SIMPSON v. BAYER PHARMACEUTICAL CORP. et al

Filing 359

OPINION AND ORDER denying 353 Defendants' Motion to certify the April 23, 2018 Opinion and Order for interlocutory appeal. Signed by Judge John Michael Vazquez on 7/16/2019. (as, )

Not for Publication
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

UNITED STATES OF AMERICA, et al., ex rel.
LAURIE SIMPSON,
Plaintiff-Relator,
v.

Civil Action No. 05-3895
OPINION & ORDER

BAYER A.G., et al.,
Defendants.

John Michael Vazquez, U.S.D.J.
Before the Court is Defendants Bayer A.G.; Bayer Healthcare, LLC; Bayer Corporation;
and Bayer Heathcare Pharmaceuticals, Inc.’s (collectively “Bayer”) motion to certify for
interlocutory appeal, D.E. 353, this Court’s April 23, 2019 Opinion and Order (the “April 23
Decision”) denying their motion for partial summary judgment, D.E. 351, 352. Plaintiff-Relator
Laurie Simpson (“Relator”) filed an opposition brief, D.E. 355, to which Bayer replied, D.E. 357. 1
After opposition was filed, this matter was transferred from Chief Judge Linares to the
undersigned. D.E. 356. The Court has considered the parties’ submissions and decided the motion
without oral argument pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R. 78.1(b). For the following
reasons, Bayer’s motion is DENIED.

1

The Court will refer to Bayer’s moving brief (D.E. 353-1) as “Def. Br.”, Relator’s opposition
brief as “Pl. Opp.”, and Bayer’s reply brief as “Def. Reply”.

I.

FACTUAL AND PROCEDURAL HISTORY
The Court’s previous decisions have detailed this matter’s facts and procedural history.

See, e.g., D.E. 208 at 1-5, 2 D.E. 351 at 2-8. Accordingly, the Court provides only an abbreviated
background.
Relator, a former Bayer employee, filed this qui tam action under the whistleblower
provisions of the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., on August 5, 2005. D.E. 1.
The Government declined to intervene. D.E. 16. In her Tenth Amended Complaint (“10AC”),
D.E. 213, Relator alleges that “Bayer engaged in unlawful marketing, including off-label
marketing and payment of kickbacks, in order to increase the market shares of its prescription
drugs Trasylol and Avelox.” 10AC ¶ 9.
1. Trasylol
Bayer’s drug product Trasylol reduces surgical and post-surgical bleeding. Id. ¶ 109. The
Food and Drug Administration (“FDA”) had approved Trasylol “for patients undergoing repeat
coronary artery bypass graft (“CABG”) surgery using a cardiopulmonary bypass pump . . . and for
patients undergoing such surgery for the first time . . . who were at high risk of bleeding.” Id. ¶
110. The FDA later had expanded approval to “low-risk primary on-pump CABG patients.” Id.
¶ 113. Despite this narrow indication, off-label Trasylol use was ubiquitous. Id. ¶ 114. Relator
alleges that Bayer promoted off-label Trasylol use by deliberately concealing and downplaying
the drug’s risks while falsely touting the its benefits. Id. ¶¶ 120-86. Relator alleges that Bayer
misbranded Trasylol and, consequently, that Trasylol’s introduction into interstate commerce was
illegal.

Id. ¶ 215.

Relator also alleges that Bayer illegally paid kickbacks to healthcare

professionals to motivate them to prescribe Trasylol. Id. ¶¶ 187-214.

