Suppressed v. Suppressed

Filing 543

MEMORANDUM Opinion and Order: For the reasons stated herein, Relator's Motion to Amend Judgment (Dkt. No. 495) is granted in part and denied in part. It is granted insofar as the Court orders damages to be trebled, post-judgment int erest on all claims, and prejudgment interest on the Texas and Louisiana claims. The Court denies the Motion as to prejudgment interest on all other state and District of Columbia claims and on federal FCA claims. The Court orders civil penalties for all violations at 20% above the relevant statutory minimums. Signed by the Honorable Harry D. Leinenweber on 5/9/2023: Mailed notice (maf) (Main Document 543 replaced on 5/9/2023) (maf, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

UNITED STATES, ex rel.
RONALD J. STRECK,
Plaintiff,

Case No. 14 C 9412

v.

Judge Harry D. Leinenweber

TAKEDA PHARMACEUTICALS
AMERICA, INC., et al.,
Defendants.

MEMORANDUM OPINION AND ORDER
I. BACKGROUND
After a jury verdict, the Court entered judgment in favor of
the Relator Ronald J. Streck (“Relator”) against Defendant Eli
Lilly and Company (“Lilly”) on qui tam actions under the federal
False Claims Act (the “FCA”) and various state false claims acts
(Dkt. No. 486). Relator has now filed a post-trial Motion under
Federal

Rule

of

Civil

Procedure

59

to

Amend

Judgment

(Dkt.

No. 495). Relator seeks trebled damages, prejudgment interest on
actual

damages,

post-judgement

interest,

and

maximum

civil

penalties. For the reasons stated herein, the Court grants in part
and denies in part the Motion.

II. DISCUSSION
A. Trebled Damages
Under Section 3729 of the FCA, a defendant is liable for “3
times the amount of damages which the Government sustains because
of the act of [the defendant].” 31 U.S.C. § 3729(a). Defendants do
not dispute that the relevant state statutes call for the same.
The jury determined the actual damages to the federal and state
governments to be $61,229,217. (Dkt. No. 486.) This figure tripled
amounts to $183,687,651.
Lilly owes trebled damages totaling $183,687,651.
B. Prejudgment Interest Under the FCA
Relator asks this Court to impose prejudgment interest on
pre-trebled damages. While the Seventh Circuit has not yet provided
firm guidance on the availability of prejudgment interest, this
Court is persuaded by other circuits that have expressly disallowed
it. See e.g., United States v. McLeod, 721 F.2d 282, 286 (9th Cir.
1983); Peterson v. Weinberger, 508 F.2d 45, 55 (5th Cir. 1975);
United States v. Foster Wheeler Corp., 447 F.2d 100, 102 (2d Cir.
1971). Relator cites one case for its position, U.S. v. Coop. Grain
& Supply Co., 476 F.2d 47, 62 (8th Cir. 1973).
Generally, a remedy is not foreclosed simply because the
statute does not mandate it. See Rodgers v. U.S., 332 U.S. 371
(1947); U.S. v. Texas, 507 U.S. 529, 535 (1993); W. Virginia v.
U.S., 479 U.S. 305, 308 (1987); Gorenstein Enterprises, Inc. v.
- 2 -

Quality Care-USA, Inc., 874 F.2d 431, 436 (7th Cir. 1989). Relator
relies heavily on Gornstein, a 1989 case in which the Seventh
Circuit asserted a presumption of prejudgment interest to victims
of federal violations. 874 F.2d 436. Since then, the Supreme Court
has remarked on the lack of prejudgment interest in the FCA qui
tam actions. See Cook Cnty., Ill. v. U.S. ex rel. Chandler, 538
U.S. 120, 131 (2003).
This Court finds any presumption of prejudgment interest
eclipsed by the FCA itself. The lack of a prejudgment interest
provision

