United States of America et al v. Forest Laboratories, Inc. et al

Filing 53

Judge F. Dennis Saylor, IV: ORDER entered. MEMORANDUM AND ORDER. Defendants motion to dismiss is GRANTED as to the FCA conspiracy claim (Count 3) and otherwise DENIED. (Maynard, Timothy)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
_______________________________________
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)
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Plaintiffs,
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v.
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FOREST LABORATORIES, INC., and
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FOREST PHARMACEUTICALS, INC.,
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Defendant.
)
_______________________________________)

UNITED STATES OF AMERICA et al. ex
rel. TIMOTHY LEYSOCK,

Civil No.
12-11354-FDS

MEMORANDUM AND ORDER ON MOTION TO
DISMISS THE SECOND AMENDED COMPLAINT
SAYLOR, J.
This is a qui tam action alleging the submission of claims to Medicare for the off-label
use of pharmaceuticals. Relator Timothy Leysock has brought suit against defendants Forest
Laboratories, Inc., and Forest Pharmaceuticals, Inc., which market and sell the drug Namenda.
Relator filed a second amended complaint on April 30, 2014. The second amended
complaint alleges that defendants caused the submission of false claims for payment to Medicare
by unlawfully marketing Namenda for the off-label use of treating mild Alzheimer’s disease. It
alleges three violations of the False Claims Act, 31 U.S.C. § 3729 et seq.
Defendants have moved to dismiss the second amended complaint. For the following
reasons, the motion will be granted in part and denied in part.

I.

Background
A.

Factual Background

The facts summarized below are set forth in the second amended complaint unless
otherwise noted.
1.

The Parties

Forest Laboratories, Inc., is a Delaware corporation with a principal place of business in
New York, New York. Forest Pharmaceuticals, Inc., which is a wholly owned and controlled
subsidiary of Forest Laboratories, is a Delaware corporation with a principal place of business in
St. Louis, Missouri.1 Forest sells a drug called Namenda (also known as memantine or
Namenda-XR).
Timothy Leysock is a resident of Florida. From August 1996 until May 2012, he was
employed by Forest as a sales representative. His sales territory covered the counties of Palm
Beach, Indian River, Martin, St. Lucie, and Okeechobee in Florida.
2.

Regulatory Framework

Under the Food and Drug Cosmetic Act, 21 U.S.C. § 301 et seq., pharmaceutical
manufacturers may not market or promote a drug for a use that the Food and Drug
Administration has not approved. 21 U.S.C. §§ 331(a), (d). When a drug is used for a treatment
not approved by the FDA, the use is called “off-label.”
Medicare is a government healthcare program. Medicare Part D covers reimbursement
for the use of prescription drugs. A patient can only be reimbursed by Medicare under Part D if
the drug is being used in an FDA-approved manner. See 42 U.S.C. §§ 1396b(i)(10), 1396r-8(k).
1

The two companies will be referred to as a single entity for the sake of convenience.

2

In other words, Medicare does not reimburse a patient for the off-label use of a prescription drug.
2.

Alleged Fraudulent Scheme

Alzheimer’s disease is an irreversible progression of dementia. Physicians commonly
use a test called the mini-mental state examination to determine the severity of a patient’s
Alzheimer’s disease, which can be classified as mild, moderate, or severe.
In 2003, Namenda was approved by the FDA for the use of treating moderate or severe
Alzheimer’s disease. In July 2005, the FDA declined to approve the drug for the use of treating
mild Alzheimer’s because research indicated that it was not effective for that use. In 2006, the
FDA approved the use of a drug named Aricept, manufactured by a competitor, for treatment of
all stages of Alzheimer’s disease, including mild Alzheimer’s.
The second amended complaint alleges that Forest believed that Aricept would hurt its
sales of Namenda. It believed that physicians would initially prescribe Aricept to mild
Alzheimer’s patients, and that it would be difficult to convince physicians to change drugs or
prescribe two drugs to treat the same disease in the same patient. It therefore believed that
physicians would start Alzheimer’s patients with Aricept when their symptoms first started and
would never prescribe Namenda.
According to the second amended complaint, Forest then began a nationwide scheme to
promote the off-label use of Namenda for mild Alzheimer’s. It alleges that Forest’s managers
instructed the company’s sales representatives to tell physicians falsely that Namenda was
effective for all stages of Alzheimer’s, that Namenda had fewer harsh side-effects than Aricept,
and that Namenda protected the gastrointestinal tract. Sales representatives were also instructed
to tell physicians that they should start treating Alzheimer’s with Namenda and add Aricept later.