2

The Court references CM/ECF-generated page numbers for this previous decision.
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Bayer’s illegal kickbacks and off-label marketing schemes, Relator avers, caused the
submission of false claims for Trasylol to Medicare, Medicaid, and other federally and statefunded healthcare programs. Id. ¶¶ 13, 16, 19. Based on Bayer’s conduct related to Trasylol,
Relator asserts ten FCA claims (Counts I to X) and various, related state and local law claims
(Counts XIII to XXXIII). Id. ¶¶ 329-418, 433-568.
2. Avelox
Bayer’s drug product Avelox is a broad-spectrum bactericide approved to treat and prevent
infections caused or strongly suspected to be caused by certain bacterial strains. Id. ¶¶ 242-43.
Relator alleges that Bayer engaged in several illegal kickback schemes to increase Avelox
prescriptions. Id. ¶¶ 249-50. Among these alleged schemes were (i) cash honoraria to key opinion
leaders for promoting Avelox; (ii) cash and gift honoraria to sham “consultants;” (iii) honoraria to
physicians in the form of “medically related items” for viewing electronic presentations,
participating in internet-based interactive learning programs, or listening to telesymposia; (iv) gifts
to physicians for attending continuing medical education programs that promoted Avelox; and (v)
a cash honorarium to at least one Kaiser Permanente-affiliated physician to present Avelox
information at an in-house meeting. Id. ¶¶ 251-82.
Relator avers that these illegal kickbacks caused the submission of false claims for Avelox
to Medicare, Medicaid, and other federally and state-funded healthcare programs. Id. ¶¶ 16, 19,
283. Based on Bayer’s conduct related to Avelox, Relator brings two FCA claims (Counts XI and
XII) and various, similar state and local law claims (Counts XIII to XXXIII). Id. ¶¶ 419-568.

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3. Retaliation
Finally, Relator alleges that Bayer retaliated against her for reporting to her supervisors
what she believed to be fraudulent conduct. Id. ¶¶ 569-72. Bayer’s retaliation, Relator alleges,
violates 31 U.S.C. § 3730(h) (Count XXXIV) and N.Y. Fin. Law § 191 (Count XXXV). Id.
Specifically, Relator avers that she complained to her supervisor Carol D’Eugenio,
Trasylol’s Product Manager Bill Allen, Randy Santiago in Scientific Affairs, and others that
certain meetings described as market research or advisory meetings were promotional in nature.
Id. ¶¶ 309-11. Afterward, Relator avers that she was passed over for a promotional opportunity
and excluded from meetings of Bayer’s New Products Evaluation Team. Id. ¶¶ 312-13. Relator
alleges that in March 2004 she complained again to Dean Slack, Director of the Strategic Analysis
Department, who relayed her concerns to in-house counsel David Reed and Director of Marketing
Stanley Horton. Id. ¶ 317. The next month, Relator alleges that Bayer excluded her from the
business planning process for Trasylol. Id. ¶ 318. And in July 2014, Bayer allegedly promoted
Relator’s less qualified colleague into an unadvertised position that would have been a promotion
for Relator. Id. ¶ 324. D’Eugenio was allegedly told by a human resources employee that the
department would have found a way to disqualify Relator had she applied. Id. In September 2004,
Bayer terminated Relator, citing a workforce reduction initiative. Id. ¶ 326. Relator avers that this
reason was a pretext and that she was replaced by a less qualified individual. Id. ¶ 327.
4. The Court’s April 23 Decision
Trasylol is administered in inpatient settings. D.E. 323-2 ¶ 18; D.E. 330-1 at 9-10.
Medicare (under Part A) and many state Medicaid programs reimburse hospitals for inpatient
procedures primarily through a fixed-fee system—i.e., a system based on pre-determined rates
rather than reasonable costs. D.E. 323-2 ¶¶ 4-5; D.E. 330-1 at 3-4. Bayer contends that this fixed-