in

Congress’s

scheme

for

relator

recoveries

under

Section 3729 of the FCA expressly differs from other portions of
the statute. In the provision of the FCA dealing with retaliation
against whistleblowers – not at issue here – Congress specifically
authorized it. 31 U.S.C. § 3730(h) (“Relief . . . shall include .
. . 2 times the amount of back pay [and] interest on the back pay.
. . .”). The history of the FCA also renders the scarcity of
support for Relator’s position unsurprising. Congress was aware of
courts’ interpretations when it amended the statute in both 1986
and 2009 but never added prejudgment interest to the text. Such
inaction suggests that Congress intended to exclude this remedy.
See Cannon v. University of Chicago, 441 U.S. 677, 703 (1979);
Monessen Sw. Ry. Co. v. Morgan, 486 U.S. 330, 338 (1988).
The Supreme Court has suggested that an amendment Congress
did make, the trebling of damages, renders prejudgment interest
- 3 -

redundant at best. See Chandler, 538 U.S. at 131-33. In 1986,
Congress raised the ceiling on damages recoverable under § 3729(a)
from double to treble. See id. at 120. While Grain & Supply, 476
F.2d 62, also was published before the amendment, the Eighth
Circuit’s reasoning would make little sense afterwards. In Grain
& Supply, the 8th Circuit explained that prejudgment interest was
important to compensate the plaintiff. Id. The Supreme Court has
characterized the trebling of FCA damages as exceeding the bounds
of

compensation

now

to

serve

punitive,

rather

than

merely

compensatory, purposes. See Chandler, 538 U.S. at 133; Vermont
Agency of Nat. Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 78486, (2000) (“[T]he current version of the FCA imposes damages that
are essentially punitive in nature.”); see also Universal Health
Servs., Inc. v. U.S., 579 U.S. 176, 182 (2016).
Indeed, as the Supreme Court explained in Chandler, the FCA’s
trebled damages feature ultimately serves more than one purpose.
538 U.S. at 133. Relator sets forth a reasonable policy argument
that the recognition of the time value of money, an economic
reality

accounted

for

by

prejudgment

interest,

ensures

fair

compensation. However, the law instructs otherwise, seemingly in
pursuit of a countervailing policy goal. “In qui tam cases the
rough difference between double and triple damages may well serve
. . . to quicken the self-interest of some private plaintiff who
can

spot

violations

and

start

litigating

- 4 -

to

compensate

the

Government, while benefiting himself as well.” Id. at 131. With an
aim for speedy litigation, the exclusion of prejudgment interest
makes sense. Congress, recognizing the time value of money, would
assume rational relators would push for efficient litigation to
obtain the award for themselves, ipso facto the Government, as
quickly as possible.
For

these

reasons,

the

Court

declines

to

award

Relator

prejudgment interest under the federal FCA.
C. Prejudgment Interest Under State FCAs
Relator also requests the Court award prejudgment interest on
the damages amount under the 27 state FCAs and the District of
Columbia FCA (“state FCAs” or “state statutes”). Lilly concedes
that claims under Texas and Louisiana statutes – namely, the Texas
Medicaid Fraud Prevention Act and the Louisiana Medical Assistance
Programs Integrity Law – are entitled to prejudgment interest. The
parties present partial, opposing arguments for several additional
states and the District of Columbia (“states”).
In a lawsuit such as this one involving the laws of various
jurisdictions,

the

availability

of

prejudgment

interest

is

determined under each jurisdiction’s laws. See In re Air Crash
Disaster Near Chicago, Illinois, on May 25, 1979, 644 F.2d 633,
637 (7th Cir. 1981) (“[T]he availability of prejudgment interest
must be determined by reference to state law.”); accord Stulberg
v. Intermedics Orthopedics, Inc., 1999 WL 759608, at *10 (N.D.
- 5 -

