United States of America et al v. Organon USA Inc et al

Filing 198

Judge Rya W. Zobel: ORDER entered denying 178 Motion for Clarification as to pricing kickback claims and deferred as to 19 state claims; denying 182 Motion for Reconsideration. The court will hold a further scheduling conference on 10/10/12 at 2:00 p.m. (Urso, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 07-12153-RWZ
UNITED STATES OF AMERICA ex rel.
JAMES BANIGAN AND RICHARD TEMPLIN et al.
v.
ORGANON USA INC., et al.
ORDER
September 7, 2012

ZOBEL, D.J.

Before me are two motions filed in response to the court’s Memorandum of
Decision of June 1, 2012, U.S. ex rel. Banigan v. Organon USA, Inc., No. 07-12153RWZ, 2012 WL 1997874 (D. Mass. June 1, 2012), incorporated herein. I address each
in turn.
I.

Relators’ Motion for Clarification or in the Alternative for Reconsideration
Regarding Certain Best Price, Kickback and State Law Claims (Docket #
178)
Relators request clarification or reconsideration on three issues. First, they

argue that, if the court’s dismissal of pricing claims against the Organon defendants
(“Organon”) included those claims based on allegations relating to nominal sales of
Remeron and sales to ineligible 340B entities, such dismissal was improper under the
first-to-file bar of the False Claims Act (“FCA”), 31 U.S.C. § 3730(b)(5), because the
nominal sale and 340B allegations were not specifically mentioned in the first-filed

case, United States ex rel. St. John La Corte v. Amerisource Bergen Corp. and
PharMerica, Inc., No. 02–3168 (E.D.La.) [“Amerisource”]. See Banigan, 2012 WL
1997874, at *8 (finding Amerisource was first-filed case and thus barred kickback and
pricing claims against Organon).
Under the “essential facts” test for the first-to-file bar, Relators’ nominal sale and
340B allegations support the same fraudulent scheme as their other pricing allegations,
and the same scheme that was disclosed in the Amerisource case. U.S. ex rel.
Duxbury v. Ortho Biotech Products, L.P., 579 F.3d 13, 32 (1st Cir. 2009) (first-to-file
rule bars later-filed action if it “states all the essential facts of a previously-filed claim”
or the “same elements of a fraud described in an earlier suit”; distinguishing “essential
facts test” from, and implicitly rejecting, the “identical facts” test). Relators allege that
Organon violated the FCA, 31 U.S.C. § 3729(a)(7) – which prohibits the making or
using of a false record or statement to “conceal, avoid, or decrease an obligation to pay
or transmit money or property to the Government” – by improperly reducing its rebate
liability for Remeron to state Medicaid programs. Likewise, the Amerisource relator
alleged that defendant PharMerica conspired with pharmaceutical manufacturers of its
“preferred drugs” (which included Remeron) to “conceal, avoid or decrease the amount
of rebate obligation” for those drugs which the manufacturers owed to federal
government agencies. Banigan, 2012 WL 1997874, at * 8 and n.20. Both complaints
allege various ways by which drug manufacturers perpetrated the fraud, including by
filing false “best price” reports. Relators do not overcome the first-to-file bar merely
because they list additional allegations of how Organon fraudulently tried to reduce its
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Medicaid rebate liability for Remeron. See Banigan, 2012 WL 1997874, at *5 (quoting
Duxbury, 579 F.3d at 33 (first-to-file rule can still bar a later claim “even if that claim
incorporates somewhat different details”)); U.S. ex rel. Folliard v. CDW Tech. Servs.,
Inc., 722 F.Supp.2d 37, 41 (D.D.C. 2010) (holding that later filed complaint “will not
pass muster by merely providing additional details about the ‘nature and extent of [the]
fraud in the provision of’ a given set of services (i.e., government procurement
services), even if the manner of the later-alleged fraud ‘varie[s] greatly. . . .’”).
As to the court’s dismissal of the pricing claims against Organon, Realtors’
motion is denied.
A.

Kickback Claims Against Organon

Relators contend that the court improperly dismissed their kickback claims
against Organon, among other reasons, under the first-to-file bar because Organon
was not a named defendant in Amerisource. Where the Amerisource complaints allege
that PharMerica engaged in a kickback scheme with drug manufacturers regarding
certain preferred drugs, and name Remeron, a drug exclusively manufactured and sold
by Organon, as one such drug, naming Remeron is equivalent to identifying Organon
as a participant in the scheme, thereby putting the government on notice of alleged
fraud by Organon. See Banigan, 2012 WL 1997874, at *7. As to the kickback claims
against Organon, Relators’ motion is denied.
B.