3

The second amended complaint alleges that Forest’s managers were careful not to discuss
the off-label marketing program by text or e-mail. It also alleges that the company’s sales
representatives received off-label training in break-out sessions instead of all at once. It alleges
that this was done so that Forest could falsely claim that any off-label marketing was done by
rogue sales representatives.
More than 95 percent of Alzheimer’s patients are over 65 years old and on Medicare.
According to the second amended complaint, many of those patients were prescribed Namenda
for mild Alzheimer’s by physicians who were misled by fraudulent statements made by Forest’s
sales representatives. Reimbursement claims were presented on behalf of those patients to
Medicare.
Leysock alleges that he observed Forest’s fraudulent scheme while working for the
company as a sales representative from 2006 until 2012.
3.

Forest’s Previous Settlement Agreement

In September 2010, Forest entered into a settlement with the United States Department of
Justice addressing violations of the FCA. The FCA claims alleged that Forest violated the
statute by promoting the off-label use of a drug called Celexa. As a result of the settlement,
Forest signed a corporate integrity agreement with the government. The agreement requires
Forest to ensure that its policies and procedures address appropriate ways to promote its products
in a way that is compliant with all applicable federal healthcare-program requirements. It also
obligates Forest to submit an annual report to the government certifying that it is in compliance
with those requirements.
The second amended complaint alleges that after entering into the settlement agreement,

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Forest made reports to the government falsely certifying that it was complying with federal
healthcare-program requirements. It alleges those reports were false because of the company’s
promotion of Namenda for the off-label use of treating mild Alzheimer’s disease.
5.

Specific Instances of False Claims

The second amended complaint alleges eight specific instances where a false claim was
submitted to Medicare for the off-label use of Namenda to treat mild Alzheimer’s. It also
includes a chart of 28 physicians who allegedly prescribed Namenda for off-label uses to
Medicare beneficiaries.
a.

Dr. Frank Attenello

Dr. Frank Attenello practices family and internal medicine in Long Beach, California.
The Forest sales representative assigned to Attenello was Keith Atardo.
The second amended complaint alleges that Atardo falsely told Dr. Attenello that
Namenda was effective in treating mild Alzheimer’s, did not have harsh gastrointestinal side
effects, and protected the gastrointestinal tract. It alleges that more than 52 percent of Dr.
Attenello’s Namenda prescriptions were written for Medicare beneficiaries for off-label uses.
For example, on June 21, 2013, Dr. Attenello, relying on Forest’s off-label promotional
marketing, prescribed Namenda-XR to treat a 71-year-old female patient with mild Alzheimer’s.
On February 4, 2014, the prescription was filled. The prescription was then presented to the
Medicare program for payment.
b.

Dr. Meria Aulds

Dr. Meria Aulds practices internal medicine in Decatur, Texas. The second amended
complaint alleges that Forest sales representatives falsely told Dr. Aulds that Namenda was

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effective in treating mild Alzheimer’s, did not have harsh gastrointestinal side effects, and
protected the gastrointestinal tract. It alleges that more than 50 percent of Dr. Aulds’s Namenda
prescriptions were written for Medicare beneficiaries for off-label uses.
For example, on September 13, 2013, Dr. Aulds, relying on Forest’s off-label
promotional marketing, prescribed Namenda to treat a male patient with mild Alzheimer’s. Dr.
Aulds provided him with a single sample packet of Namenda. On November 21, 2013, the
prescription was filled. The prescription was presented to the Medicare program for payment.
c.