Ill. Aug. 31, 1999) (“When a case arises under federal question
jurisdiction, but also contains supplemental state law claims,
courts award prejudgment interest on the state law claims under
state law and the federal claims under federal law.”). Still, given
the substantive similarity between state FCAs and the federal FCA,
the statutes may be construed consistently, particularly with
respect to substantively similar provisions. See City of Chicago
ex rel. Rosenberg v. Redflex Traffic Sys., Inc., 884 F.3d 798, 802
(7th Cir. 2018) (“Given the substantive similarity between the
Illinois False Claims Act (IFCA) and the FCA, Illinois courts have
relied upon federal cases interpreting the FCA in construing the
provisions of the IFCA.”); New York v. Amgen Inc., 652 F.3d 103,
109 (1st Cir. 2011) (“Given the substantive similarity of the state
FCAs . . . and the federal FCA with respect to the provisions at
issue in this litigation, the state statutes may be construed
consistently with the federal act.”).
Accepting, as the parties do, that all relevant state statutes
allow trebled damages, and that only Texas and Louisiana contain
statutory provisions expressly providing prejudgment interest, the
Court finds substantial similarity on the issue of prejudgment
interest. Thus, the same rationale for the lack of available
prejudgment interest in the federal FCA applies to the relevant
state FCAs.

- 6 -

The Court orders prejudgment interest for claims rendered
under the laws of Texas and Louisiana. The Court orders no prejudgment interest for the remaining states.
D. Post-judgment Interest
Relator requests post-judgment interest at the U.S. Treasury
Bill rate. Lilly does not contest that post-judgment interest is
available under the federal FCA for federal claims. Rather, Lilly
objects to Relator’s request for post-judgment interest at the
U.S. Treasury Bill rate on his state law claims, arguing that that
interest under state FCAs depends on state law. Lilly then contends
that Relator waived post-judgment interest on his state law claims
by failing to cite state authority.
Under 28 U.S.C. § 1961, interest is allowed “on any money
judgment in a civil case recovered in a district court.” 28 U.S.C.
§ 1961; Travelers Ins. Co. v. Transp. Ins. Co., 846 F.2d 1048,
1053 (7th Cir.1988). Federal district courts generally award postjudgment interest. See Student Loan Marketing Ass'n v. Lipman, 45
F.3d 173, 176 (7th Cir.1995). The courts calculate post-judgment
interest using 28 U.S.C. § 1961(a), which provides for interest
from the date of judgment at a floating rate determined by the
coupon yield of United States Treasury Bills. 28 U.S.C. § 1961(a).
This interest compounds annually. 28 U.S.C. § 1961(b); Illinois
Nat'l Ins. Co. v. Ace Stamping & Mach. Co. Inc., 2021 WL 323785,
at *2 (N.D. Ill. Feb. 1, 2021). The Seventh Circuit recognizes the
- 7 -

preemption of a federal statutory provision over a state law
provision in the post-judgment interest context. See Travelers
Ins. Co. v. Transp. Ins. Co., 846 F.2d 1048, 1053 (7th Cir. 1988).
Lilly cites no authority for its position, nor explains why
there would be a conflict between the state and federal statutes
that would negate federal preemption.
As such, the Court awards Relator post-judgment interest for
federal and state claims at the U.S. Treasury Bill rate.
E. Civil Penalties
The Court assesses civil penalties against Lilly for its
federal

and

state

violations

within

the

respective

statutory

ranges. See U.S. ex rel. Tyson v. Amerigroup Illinois, Inc., 488
F.Supp. 2d 719, 741 (N.D. Ill. 2007). Before determining the
appropriate penalties, the Court will clarify the appropriate
ranges for consideration.
Civil Penalty Ranges
The federal statutory minimum is $5000 per violation before
November 2015 and $12,537 per violation after November 2015.
28 C.F.R. §§ 85.3, 85.5; see 31 U.S.C. § 3729(a). The federal
statutory maximum is $11,000 per violation before November 2015
and $25,076 per violation after November 2015. Id. As exhibited in
the appendix, many states follow suit. In all relevant statutory
schemes at all relevant times, the maximum is twice the minimum.
See Appendix A. In other words, the statutes’ penalty multiplier
- 8 -