State Claims

Finally, Relators question whether the court properly dismissed claims against
PharMerica and Organon under 19 state and local false claims statutes (“the dismissed
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state claims”)1 which, in earlier filings, the parties agreed mirrored the federal FCA.
See Banigan, 2012 WL 1997874, at *17. I defer decision on Relators’ motion to
reconsider the dismissed state claims, and likewise defer decision on PharMerica’s and
Organon’s motions to dismiss the remaining nine state claims2 and Count XXXV for
Common Fund Relief, pending disposition of the federal claims.
II.

Omnicare’s Motion to Reconsider or, in the Alternative, Certify for
Interlocutory Appeal the Court’s June 1, 2012 Order (Docket # 182)
Defendant Omnicare argues that the court erred when it found the first-to-file bar

inapplicable to the kickback claims alleged against it because the allegedly first-filed
cases which it identified3 do not mention Organon or Remeron, and, in this case, the
identity of the “drug itself is an essential element of the fraudulent scheme alleged
against it.” See Banigan, 2012 WL 1997874, at *9. Omnicare contends that this
decision constituted a clear error of law and/or merits reconsideration in the interests of
justice. Despite these protestations, its motion to reconsider is effectively a request to
relitigate an issue which it already has had the opportunity to brief, and which this court
rejected. See id. (discussing and rejecting Omnicare’s argument that “the fact that the
prior qui tam complaints involved other drugs is of no merit” in first-to-file analysis).
Omnicare’s arguments in support of its motion to reconsider do not persuade the court

1

California, Delaware, District of Columbia, Florida, Hawaii, Illinois, Indiana, Massachusetts,
Minnesota, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode
Island, Tennessee and Virginia.
2

Georgia, Louisiana, Michigan, New Hampshire, Texas, Wisconsin, Connecticut, Colorado, and
Maryland.
3

See Banigan, 2012 WL 1997874, at *9 and n.21-23 (discussing allegedly first-filed cases raised
by Omnicare: LaCorte, the Illinois Actions, and the Massachusetts Actions).

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otherwise; its motion is therefore denied.
In the alternative, Omnicare moves for certification of an interlocutory appeal
under 28 U.S.C. § 1292(b). To satisfy section 1292(b), (1) an order must involve a
“controlling question of law,” (2) as to which “there is substantial ground for difference
of opinion,” and (3) “immediate appeal from the order may materially advance the
ultimate termination of the litigation.” 28 U.S.C. § 1292(b). My determination that the
failure of the earlier-filed complaints to mention Remeron constitutes a failure to state
all of the essential facts of the fraudulent kickback scheme alleged against Omnicare
does not raise a controlling question of law. See In re Pharmaceutical Industry
Average Wholesale Price Litigation, No. 01-12257-PBS and 07-11618-PBS, 2008 WL
2778808, at *3 (D. Mass. July 15, 2008) (denying motion for certification of interlocutory
appeal of court’s decision that first-to-file bar did not preclude jurisdiction in FCA action
involving fraudulent drug pricing scheme; reasoning that court’s decision “[did] not
involve a pivotal question of law” where it ruled that “failure to specify the drug
Erythromycin in the earlier action” – which was drug-at-issue in later action –
“constitutes a failure to state all the essential facts under the ‘same material elements’
standard in established caselaw.”).
Omnicare’s motion for certification of an interlocutory appeal is denied.
III.

Conclusion
Relators’ Motion for Clarification or in the Alternative for Reconsideration

Regarding Certain Best Price, Kickback, and State Law Claims (Docket # 178) is
DENIED as to the pricing and kickback claims, and DEFERRED as to the 19 state
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claims that were dismissed in the court’s order of June 1, 2012. The court defers
decision on PharMerica’s and Organon’s motions to dismiss the remaining state claims
and Count XXXV for Common Fund Relief.
Omnicare’s Motion to Reconsider or, in the Alternative, Certify for Interlocutory
Appeal the Court’s June 1, 2012 Order (Docket # 182) is DENIED. The court will hold
a further scheduling conference on October 10, 2012 at 2:00 p.m.

September 7, 2012
DATE

/s/Rya W. Zobel
RYA W. ZOBEL
UNITED STATES DISTRICT JUDGE

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