Dr. David Austin

Dr. David Austin practices family medicine in Manhattan Beach, California. The second
amended complaint alleges that Forest sales representatives falsely told Dr. Austin that Namenda
was effective in treating mild Alzheimer’s, did not have harsh gastrointestinal side effects, and
protected the gastrointestinal tract. It alleges that it was Dr. Austin’s regular practice to write
off-label Namenda prescriptions for Medicare beneficiaries with mild Alzheimer’s.
For example, on January 29, 2014, Dr. Austin, relying on Forest’s off-label promotional
marketing, prescribed Namenda to treat a 79-year-old female patient with mild Alzheimer’s. In
March 2014, the prescription was filled. The prescription was presented to the Medicare
program for payment.
d.

Dr. Mouhannad Azzouz

Dr. Mouhannad Azzouz practices neurology in Fairmont, West Virginia. The second
amended complaint alleges that Forest sales representatives falsely told Dr. Azzouz that
Namenda was effective in treating mild Alzheimer’s, did not have harsh gastrointestinal side
effects, and protected the gastrointestinal tract. It alleges that it was Dr. Azzouz’s regular

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practice to write off-label Namenda prescriptions for Medicare beneficiaries with mild
Alzheimer’s, and that approximately 50 percent of his Namenda prescriptions were written for
off-label uses to Medicare beneficiaries.
For example, on February 18, 2010, Dr. Azzouz, relying on Forest’s off-label
promotional marketing, prescribed Namenda to treat an 80-year-old female patient with mild
Alzheimer’s. On March 27, 2012, the prescription was filled. The prescription was presented to
the Medicare program for payment.
e.

Dr. Richard Bendinger

Dr. Richard Bendinger practices family medicine in Abbeville, Alabama. The second
amended complaint alleges that Forest sales representatives falsely told Dr. Bendinger that
Namenda was effective in treating mild Alzheimer’s, did not have harsh gastrointestinal side
effects, and protected the gastrointestinal tract. It alleges that more than ten percent of
Bendinger’s Namenda prescriptions were written for off-label uses to Medicare beneficiaries.
For example, on January 13, 2014, Dr. Bendinger, relying on Forest’s off-label
promotional marketing, prescribed Namenda to treat a 76-year-old female patient with mild
Alzheimer’s. On February 13, 2014, the prescription was filled. The prescription was presented
to the Medicare program for payment.
f.

Dr. Amit Bhalodia

Dr. Amit Bhalodia practices family medicine in Camden, New Jersey. The second
amended complaint alleges that Forest sales representatives falsely told Dr. Bhalodia that
Namenda was effective in treating mild Alzheimer’s, did not have harsh gastrointestinal side
effects, and protected the gastrointestinal tract. It alleges that it was Dr. Bhalodia’s regular

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practice to write off-label Namenda prescriptions for Medicare beneficiaries with mild
Alzheimer’s.
For example, on October 20, 2009, Dr. Bhalodia, relying on Forest’s off-label
promotional marketing, prescribed Namenda to treat a 76-year-old female patient with mild
Alzheimer’s. On February 4, 2011, and June 3, 2011, the prescription was filled. The
prescription was presented to the Medicare program for payment.
g.

Dr. William Bell

Dr. William Bell practices family medicine in Robbins, North Carolina. The second
amended complaint alleges that it was Dr. Bell’s regular practice to write off-label Namenda
prescriptions for Medicare beneficiaries with mild Alzheimer’s, and that more than 20 percent of
his Namenda prescriptions were written for off-label uses to Medicare beneficiaries.
For example, on February 17, 2010, Dr. Bell, relying on Forest’s off-label promotional
marketing, prescribed Namenda to treat an 86-year-old patient with mild Alzheimer’s. On
February 24, 2011, the prescription was filled. The prescription was presented to the Medicare
program for payment. That same day, Dr. Bell also prescribed the patient Aricept.
h.

Dr. Yim Chan

Dr. Yim Chan practices psychiatry in San Francisco, California. The second amended
complaint alleges that Forest sales representatives falsely told Dr. Chan that Namenda was
effective in treating mild Alzheimer’s, did not have harsh gastrointestinal side effects, and
protected the gastrointestinal tract. It alleges that it was Dr. Chan’s regular practice to write offlabel Namenda prescriptions for Medicare beneficiaries with mild Alzheimer’s, and that 30
percent of his Namenda prescriptions were written for off-label uses to Medicare beneficiaries.