is as low as 1 and as high as 2 of the statutory minimums, or as
low as .5 or as high as 1 of the maximums. The Court has discretion
to award civil penalties within this range. See United States ex
rel. Tyson v. Amerigroup Illinois, Inc., 488 F. Supp. 2d 719, 741
(N.D. Ill. 2007).
Relator conceded that he originally overstated the penalties
available under the District of Columbia (“D.C.”) and Wisconsin
FCAs. The D.C. FCA states that a violator “shall be liable to the
District for a civil penalty of . . . not more than $11,000.”

D.C.

Code Ann. § 2-381.02(a). The Wisconsin FCA in force in 2015
provides that a violator “shall forfeit not less than $5,000 nor
more than $10,000 for each violation.” Wis. Stat. Ann. § 20.931(2)
(2013–14), repealed by 2015-2016 Wisc. Legis. Serv. Act 55, § 945n,
eff. July 14, 2015. The parties dispute the penalties available
under Hawaii FCA. The Court reads Hawaii’s statutory range between
November 2015 and 2020 to be $11,463 to $22,927, then to match the
federal rate after 2020. See Haw. Rev. Stat. § 661-21. Because the
conduct at issue predated 2020, the $11,463 to $22,927 range
applies. Accordingly, the Court incorporated these deductions with
respect to the District of Columbia, Wisconsin, and Hawaii statutes
in the addendum. See Appendix A.
Civil Penalty Application
To assess the appropriate penalties, the Court looks to the
totality

of

the

circumstances.

Tyson

- 9 -

488

F.Supp

2d

at

741.

Circumstances

include

the

egregiousness

of

the

conduct,

the

gravity of the offense, fairness, see e.g., id. at 741-42, and the
degree of the defendant’s scienter, see e.g., S.E.C. v. Zynergy
Int’l Inc., 420 F.Supp. 3d 384, 394 (N.D. Ill. 2019).
Relator

asks

for

the

Court

to

impose

the

maximum

civil

penalties, arguing Lilly engaged in systematic misconduct for over
a decade (2005 to 2017), acted knowingly, and expressed no remorse.
Relator cites cases around the country in which courts imposed
maximum penalties. Lilly argues that it should not be penalized
for exercising its right to a defense and proffers that its
remedial actions weigh in favor of minimal, if any, penalties.
Lilly

changed

its

practices

years

before

trial,

including

restating, in 2017, its Average Manufacturer Price (“AMP”) amounts
back to the date, in 2016, of the relevant agency action. Relator
argues that Lilly’s correction should have dated back to 2005.
Ultimately,

while

Lilly

could

have,

of

course,

behaved

better, it could have acted far worse. Lilly’s misrepresentations
affected the significant portions of its public dealings over
several

years,

and

such

a

grave

impact

has

favored

maximum

penalties elsewhere. See United States ex rel. Morsell v. Norton
LifeLock, Inc., 2023 WL 314506, at *75 (D.D.C. 2023). However,
Lilly’s conduct did not match the defendants’ conduct in cases
where courts within the Seventh Circuit have imposed maximum civil
penalties. Here, Relator did not claim fraud, and the evidence on
- 10 -

scienter has been heavily disputed. The Court does not consider
Lilly’s litigation strategies, because a defendant should not be
penalized for exercising its right to defense. See Tyson, 488 F.
Supp. 2d at 742.
For these reasons, the Court considers the civil penalty of
twenty percent above the statutory minimum, i.e., the minimum at
a factor of 1.2, or 60% of the maximum penalty, appropriate for
each

offense

violations

under

before

each

statute.

November

2015

The

and

9

jury

found

violations

43

federal

afterwards.