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fee payment system is fatal to Relator’s Trasylol-related FCA claims. 3 See, e.g., D.E. 323-1 at 1825. Bayer argues that because the Government pays the same price for a given procedure
regardless of whether Trasylol is used, any alleged misrepresentation regarding Trasylol is not
capable of influencing the Government’s decision to pay a claim. See id. Thus, Bayer contends
that the fixed fee payment system renders any alleged misrepresentation regarding Trasylol
immaterial as a matter of law. See id.
Despite discovery being substantially incomplete, the Court ordered the parties to cross
move for partial summary judgment on this narrow issue to facilitate a potential settlement. D.E.
322 at 5:1-22; D.E. 321 at 1-2. After considering the parties’ submissions, the parties’ oral
arguments, and the United States’ statement of interest, the Court rejected Bayer’s legal theory.
D.E. 351, 352. The Supreme Court’s decision in Escobar clarified that the materiality inquiry
focuses on “the ‘Government’s payment decision.’” D.E. 351 at 24 (citing Escobar, 136 S. Ct. at
2002). The focus “is not [on] the amount of payment.” Id. Indeed, “[t]he Government considers
factors other than the bald dollar amount of a reimbursement request when deciding whether to
pay a claim, including the claimant’s compliance with applicable regulatory requirements.” Id. In
denying Bayer’s motion for partial summary judgment, the Court ruled as follows:
Bayer may be held liable under the [FCA] for claims for Medicare
and Medicaid reimbursement for surgical procedures in which
Trasylol was administered, regardless of whether the relevant
requests for reimbursement were bundled rather than itemized[, and]
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Liability under the FCA attaches to any person who “(A) knowingly presents, or causes to be
presented [to the United States Government], a false or fraudulent claim for payment or approval;
[or] (B) knowingly makes uses, or causes to be made or used, a false record or statement material
to a false or fraudulent claim.” 31 U.S.C. § 3729(a)(1)(A)-(B). Relevant here, a claim can be
“false or fraudulent” based on “lies about [a claimant’s] compliance with a statutory, regulatory,
or contractual requirement.” United States ex rel. Greenfield v. Medco Health Solutions, Inc., 880
F.3d 89, 94 (3d Cir. 2018). But those lies “must be material to the Government’s payment decision
in order to be actionable under the [FCA].” Universal Health Servs., Inc. v. United States ex rel.
Escobar, 136 S. Ct. 1989, 1996 (2016).
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regardless of whether the administration of Trasylol in these
procedures affected the total amount of corresponding
reimbursement.
Id. at 33-34. 4
II.

LEGAL STANDARD
The statute governing interlocutory appeals, 28 U.S.C. § 1292(b), provides in relevant part:
When a district judge, in making in a civil action an order not
otherwise appealable under this section, shall be of the opinion that
such order involves a controlling question of law as to which there
is substantial ground for difference of opinion and that an immediate
appeal from the order may materially advance the ultimate
termination of the litigation, he shall so state in writing in such order.
The Court of Appeals which would have jurisdiction of an appeal of
such action may thereupon, in its discretion, permit an appeal to be
taken from such order[.]
Thus, a district court may certify a non-final order for interlocutory appeal where the order

“(1) involve[s] a controlling question of law, (2) offer[s] substantial ground for difference of
opinion as to its correctness, and (3) if appealed immediately [would] materially advance the
ultimate termination of the litigation.” Katz v. Carte Blanche Corp., 496 F.2d 747, 754 (3d Cir.
1974) (internal quotation marks omitted). A controlling question of law is one in which, either (1)
“if erroneous, would be reversible error on final appeal;” or (2) is “serious to the conduct of
litigation, either practically or legally.” Id. at 755. “[Q]uestions about a district court’s application
of facts of the case to established legal standards are not controlling questions of law for the
purposes of section 1292(b).” Morgan v. Ford Motor Co., No. 06-1080, 2007 WL 269806, at *2
(D.N.J. Jan. 25, 2007).