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For example, on December 3, 2007, Dr. Chan, relying on Forest’s off-label promotional
marketing, prescribed Namenda to treat a 66-year-old female patient with mild Alzheimer’s. On
January 21, 2008, the prescription was filled. The prescription was presented to the Medicare
program for payment.
B.

Procedural Background

On July 24, 2012, relator filed the complaint in this case. The complaint was amended
twice, on October 2, 2012, and again on April 30, 2014. The second amended complaint alleges
claims of (1) causing false or fraudulent claims for payment to be presented to the United States
in violation of 31 U.S.C. § 3729(a)(1)(A); (2) knowingly making, using, or causing to be made
or used false records or statements material to a false of fraudulent claim paid by the United
States in violation of 31 U.S.C. § 3729(a)(1)(B); and (3) conspiracy to violate the FCA in
violation of 31 U.S.C. § 3729(a)(1)(C). On April 16, 2014, the government declined to intervene
in the case. On April 30, the complaint was unsealed.
On June 30, 2014, defendants filed a motion to dismiss. They contend (1) that the
substantive FCA claims fail to satisfy the pleading requirements of Fed. R. Civ. P. 9(b); (2) that
the alleged non-compliance with the settlement agreement should be struck from the complaint
because it is not actionable; and (3) that the conspiracy claim fails to satisfy the requirements of
Rule 9(b).
III.

Analysis
Under the FCA, it is unlawful for a person or entity to (1) knowingly present, or cause to

be presented, a false or fraudulent claim for payment or approval to the United States, (2)
knowingly make, use, or cause to be made or used, a false record or statement material to a false

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or fraudulent claim; or (3) conspire to commit a violation of the statute. 31 U.S.C. §§
3729(a)(1)(A)-(C). Private persons, known as relators, can file civil qui tam actions on behalf of
the United States against persons or entities who violate the act. Id. § 3730(b). The government
can intervene in a qui tam action and assume primary responsibility over it. Id. § 3730(b)(2),
(b)(4), (c)(1). The relator is eligible to collect a portion of any damages awarded in a qui tam
action, regardless of whether or not the government intervenes. Id. § 3730(d).
A.

Rule 9(b)

Defendants first contend that the FCA claims should be dismissed because the complaint
does not satisfy the pleading requirements of Rule 9(b). That rule requires that “[i]n alleging
fraud or mistake, a party must state with particularity the circumstances constituting fraud or
mistake.” Fed. R. Civ. P. 9(b). Those heightened pleading requirements apply to claims brought
under the FCA. United States ex rel. Ge v. Takeda Pharm. Co. Ltd., 737 F.3d 116, 123-24 (1st
Cir. 2013). Thus, “[r]elators are required to set forth with particularity the ‘who, what, when,
where, and how’ of the alleged fraud.” Id. at 123 (quoting United States ex rel. Walsh v.
Eastman Kodak Co., 98 F. Supp. 2d 141, 147 (D. Mass. 2000)).
As the First Circuit explained in Ge:
A relator must provide details that identify particular false claims for payment that
were submitted to the government. In a case such as this, details concerning the
dates of the claims, the content of the forms or bills submitted, their identification
numbers, the amount of money charged to the government, the particular goods or
services for which the government was billed, the individuals involved in the billing,
and the length of time between the alleged fraudulent practices and the submission
of claims based on those practices are the types of information that may help a relator
to state his or her claims with particularity. These details do not constitute a
checklist of mandatory requirements that must be satisfied by each allegation
included in a complaint. However, we believe that some of this information for at
least some of the claims must be pleaded in order to satisfy Rule 9(b).