Therefore, the total minimum federal civil penalty amounts to
$349,333, then adding twenty percent, the total is $419,200. See
Appendix A. (Equally, the maximum is $698,684, sixty percent of
which is $419,200.) Among the state and D.C. (“state”) claims, the
jury

found

956

violations

prior

to

November

2015

and

243

afterwards. The total minimum state civil penalties would amount
to $7,849,827, and the maximum $15,700,023. See id. With a twenty
percent

increase

on

the

minimum,

the

total

is

$9,419,792.

Ultimately, the statutes allow total penalties between $8,199,160
and $16,398,707, and the Court orders Lilly to pay $9,838,992 in
civil penalties.
Lilly owes $9,838,992 in civil penalties.
III. CONCLUSION
For the reasons stated herein, Relator’s Motion to Amend
Judgment (Dkt. No. 495) is granted in part and denied in part. It
- 11 -

is granted insofar as the Court orders damages to be trebled, postjudgment interest on all claims, and prejudgment interest on the
Texas and Louisiana claims. The Court denies the Motion as to
prejudgment interest on all other state and District of Columbia
claims and on federal FCA claims. The Court orders civil penalties
for all violations at 20% above the relevant statutory minimums.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
Dated: 5/9/2023

- 12 -

APPENDIX A - Civil Penalties Table

Jurisdiction

California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Illinois
Indiana
Iowa
Louisiana
Massachusetts
Michigan
Minnesota
Montana

Authority

Cal Gov’t.
Code §12651
Colo. Stat.
§ 25.5‐4‐
305(1)
Conn. Gen.
Stat.
§ 4‐275(a)
Del. Code tit.
6, § 1201(a)
Fla. Stat.
§ 68.082(2)
Ga. Code
§ 49‐4‐
168.1(a)
Haw. Rev. Stat.
§661‐21
740 Ill. Comp.
Stat. 175/3(a)
IC 5‐11‐5.7‐
2(a)
Iowa Code
§ 685.2(1)
La. Stat.
§ 46:438.6
Mass. Gen.
Laws ch. 12
§5B(a)
Mich. Comp.
Laws
§ 400.612
Minn. Stat.
§15c.02(a)
Mont. Code
17‐8‐403