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As “[b]oth parties acknowledge[d] ongoing disputes of fact that are material to a determination
of liability on any element” of Relator’s Trasylol-related FCA claims, the Court also denied
Relator’s motion for partial summary judgment. Id. at 34.
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A substantial ground for difference of opinion must arise “out of genuine doubt as to the
correct legal standard.” Kapossy v. McGraw-Hill, Inc., 942 F. Supp. 996, 1001 (D.N.J. 1996).
Mere disagreement with the district court’s ruling is not enough. Id. Rather, “[a] substantial
ground for difference of opinion exists where reasonable jurists might disagree on an issue’s
resolution, not merely where they have already disagreed.” Reese v. BP Exploration (Ala.) Inc.,
643 F.3d 681, 688 (9th Cir. 2011). Therefore, “when novel legal issues are presented, on which
fair-minded jurists might reach contradictory conclusions, a novel issue may be certified for
interlocutory appeal without first awaiting development of contradictory precedent.” Id.
Lastly, certification would materially advance the ultimate termination of the litigation
“where the interlocutory appeal eliminates: (1) the need for trial; (2) complex issues that would
complicate trial; or (3) issues that would make discovery more costly or burdensome.” F.T.C. v.
Wyndham Worldwide Corp., 10 F. Supp. 3d 602, 635 (D.N.J. 2014). This element does not require
a movant to establish that an appeal would guarantee termination of the litigation, but rather
“requires the court to analyze whether an immediate appeal may materially advance the
termination of the litigation.” A.S. ex rel. Miller v. SmithKline Beecham Corp., No. 13-2382, 2013
WL 6506570, at *3 (M.D. Pa. Dec. 12, 2013).
“The burden is on the movant to demonstrate that all three requirements are met.”
Piacentile v. Thorpe, No. 12–7156, 2016 WL 3360961, at *2 (D.N.J. June 8, 2016) (quoting Litgo
N.J., Inc. v. Martin, No. 06-2891, 2011 WL 1134676, at *2 (D.N.J. Mar. 25, 2011)). However,
“even if all three criteria . . . are met, the district court may still deny certification, as the decision
is entirely within the district court’s discretion.” Id. (quoting Morgan, 2007 WL 269806, at *2
(D.N.J. Jan. 25, 2007)). Further, Section 1292(b) “is to be used sparingly and only in exceptional
circumstances that justify a departure from the basic policy of postponing review until the entry of

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the final order.” Acosta v. Pace Local I-300 Health Fund, No. 04-3885, 2007 WL 1074093, at *1
(D.N.J. Apr. 9, 2007) (quoting Morgan, 2007 WL 269806, at *2 (internal quotation marks
omitted)); see also Kapossy, 942 F. Supp. at 1001 (stating that interlocutory appeal is “used
sparingly” since it is “a deviation from the ordinary policy of avoiding piecemeal appellate review
of trial court decisions which do not terminate the litigation”) (quoting United States v. Hollywood
Motor Car Co., 458 U.S. 263, 265 (1982) (internal quotation marks omitted)).
III.

ANALYSIS
In requesting certification, Bayer argues that the April 23 Decision involves the question

of whether the Government’s fixed-fee payment system renders any alleged fraud regarding
Trasylol immaterial as a matter of law, as the Government pays the same price for a surgical
procedure regardless of whether Trasylol is used. Def. Br. at 8. Bayer argues that this question is
a “controlling question of law” for which there is a “substantial ground for difference of opinion.”
Id. at 8-10. In support, Bayer cites to the lack of mandatory authority and the split in district courts
on the issue. Id. at 9-10; Def. Reply at 2-4. Bayer also argues that “certification could very well
eliminate the need for trial . . . but at the very least, [certification] would drastically reduce the
scope and complexity of any discovery and trial that might occur thereafter.” Def. Br. at 10.
Namely, Bayer contends that an appellate decision in their favor would significantly trim down
this litigation because “Relator has not identified any exceptions to the . . . fixed-fee payment
system” and has identified only one false claim for the other drug product at issue, Avelox. Id.
Bayer further contends that this Court’s April 23 Decision requires the parties “to propound
additional significant discovery on multiple government agencies.” Id. at 11. Bayer provides a
non-exclusive list of questions that need to be addressed, and Bayer argues that a reversal of this

