PETRATOS et al v. GENENTECH, INC. et al

Filing 94

OPINION fld. Signed by Judge Madeline C. Arleo on 10/29/15. (sr, )

FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

UNITED STATES, et al. ex rel.
GERASIMOS PETRATOS
Plaintiff,

Civil Action No. 11-3691

v.

OPINION

GENENTECH, INC., et al.
Defendants.

ARLEO, UNITED STATES DISTRICT JUDGE
Before the Court are Defendant Genentech, Inc.’s and Defendant Hoffman La-Roche Inc.’s
motions to dismiss Plaintiff Gerasimos Petratos’ Amended Complaint. Dkt. Nos. 68, 70. On
September 3, 2015, the Court heard oral argument. This case concerns whether the False Claims
Act can be extended to cover wrongful behavior that does not lead to a false claim. It cannot, so
Plaintiff’s Amended Complaint must be dismissed.
I.

FACTS
This is a qui tam action brought by relator Gerasimos Petratos (“Plaintiff”) on behalf of the

United States government and various state governments. Plaintiff was previously Global Head
of Healthcare Data Analytics for Defendants, which include Genentech, Inc., F. Hoffman La
Roche Ltd., Hoffman-La Roche Inc., and Roche Holding Ltd.

Dkt. No. 77, Am. Compl.

(Corrected) ¶ 24. 1

1

Two of these defendants, F. Hoffman-La Roche Ltd. and Roche Holding Ltd. (“Foreign
Defendants”) filed a motion challenging personal jurisdiction. See Dkt. No. 85. Because the Court
finds no claim has been stated as Defendants Genentech, Inc. and Defendant Hoffman La-Roche
1

Defendants own Avastin, one of the world’s highest-grossing cancer drugs with 2010
revenues estimated at $6.5 billion. Am. Compl. ¶ 5. Avastin is a monoclonal antibody cancer
drug that limits the growth of tumors by preventing the growth of blood vessels that feed tumors.
Id. ¶ 89. In February 2004, Avastin received approval from the Food and Drug Administration
(“FDA”) as a treatment in combination with chemotherapy for patients with metastatic colorectal
cancer. Id. ¶ 90. In December 2007, the Oncologic Drugs Advisory Committee (“ODAC”) of the
FDA recommended denial of Avastin for metastatic breast cancer, highlighting a number of
concerns with the clinical trial data provided by Defendants. In December 2007, however, the
FDA approved Avastin for treatment for patients with metastatic breast cancer. Id. ¶¶ 91-95. This
approval was conditioned on completion of adequate studies showing the drug’s clinical benefit.
Id. ¶ 97. By December 2010, subsequent clinical studies showed no extension of lifespan and
serious side effects to Avastin, so the FDA removed breast cancer as an approved use. Id. ¶ 99.
Defendants appealed that decision, but the FDA removed the metastatic breast cancer indication
from Avastin’s label in 2011. Id. ¶¶ 99-100, 229.
Avastin remains FDA-approved for treatment of metastatic colorectal cancer, nonsquamous non-small cell lung cancer, glioblastoma, and metastatic renal cell carcinoma. Id. ¶ 101.
Avastin is also used for a variety of uses not approved by the FDA, known as “off-label uses.” Id.
¶ 102. These treatments include renal (kidney) cancer, ovarian cancer, pancreatic cancer, and
various eye diseases such as macular degeneration. Id. Side-effects from Avastin can be serious,
stemming from hypertension to kidney failure. Id. ¶ 103.

Inc. (“U.S. Defendants”) and because the allegations against the Foreign Defendants are identical
to those against the U.S. Defendants, the claims against the Foreign Defendants are dismissed as
well without the Court reaching the issue of personal jurisdiction.
2

Plaintiff alleges that Defendants knowingly based regulatory submissions on patient
databases that contained inadequate information about Avastin’s real-world risks and did not use
electronic medical records which would have better answered questions about Avastin safety. Id.
¶ 125. In February 2010, Plaintiff recommended use of a different database to Defendants, but no
action was taken. Id. ¶¶ 134-39. The different database, Plaintiff alleges, better integrated both
inpatient and outpatient data, and so more accurately reflected actual Avastin side effects. Id. ¶
141-42. Certain of Defendants’ employees recognized that the database proposed by Plaintiff was
more relevant than those used by Defendants, but declined to examine it because there was too
much “business risk.” Id. ¶ 146. In April 2010, Plaintiff met with higher level executives for
Defendants, including the head of product development and the head of regulatory affairs,
requesting use of a different database to study Avastin side effects. Id. ¶ 150. The executives
declined to act and Plaintiff subsequently received a scathing email from his supervisor. Id. ¶ 152.
At this point, no health authority had questioned the company’s data sources. Id. ¶¶ 139, 147.
In June 2010, an independent study found a dose-dependent relationship for proteinuria
occurrence in Avastin patients. Id. ¶ 175. Dr. Richard Lafayette, a doctor who has significant
influence in prescription practices, also known as a “Key Opinion Leader,” subsequently requested
information from Defendants concerning the incidence of proteinuria in Avastin patients. Id. ¶
176. Defendants did not provide that data to Dr. Lafayette, claiming it was not available. Id. ¶
178. Plaintiff claims that Dr. Lafayette would likely have changed his opinion on the risk-benefit
profile for Avastin if he was given more complete information, which would have had an impact
on prescribing habits of oncologists. Id. ¶ 221.
In January 2011, the Center for Medicare and Medicare Services (“CMS”), the agency
responsible for reimbursement decision for Medicare, asked Defendants to provide it with