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Id. (quoting United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 232-33
(1st Cir. 2004) (alterations omitted) (internal quotation marks omitted)).
“Because FCA liability attaches only to false claims, merely alleging facts related to a
defendant’s alleged misconduct is not enough. Rather, a complaint based on § 3729(a)(1)(A)
must ‘sufficiently establish that false claims were submitted for government payment’ as a result
of the defendant’s alleged misconduct.” Id. at 124 (citations omitted) (emphasis in original)
(quoting United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720, 733 (1st Cir. 2007)). However,
“[i]n a qui tam action in which the defendant is alleged to have induced third parties to file false
claims with the government, a relator can satisfy this requirement by ‘providing factual or
statistical evidence to strengthen the inference of fraud beyond possibility without necessarily
providing details as to each false claim.’” Id. at 123-24 (quoting United States ex rel. Duxbury v.
Ortho Biotech Prods., L.P., 579 F.3d 13, 29 (1st Cir. 2009)).2
Thus, a qui tam complaint alleging that a defendant induced a third party to submit false
claims to the government for reimbursement must allege two things: (1) particular details of a
scheme to cause the submission of false claims to the government and (2) factual or statistical
evidence that strengthens the inference of fraud on the government beyond a mere possibility.
Duxbury, 579 F.3d at 29. While conclusory allegations are insufficient, Rule 9(b) may be
satisfied “when some questions remain unanswered, provided the complaint as a whole is
sufficiently particular to pass muster.” United States ex rel. Gagne v. City of Worcester, 565
F.3d 40, 45 (1st Cir. 2009).
Defendants contend that the amended complaint does not state sufficient factual or

2

This standard also applies to FCA claims under 31 U.S.C. § 3729(a)(1)(B). Ge, 737 F.3d at 125 n.5.

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statistical evidence showing that defendant caused the submission of a false claim to the
government. An FCA relator can satisfy that requirement without necessarily providing details
as to each false claim. Ge, 737 F.3d at 123-24. The two most recent First Circuit cases on the
issue, Ge and Duxbury, offer some guidance on when factual evidence is sufficient to satisfy the
requirements of Rule 9(b).
In Ge, the relator’s FCA claim was dismissed because she “made no attempt in her
complaints to allege facts that would show that some subset of claims for government payment
for the four subject drugs was rendered false as a result of [defendant’s] alleged misconduct.”
Id. at 124 (emphasis in original). The court found that the relator had alleged no factual or
statistical evidence to strengthen the inference of fraud beyond a mere possibility. Id.
In contrast, the Duxbury court found that the relator sufficiently alleged factual evidence
to strengthen the inference of fraud beyond a mere possibility. 579 F.3d at 30. In that case, the
relator set forth allegations of kickbacks provided by the defendant that resulted in the
submission of false claims by eight healthcare providers in the state of Washington. Id. The
court found that those eight specific allegations were sufficient factual support to satisfy the
requirements of Rule 9(b), but described the matter as “a close call.” Id.
The First Circuit in Duxbury quoted one of the specific allegations the plaintiff made in
that case:
In 1997–98 Western Washington Treatment Center in Olympia, Washington,
received more than $5,000 of free commercially packaged ProCrit from [defendant]
under the direction of Robert Ashe so that Western Washington could submit the free
product for reimbursement to Medicare under the false and fraudulent certification
that the provider had paid for the product. [Defendant] intended the free
commercially packaged ProCrit to be a “cash equivalent” “kickback” to Western
Washington in order to induce the provider to purchase ProCrit and to administer
ProCrit at the “off-label” once a week dosing regiment. Western Washington was
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reimbursed by Medicare for the free commercially packaged ProCrit. As a result,
[defendant] knowingly caused the presentation by Western Washington of these false
claims to the United States Government.
579 F.3d at 30. The court concluded that the complaint’s collection of eight specific examples of
similar specificity, along with allegations of the defendant’s fraudulent scheme, were enough to
satisfy the requirements of Rule 9(b). Id. As the court noted, the plaintiff “identified, as to each
of the eight medical providers (the who), the illegal kickbacks (the what), the rough time periods
and locations (the where and when), and the filing of the false claims themselves.” Id.
Here, the specific examples in the second amended complaint allege information in a
format almost identical to the information alleged in Duxbury. For example, it alleges:
89.

For example, Dr. Frank Attenello practices family and internal medicine at
1201 East Bixby Road in Long Beach, California. One of the Forest sales
reps assigned to Dr. Attenello is Keith Atardo. (“Atardo”)

90.