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the April 23 Decision would obviate the need for this burdensome, additional discovery. Id. at 1113.
Relator does not contest that the question Bayer seeks to certify is a controlling question
of law. See Pl. Opp. Rather, Relator contends that Bayer has not satisfied the burden of
demonstrating the applicable test’s second and third prongs—i.e., there is a substantial ground for
difference of opinion and immediate appeal would materially advance the litigation’s ultimate
termination. Id. at 7-13. 5 Relator argues that the second prong requires the “substantial ground
for difference of opinion . . . [to] arise ‘out of genuine doubt as to the correct legal standard.’” Id.
at 7 (quoting Kapossy, 942 F. Supp. at 1001). Escobar clarified the legal standard for materiality
under the FCA: whether the Government’s knowledge of a false claim would affect the
Government’s payment decision. Pl. Opp. at 8. Because Bayer cites only pre-Escobar cases to
support their contention of a district court split, Relator argues that Bayer has not shown a
substantial ground for difference of opinion. Id. at 7-9. Regarding the third prong, Relator
contends that the advanced stage of this litigation weighs against certifying the question for
interlocutory appeal. Id. at 10-11. The significant discovery burden, Relator argues, “is of Bayer’s
creation and cannot justify the excessive delay caused by an interlocutory appeal. . . .” Id. at 11.
Relator contends that much of Bayer’s proposed discovery runs afoul of Federal Rules of Civil
Procedure 26(c) and 45. Id. at 11-12. Further, Relator highlights that the Court has appointed a
Special Master to resolve any discovery disputes. Id. at 10-11. Finally, Relator contends that
regardless of an interlocutory appeal, she would still be able to proceed on other claims not
implicated by the April 23 Decision. Id. at 13.

5

Page numbers in cites to Relator’s opposition brief reference CM/ECF-generated page
numbers.
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The Court will not certify its April 23 Decision for interlocutory appeal. Bayer has not
convinced the Court that this case involves “exceptional circumstances that justify a departure
from the basic policy of postponing review until the entry of the final order,” and the Court finds
that Bayer has not met their burden of showing that an interlocutory appeal would materially
advance the ultimate termination of this litigation. See Acosta, 2007 WL 1074093, at *1; accord
Piacentile, 2016 WL 3360961, at *2.
First, Relator’s Trasylol-related FCA claims form only one set of claims within a larger
lawsuit. See 10AC. Even if the Third Circuit were to rule in Bayer’s favor, Relator’s Aveloxrelated FCA claims and FCA retaliation claim would remain. Those claims “are still being actively
litigated, and their merits would not be resolved or clarified in any way on an immediate appeal
concerning” the April 23 Decision. See Ferreras v. Am. Airlines, Inc., No. 16-2427, 2017 WL
1709597, at *2 (D.N.J. May 1, 2017) (finding that an interlocutory appeal would not materially
advance the ultimate termination of the litigation where two claims would remain regardless of an
appeal’s outcome); accord Shevlin v. Phoenix Life Ins. Co., No. 09-6323, 2015 WL 348552, at *7
(D.N.J. Jan. 23, 2015) (finding that an interlocutory appeal would not materially advance the
ultimate termination of the litigation where any appellate decision “would not render the breachof-contract claim terminated or moot).
Second, a favorable appellate decision for Bayer would not completely dispose of Relator’s
Trasylol-related FCA claims. For example, Relator would still be able to proceed on Trasylolrelated FCA claims for physician and hospital claims billed under Medicare Part B. Pl. Opp. at
13. Relator would be able to proceed on “outlier” claims billed under Medicare Part A. 6 See 42