3

information to determine appropriate reimbursement from the federal government. Id. ¶ 21.
Defendants allegedly supplied data which projected significantly reduced annual costs associated
with the drug’s side effects across the patient population. Id.
Plaintiff alleges that Defendants’ data deficiencies were the result of an intentional
campaign to maximize profits by suppressing clinical and epidemiological information. Id. ¶¶ 12,
182-88. Data deficiencies allegedly led to underreporting of side effects facing at-risk patients,
including higher rates of various adverse events: cardiac arrhythmia, renal failure, pulmonary and
cranial hemorrhages, and microangiopathic haemolytic anaemia. Id. ¶ 16.
Plaintiff challenges a variety of components of the FDA-approved label for Avastin,
including dose dependency, id. ¶ 180, and proteinuria, id. ¶¶ 216-17. Plaintiff further claims that
a variety of statements made to the FDA were misleading. Id. ¶¶ 213-25. Defendants also
allegedly failed to report adverse events promptly during clinical trials. Id. ¶¶ 167-70.
Plaintiff also alleges generally that if Defendants revealed complete information about
Avastin, many doctors would have more carefully evaluated their patients to determine if Avastin
use was appropriate. Id. ¶ 19. One physician, Dr. Mark Levin, confirmed that had he known of
the risks of Avastin, he would not have prescribed it for some of his patients. Id. ¶ 240-42. Plaintiff
also argues that federal and state governments would have reimbursed for fewer Avastin
indications, for lower dosages, or not at all. Id. ¶ 19. Plaintiff claims hundreds of millions of
dollars in damages. Id. ¶ 20.
Plaintiff’s initial complaint was filed on June 27, 2011. Dkt. No. 1. Following a motion
to dismiss, the complaint was dismissed in part on January 29, 2014, by the Hon. Dennis M.
Cavanaugh, U.S.D.J. Dkt. No. 43. The Court subsequently granted Plaintiff’s motion to amend

4

its complaint, Dkt. No. 56, and the Amended Complaint was filed on December 22, 2014. Dkt.
No. 58. 2 The motions to dismiss followed.
Plaintiff’s Amended Complaint includes four federal causes of action: (1) presentation of
false claims in violation of 31 U.S.C. § 3729(a)(1)(A); (2) knowingly making a false statement
material to a false claim in violation of 31 U.S.C. § 3729(a)(1)(B); (3) making or using a false
statement to avoid an obligation to refund in violation of 31 U.S.C. § 3729(a)(1)(G); and (4)
conspiracy in violation of 31 U.S.C. § 3729(a)(1)(C). Plaintiff also includes separate claims under
state law analogues in California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii,
Illinois, Indiana, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada,
New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island,
Tennessee, Texas, Virginia, Wisconsin, and Washington, D.C.
II.

LEGAL STANDARD
In order to state a claim for violation of the False Claims Act, 31 U.S.C. 3729(a)(1)

(“FCA”), a plaintiff must provide facts sufficient to plausibly show that “(1) the defendant
presented or caused to be presented to an agent of the United States a claim for payment; (2) the
claim was false or fraudulent; and (3) the defendant knew the claim was false or fraudulent.”
United States ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235, 242 (3d Cir. 2004). “A private
individual, otherwise known as a relator, may bring a civil action in the name of the United States
to enforce this provision of the FCA and may share a percentage of any recovery resulting from

2

Permitting an amendment over a futility objection does not categorically preclude consideration
of a motion to dismiss. See, e.g., Bussicolo v. Babcock Power, Inc., No. 13-07192, 2014 WL
6908771, at *2-3 (D.N.J. Dec. 8, 2014) (addressing defendant’s motion to dismiss amended
complaint after defendant previously argued futility); Ashcroft v. Dep’t of Corrections, No. 05488, 2007 WL 1989265, at *6-7 (W.D.N.Y July 6, 2007) (same).
5