For years, Forest sales reps, including Mr. Atardo, regularly promoted offlabel uses of Namenda to Dr. Attenello in his office, including promoting the
use of Namenda (particularly Namenda-XR) to treat mild AD, at least as
recently as late January or early February, 2014. In reliance of those offlabel messages, it is and has been Dr. Attenello’s regular practice to write
off-label Nemanda prescriptions for mild AD to Medicare beneficiaries,
which he did at least as recently as late January, 2014.

91.

Among the off-label messages Dr. Attenello received from Forest, and relied
on in writing off-label prescriptions of Namenda to Medicare beneficiaries,
were that Namenda is effective for all stages of AD (mild, moderate and
severe), that Namenda does not have the harsh GI side-effects of ACHEI’s
(e.g. Aricept), and that Namenda is GI-protective, so he should start treating
AD with Namenda and then add an ACHEI (e.g. Aricept) later. Dr. Attenello
received these messages from sales rep Atardo and via Forest-sponsored
physician speakers, including Continuing Medical Education (“CME”)
events.
...

93.

As a result of Forest’s off-label promotion, over 52% of Dr. Attenello’s
Namenda prescriptions are written for Medicare beneficiaries for off-label
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uses, and thus constitute false claims under the FCA, all of which false
claims were caused by Defendants.
94.

Dr. Attenello provided the example of a 4' 11", 166 lb. 71 year old female
Medicare beneficiary (“Patient A”), with mild AD, documented in part by a
MMSE score of 19 out of 30 on June 21, 2013. On . . . June 21, 2013,
relying on Forest’s off-label promotional messages, Dr. Attenello prescribed
Namenda-XR (28 mg once per day) to treat Patient A’s mild AD, a use that
Dr. Attenello knew was off-label. . . .

95.

When Patient A returned to Dr. Attenello’s office in Long Beach on February
4, 2014, she had had her Namenda-XR prescription filled and was continuing
to take Namenda-CR. She had had her prescription filled at the CVS at 311
West Pacific Coast Highway in Wilmington, CA.

...
97.

Patient A is a Medicare beneficiary who was prescribed Namenda for an
“off-label” use (i.e., a use that was neither approved by the FDA nor
supported in an authorized compendium) as a direct and foreseeable result of
Forest’s promotion of that use. Patient A’s off-label Namenda prescription
was filled and presented to the Medicare program for payment.

(Second Am. Compl. ¶¶ 89-97). The seven other specific examples are similar to the one
involving Attenello.
Those quoted paragraphs of the second amended complaint identify one of defendants’
sales representatives, the doctor, and the patient (the who), the specific misrepresentations made
by defendants (the what), time periods and locations (the where and when), and the filing of the
false claims themselves. That is exactly what the specific examples in Duxbury identified.
Although there are no specific details regarding the claim for payment, such detail is not
necessary under the precedent in this circuit. See Ge, 737 F.3d at 124 (explaining that relator
can satisfy Rule 9(b) “without necessarily providing details as to each false claim”); Duxbury,
579 F.3d at 29 (the same); Rost, 507 F.3d at 733 (the same). And in Duxbury, the most specific
information about the false filing itself was that “Western Washington was reimbursed by
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Medicare for the free commercially packaged ProCrit.” 579 F.3d at 30. That satisfied the
requirements of Rule 9(b) even though the dollar amount or the date of claim was not alleged.
The second amended complaint in this case therefore alleges fraud with particularity
found adequate in Duxbury to satisfy the requirements of Rule 9(b). Accordingly, defendants’
motion to dismiss on Rule 9(b) grounds will be denied.3
B.

Alleged Non-Compliance with Settlement Agreement

Defendants next contend that their alleged non-compliance with the settlement agreement
should be struck because such non-compliance is not actionable under the FCA. Under 31
U.S.C. § 3729(a)(1)(B), if a false statement “is not made with the purpose of inducing payment
of a false claim . . . the direct link between the false statement and the Government’s decision to
pay or approve a false claim is too attenuated to establish liability.” Allison Engine Co., Inc. v.
United States ex rel. Sanders, 553 U.S. 662, 672 (2008). Thus, the “question here is whether
[the] claims . . . misrepresented compliance with a material precondition of payment recognized
by [Medicare].” New York v. Amgen Inc., 652 F.3d 103, 110-11 (1st Cir. 2011).
Plaintiff contends that defendants could have been excluded from government healthcare
programs if they did not certify, pursuant to the settlement agreement, that they were complying
with federal healthcare regulations. He contends that defendants’ certifications were therefore a