6

“Outlier” claims are ones where the hospital’s actual costs exceed Medicare’s fixed payment by
a certain amount. 42 C.F.R. § 412.80. The Government must make additional payments for these
unusually costly cases of patient treatment. 42 U.S.C. § 1395ww(d)(5)(A).
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U.S.C. § 1395ww(d)(5)(A). And Relator would be able to proceed on claims at “critical access
hospitals” in rural areas. D.E. 338 at 4 n.1.
Bayer does not argue that an interlocutory appeal would resolve Relator’s Avelox-related
FCA claims or completely resolve Relator’s Trasylol-related FCA claims. See Def. Br.; Def.
Reply. Indeed, Bayer seems to admit that an appeal might not resolve these claims. See, e.g., Def.
Br. at 8 n.3; Def. Reply at 5 n.3. Instead, Bayer contends that despite years of litigation, Relator
has not been able to identify any exceptions to the fixed-payment system and has identified only
an insignificant amount in allegedly false Avelox claims. Def. Br. at 10. Therefore, Bayer
contends certification “would drastically reduce the scope and complexity of any discovery and
trial that might occur thereafter.” Id.
The Court affords little weight to this argument. The Court in its April 23 Decision noted
that discovery remained substantially incomplete. D.E. 351 at 14. Bayer has acknowledged as
much, and has further stated that the Government to date has refused to participate in discovery.
Def. Br. at 13; Def. Reply 5-6. If Bayer’s statement regarding Government participation is true,
the Court, at least for the purpose of this motion, will not fault Relator for not identifying any
“outlier” claims or exceptions to the fixed payment system. Similarly, the Court will not consider
the number or value of Relator’s Avelox-related claims based on limited discovery. Ongoing
discovery may uncover more evidence to support Relator’s claims. Consequently, an interlocutory
appeal very well may not meaningfully reduce the cost or burden of discovery. See Wyndham
Worldwide, 10 F. Supp. 3d at 635. The Court notes that it has appointed a Special Master to
oversee discovery and that the Special Master is more than capable of limiting the scope and
complexity of discovery to an appropriate level. See D.E. 328. To the extent Bayer is suggesting
an interlocutory appeal would facilitate settlement (Def. Br. at 8 n.3), the Court notes that it has

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conducted three settlement conferences without success, the parties have litigated three motions to
dismiss, the Complaint is in its tenth iteration, and the parties have struggled to resolve any
discovery issue without Court intervention. See D.E. 310, 316, 319, 328 at 2-3, Pl. Opp. at 10.
For these reasons, the Court finds that Bayer has not met their burden of showing that an
interlocutory appeal would materially advance the ultimate termination of this litigation. 7 See
Piacentile, 2016 WL 3360961, at *2.
Finally, even if the Bayer had satisfied the three-part test, the Court would exercise its
discretion to deny certification. See Piacentile, 2016 WL 3360961, at *2. The Court stands by its
previous holding, which is well supported by case law. Therefore, although an interlocutory appeal
might provide clarity on one issue in this large dispute, the Court finds it more likely that an appeal
would simply defer resolution of a case that is 14-years old. See U.S. ex rel. Galmines v. Novartis
Pharm. Corp., No. 06-3213, 2013 WL 4511626, at *2 (E.D. Pa. Aug. 26, 2013) (denying
certification in a seven-year-old case where the court’s prior holding was well supported by case
law); Singh v. Daimler-Benz, AG, 800 F. Supp. 260, 263 (E.D. Pa. 1992) (denying certification
where clear statutory language supported its previous holding); Shevlin, 2015 WL 348552, at *6
(“A critical factor is whether the interlocutory appeal will cause excessive delay.”). The Court
cannot justify the delay of an interlocutory appeal under these circumstances.

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Because Bayer has not satisfied the third-prong of the test, the Court will not address the parties’
arguments regarding “substantial ground for difference of opinion.” See Liberty Salad, Inc. v.
Groundhog Enters., Inc., No. 17-0226, 2019 WL 1303829, at *3 (E.D. Pa. Mar. 20, 2019) (“All
three criteria must be satisfied [for a court to grant certification].”).
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IV.

CONCLUSION
For these reasons, and for good cause shown,
IT IS on this 16th day of July 2019,
ORDERED that Defendants’ motion to certify this Court’s April 23, 2018 Opinion and

Order for interlocutory appeal (D.E. 353) is DENIED.

s/ John Michael Vazquez
John Michael Vazquez, U.S.D.J.

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