Maximum
violation
penalty
pre- Nov.
2015

Total
minimum
penalty
pre‐ Nov.
2015
violations

Total
Penalty for
pre‐ Nov.
2015
violations
at
Minimum
*1.2

Total
maximum
penalty for
pre‐ Nov.
2015
violations

#
Violations
post- Nov.
2015

Minimum
per‐
violation
penalty
post- Nov.
2015

Maximu
m per‐
violation
penalty
postNov.
2015

Total
minimum
penalty for
post‐ Nov.
2015
violations

Total
Penalty for
post‐ Nov.
2015
violations
at
Minimum
*1.2

Total
maximum
penalty for
post‐ Nov.
2015
violations

Total
minimum
civil penalty

Total
Penalty at
Minimum
Penalty
*1.2

Total
maximum
civil penalty

$5,500

$11,000

$236,500

$283,800

$473,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$349,333

$419,200

$698,684

18

$5,500

$11,000

$99,000

$118,800

$198,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$211,833

$254,200

$423,684

20

$5,500

$11,000

$110,000

$132,000

$220,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$222,833

$267,400

$445,684

21

$5,500

$11,000

$115,500

$138,600

$231,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$228,333

$274,000

$456,684

43

$5,500

$11,000

$236,500

$283,800

$473,000

9

$5,500

$11,000

$49,500

$59,400

$99,000

$286,000

$343,200

$572,000

34

$5,500

$11,000

$187,000

$224,400

$374,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$299,833

$359,800

$599,684

43

$5,500

$11,000

$236,500

$283,800

$473,000

9

$11,463

$22,927

$103,167

$123,800

$206,343

$339,667

$407,600

$679,343

43

$5,500

$11,000

$236,500

$283,800

$473,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$349,333

$419,200

$698,684

42

$5,500

$11,000

$231,000

$277,200

$462,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$343,833

$412,600

$687,684

21

$5,500

$11,000

$115,500

$138,600

$231,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$228,333

$274,000

$456,684

43

$5,500

$11,000

$236,500

$283,800

$473,000

9

$5,500

$11,000

$49,500

$59,400

$99,000

$286,000

$343,200

$572,000

43

$5,500

$11,000

$236,500

$283,800

$473,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$349,333

$419,200

$698,684

27

$5,000

$10,000

$135,000

$162,000

$270,000

9

$5,000

$10,000

$45,000

$54,000

$90,000

$180,000

$216,000

$360,000

21

$5,500

$11,000

$115,500

$138,600

$231,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$228,333

$274,000

$456,684

25

$5,500

$11,000

$137,500

$165,000

$275,000

9

$5,500

$11,000

$49,500

$59,400

$99,000

$187,000

$224,400

$374,000

#
Violations
pre- Nov.
2015

Minimum
per‐
violation
penalty
pre- Nov.
2015

43

- 13 -

Nevada
New Jersey
New York
New Mexico
North Carolina
Oklahoma
Rhode Island
Tennessee
Texas
Virginia
Washington
Wisconsin
D.C.

Nev. Rev.
Stat.
§357.040(2)
(c)
N.J. Stat.
§ 2A:32C‐3(g)
NY St. Fin. Law
§189(1)
N.M. Stat.
§ 27‐14‐4
N.C. Gen. Stat.
§1‐607(a)
Okla. Stat. tit.
63, §5053.1(B)
R.I. Gen. Laws
§9‐1.1‐3(a)
Tenn. Code
§ 71‐5‐182
Tex. Hum. Res.
Code
§ 36.052
Va. Code
§ 8.01‐216.3
RCW
§ 74.66.020
Wis. Stat.
§ 20.931(2)(g)
D.C. Code
§2‐381.02(a)

State SubTotal
Federal

TOTAL

28 C.F.R.
§§ 85.3, 85.5

43

$5,500

$11,000

$236,500

$283,800

$473,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$349,333

$419,200

$698,684

31

$5,500

$11,000

$170,500

$204,600

$341,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$283,333

$340,000

$566,684

43

$5,500

$11,000

$236,500

$283,800

$473,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$349,333

$419,200

$698,684

43

$5,000

$10,000

$215,000

$258,000

$430,000

9

$5,000

$10,000

$45,000

$54,000

$90,000

$260,000

$312,000

$520,000

19

$5,500

$11,000

$104,500

$125,400

$209,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$217,333

$260,800

$434,684

32

$5,500

$11,000

$176,000

$211,200

$352,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$288,833

$346,600

$577,684

31

$5,500

$11,000

$170,500

$204,600

$341,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$283,333

$340,000

$566,684

43

$5,500

$11,000

$236,500

$283,800

$473,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$349,333

$419,200

$698,684

43

$5,500

$11,000

$236,500

$283,800

$473,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$349,333

$419,200

$698,684

43

$5,500

$11,000

$236,500

$283,800

$473,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$349,333

$419,200

$698,684

13

$5,500

$11,000

$71,500

$85,800

$143,000

9

$12,537

$25,076

$112,833

$135,400

$225,684

$184,333

$221,200

$368,684

42

$5,000

$10,000

$210,000

$252,000

$420,000

0

$5,500

$11,000

$‐

$‐

$210,000

$252,000

$420,000

43

$5,500

$11,000

$236,500

$283,800

$473,000

9

$5,500

$11,000

$49,500

$59,400

$99,000

$286,000

$343,200

$572,000

956

$5,202,000

$6,242,400

$10,404,000

243

$2,647,827

$3,177,392

$5,296,023

$7,849,827

$9,419,792

$15,700,023

43

$236,500

$283,800

$473,000

9

$112,833

$135,400

$225,684

$349,333

$419,200

$698,684

999

$5,438,500

$6,526,200

$10,877,000

252

$2,760,660

$3,312,792

$5,521,707

$8,199,160

$9,838,992

$16,398,707

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