3

Defendants also contend that the second amended complaint does not allege with particularity that they
knowingly caused the submission of any false claim. However, “[m]alice, intent, knowledge, and other conditions
of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). The allegations that (1) defendants vigorously
promoted the off-label use of Namenda even though the medical literature showed it was not effective in treating
mild Alzheimer’s and (2) that physicians only prescribed Namenda for that off-label use because of defendants’ false
statements are enough to state a claim under the FCA.
Finally, defendants contend that the statistical evidence in the second amended complaint is not enough to
make the FCA claims plausible. Because the factual allegations without statistical evidence are sufficient, it is not
necessary to decide that issue.

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precondition of reimbursement for its products by Medicare.
While failing to comply with the settlement agreement may have excluded defendants
from participating in government healthcare programs, courts have differentiated those
requirements from preconditions that are a prerequisite to a particular payment. See United
States ex rel. Landers v. Baptist Mem’l Health Care Corp., 525 F. Supp. 2d 972, 978 (W.D.
Tenn. 2007) (explaining that conditions of participation in Medicare and Medicaid “are quality
of care standards directed towards an entity’s continued ability to participate in the Medicare
program rather than a prerequisite to a particular payment”). Thus, a claim for payment “is not
‘false’ within the meaning of the FCA if the [person] is not required to certify compliance in
order to receive payment. . . . [A] false certification of compliance, without more, does not give
rise to a false claim for payment unless payment is conditioned on compliance.” United States
ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262, 269 (5th Cir. 2010).
Although the settlement agreement permits the government to exclude defendants from
government healthcare programs wholesale, it does not require that sanction. Nowhere in the
agreement is the payment of any specific claim for reimbursement from Medicare conditioned on
defendants’ compliance with the agreement. An FCA claim cannot be based on the allegations
that defendant violated the settlement agreement alone.
However, the settlement agreement could be relevant to defendants’ knowledge of the
FCA and its relation to the off-label promotion of Namenda. Under Rule 12(f), a court may
strike from a pleading “any redundant, immaterial, impertinent, or scandalous matter.” Fed. R.
Civ. P. 12(f). Because the allegations involving defendants’ breach of the settlement agreement

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appear to be relevant to defendants’ knowledge, those allegations will not be struck.4
C.

FCA Conspiracy Claim

Finally, defendant contends that the second amended complaint does not allege
conspiracy with particularity as required by Rule 9(b). FCA conspiracy claims are subject to the
requirements of Rule 9(b). Gagne, 565 F.3d at 45. The rule, however, only requires that a
complaint allege “fraud or mistake” with particularity. As described above, the second amended
complaint satisfies that requirement.
The second amended complaint alleges that defendants “combined, conspired, and agreed
together with physicians and others to defraud the United States.” (Second Am. Compl. ¶ 218).
However, it does not allege any facts as to (1) who the co-conspirators are, (2) when or where
they entered into an agreement, or (3) what overt acts they took in furtherance of the conspiracy.
Absent such allegations, a conspiracy claim under the FCA cannot survive a motion to dismiss.
See United States ex rel. Estate of Cunningham v. Millennium Labs. of Cal., 2014 WL 309374, at
*1-2 (D. Mass. Jan. 27, 2014) (holding that relator did not plead facts sufficient to show a
conspiracy).
In addition, plaintiff did not offer any opposition to dismissal of the conspiracy claim in
his memorandum. If there is a reason to deny the motion to dismiss the conspiracy claim,
plaintiff has not supplied it.
Accordingly, the motion to dismiss will be granted as to the FCA conspiracy claim.
V.

Conclusion
For the foregoing reasons, defendant’s motion to dismiss is GRANTED as to the FCA

4
The Court makes no ruling at this stage whether the settlement agreement would be admissible at any trial
of this action.

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conspiracy claim (Count 3) and otherwise DENIED.
So Ordered.
/s/ F. Dennis Saylor
F. Dennis Saylor IV
United States District Judge

Dated: October 27, 2014

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