not resolve
this issue because Patel fails to allege any facts sufficient
to support the element of intent.

Id. at 1329-30.

Patel

includes no allegations relevant to intent within Count II.
(Doc. # 73 at ¶¶ 256-267).

And in response to the Motion to

Dismiss, Patel identifies no such allegations within the TAC.
(Doc. # 80 at 11-12).
GE appears to suggest that the same elements of intent
and payment are required under the current version of the
statute, § 3729(a)(1)(B), which creates a cause of action
against any person who “knowingly makes, uses, or causes to be
21

made or used, a false record or statement material to a false
or fraudulent claim.”

(Doc. # 77 at 18 n.18).

In contrast to

§ 3729(a)(2), the current version omits any reference to
payment or intent.
In Hopper, the Eleventh Circuit declined to address the
elements of a claim under the current version.

588 F.3d at

1329

710

n.4;

see

also

Mastej,

591

declining to address the issue).

F.

App’x

at

(again

But in a recent published

decision, the Eleventh Circuit held that “[t]o prove a claim
under § 3729(a)(1)(B), a relator must show that: (1) the
defendant made (or caused to be made) a false statement, (2)
the defendant knew it to be false, and (3) the statement was
material

to

a

false

claim.”

Phalp,

857

F.3d

at

1154.

Consistent with the revised statutory language, the Eleventh
Circuit

omitted

any

intent

or

payment

requirement.

Accordingly, absent some contrary authority, the Court is not
persuaded

that

the

requirements

under

§

3729(a)(2)

are

applicable to the portion of Patel’s claims brought under
§ 3729(a)(1)(B).
GE alternatively argues that Patel fails to allege that
the false statements or records were “material” to a false
claim. (Doc. # 77 at 21-22). In particular, GE contends that
a heightened materiality standard applies under Escobar, a
2016 Supreme Court decision.

(Id. at 22).

22

In Escobar, the Supreme Court addressed the viability of
the

so-called

“implied

false-certification”

theory

of

liability under § 3729(a)(1)(A) – not § 3729(a)(1)(B), which
is the subsection at issue in Count II.3

136 S. Ct. at 1999.

The Supreme Court first confirmed the prevailing view among
the Circuits that a plaintiff could establish a “false claim”
under § 3729(a)(1)(A) by showing that a defendant omitted
information material to a claim.
split,

the

Supreme

Court

also

Id.

Resolving a Circuit

held

that

materiality

assessed under a “demanding” and “rigorous” standard.

is

Id. at

2003-2004 & n.6.
In

an

implied-false

certification case under

§ 3729(a)(1)(A), the materiality requirement is a judiciallyimposed doctrine, which is designed to ensure that only
significant

omissions

penalties.
§

trigger

But

here,

3729(a)(1)(B),

which

statements

or

records

be

Patel

the

FCA’s

brings

expressly

Count

requires

“material”

to

considerable

a

II

under

that

false

false

claim.

Notably, for this provision, the FCA specifically defines
“material” as “having a natural tendency to influence, or be
capable of influencing, the payment or receipt of money or

3

In connection with the instant Motion, neither side
addresses the viability of an implied-certification theory
under § 3729(a)(1)(B), likely because GE does not directly
challenge Patel’s pleading of the “falsity” element for this
claim.
23

property.”

31 U.S.C. § 3729(b)(4); Rutledge v. Aveda, No.

2:14-CV-00145-AKK, 2015 WL 2238786, at *5 (N.D. Ala. May 12,
2015); U.S. ex rel. St. Joseph’s Hosp., Inc. v. United
Distributors, Inc., 918 F. Supp. 2d 1306, 1315 (S.D. Ga.
2013).
GE

cites

definition

no

of

§ 3729(a)(1)(B).

case

holding

materiality

that

applies

Escobar’s
to

a

heightened

claim

under

Indeed, the Fourth Circuit has declined to

alter its analysis under § 3729(a)(1)(B) following Escobar.
United States v. Triple Canopy, Inc., 857 F.3d 174, 179 (4th
Cir. 2017) (holding that the court’s prior opinion, which
applied § 3729(b)(4)’s materiality standard to a claim under
§ 3729(a)(1)(B), was not impacted by Escobar).
For the present, the Court reserves ruling on this
unbriefed issue in light of a more fundamental problem with
the TAC.

As discussed, Count II implicates two versions of

the statute, which in turn possess separate elements of proof.
Accordingly, the Court dismisses Count II sua sponte in order
for Patel to re-plead his claim in separate counts and to
otherwise cure the deficiencies identified above. See U.S. ex
rel. Graves v. Plaza Med. Ctrs. Corp., No. 10-23382-CIV, 2014
WL 5040284, at *4 (S.D. Fla. Oct. 8, 2014) (ordering relator
to plead separate counts for each version of the statute). GE
may

renew

its

arguments,

with

authority, on a subsequent motion.
24

citation

to

persuasive

E.

State claims
In addition to alleged violations of the FCA, Patel

alleges parallel violations of the States’ false claims laws.
GE

moves

to

dismiss

those

claims

for

the

same

identified above, and Patel offers no opposition.
at 27).

reasons

(Doc. # 77

Accordingly, the state-law claims in Counts I and II

are dismissed without prejudice. Keeler, 568 F. App’x at 803.
V.

Conclusion
Based on the foregoing, it is ORDERED, ADJUDGED, and

DECREED that:
(1)

GE’s Unopposed Request for Judicial Notice (Doc.

# 78) is GRANTED;
(2) GE’s Request for Oral Argument (Doc. # 77 at 28) is
DENIED;
(3)

GE’s Motion to Dismiss the Third Amended Complaint

(Doc. # 77) is GRANTED as set forth more specifically herein.
Counts I and II are dismissed without prejudice.

Patel may

file a Fourth Amended Complaint on or before October 26, 2017.
DONE and ORDERED in Chambers in Tampa, Florida, this 28th
day of September, 2017.

25