the suit.” Wilkins v. United Healthcare Group, Inc., 659 F.3d 295, 305 (3d Cir. 2011); 31 U.S.C.
§ 3730(b), (d).
An FCA claim must satisfy the pleading requirements of Federal Rule of Civil Procedure
9(b). See Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153, 157 (3d Cir. 2014). The allegations
of fraud “must provide particular details of a scheme to submit false claims paired with reliable
indicia that lead to a strong inference that claims were actually submitted.” Id. at 156-57.
“Describing a mere opportunity for fraud will not suffice.” Id. at 159.
Claims under the FCA may be factually or legally false. Id. “A claim is factually false
where a claimant misrepresents what goods or services it provided to the Government and a claim
is legally false when the claimant knowingly falsely certifies that it has complied with a statute or
regulation the compliance with which is a condition for Government payment.” Id.
Legally false claims are based on a false certification theory of liability. See Rodriquez v.
Our Lady of Lourdes Med. Ctr., 552 F.3d 297, 303 (3d Cir. 2008), overruled in part on other
grounds by United States ex rel. Eisenstein v. City of New York, 556 U.S. 928 (2009). They may
be based on express or implied certifications. See Wilkens, 659 F.3d at 305. Express certifications
are those actually stated. Id. Implied certifications occur where “a claimant seeks and makes a
claim for payment from the Government without disclosing that it violated regulations that affected
its eligibility for payment.” Id. The underlying basis for implied certification liability under the
FCA is “the notion that the act of submitting a claim for reimbursement itself implies compliance
with governing federal rules that are a precondition to payment.” Mikes v. Straus, 274 F.3d 687,
699 (2d Cir. 2001); see also United States v. Sci. Applications Int’l Corp., 626 F.3d 1257, 1266
(D.C. Cir. 2010) (“Courts infer implied certifications from silence where certification was a
prerequisite to the government action sought.”) (internal quotation marks and citation omitted).

6

Under the implied certification theory, “a plaintiff must show that if the Government had
been aware of the defendant’s violations of the Medicare laws and regulations that are the basis of
a plaintiff’s FCA claims, it would not have paid the defendant’s claims.” Wilkins, 659 F.3d at
307; see also United States ex rel. Conner v. Salina Reg'l Health Ctr., Inc., 543 F.3d 1211, 121920 (10th Cir. 2008). “Absent this requirement, the FCA could turn into a blunt instrument to
enforce compliance with all regulations rather than only those regulations that are a precondition
to payment.” Wilkins, 659 F.3d at 307 (quotation marks and ellipses omitted).
III.

ANALYSIS
Plaintiff relies on three federal statutory hooks for FCA liability. 3

31 U.S.C. §

3729(a)(1)(A)-(B), (G). Sections (A) and (B) each require a false claim. See United States ex rel.
Schmidt v. Zimmer, Inc., 386 F.3d 235, 242 (3d Cir. 2004).
A. False Claims Under § 3729(a)(1)(A)-(B).
“Claim” is defined within the statute as:
any request or demand, whether under a contract or otherwise, for
money or property and whether or not the United States has title to
the money or property, that—
(i) is presented to an officer, employee, or agent of the United States;
or
(ii) is made to a contractor, grantee, or other recipient, if the money
or property is to be spent or used on the Government’s behalf or to
advance a Government program or interest, and if the United States
Government—
(I) provides or has provided any portion of the money or
property requested or demanded; or
(II) will reimburse such contractor, grantee, or other recipient
for any portion of the money or property which is requested or
demanded

3

Plaintiff alleges a violation of § 3729(a)(1)(C) as well, but that section imposes liability for any
person who “conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G).”
Without an underlying violation, there can be no liability for conspiracy under the FCA. Thus,
this count rises or falls with the others.
7

31 U.S.C. § 3729(b)(2)(A).
Defendants’ submissions to the FDA to get Avastin approved are not claims for payment.
Nor are their submissions to third-party compendia authors or “Key Opinion Leaders.” The only
conceivable claims discussed in the Amended Complaint are the submissions doctors make for
Medicare and Medicaid reimbursements. Therefore, in order to state a claim, Plaintiff must allege
that the claims made by doctors for Medicare and Medicaid reimbursements are false. 4
1. “Medically Reasonable and Necessary”
Plaintiff argues that doctors’ claims were false because certain procedures were not
“medically reasonable and necessary” as required by statute and regulations. Defendants reply
that doctors do not make this determination, CMS does, and there are no allegations that CMS
would make a different decision as to whether Avastin is medically reasonable and necessary for
any particular use. Defendants prevail here.
Medicare provides for payment for “a drug or biological.” 42 U.S.C. § 1395u(o)(1). The
term “drugs” is defined to include any drugs used in an anticancer chemotherapeutic regimen for
a “medically accepted indication.” 42 U.S.C. § 1395x(t)(2)(A). “Medically accepted indication”
is defined to include any use of a drug or biologic that has been approved by the FDA and other
uses of a drug or biologic (i.e., off-label uses), so long as the drug or biologic is (1) FDA approved,
and (2) “such use is supported by one or more citations which are included . . . in one or more”
specified compendia, “unless the Secretary has determined that the use is not medically appropriate
or the use is identified as not indicated in one or more such compendia.” See 42 U.S.C. §
1395x(t)(2)(B). Medicaid similarly reimburses drugs used for “medically accepted indications,”

4

Plaintiff’s allegations that doctors would have prescribed less Avastin do not make the Avastin
prescriptions “false claims,” i.e. claims that would not be reimbursed by CMS.
8

which include indications approved by the FDA and uses “supported by one or more citations
included or approved for inclusion in any of the compendia.” 42 U.S.C. § 1396r-8(d)(1)(B); 42
U.S.C. § 1396r-8(k)(6).
CMS regulations prohibit compensation for “items and services . . . that are not reasonable
and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a
malformed body member.” 42 U.S.C.A. § 1395y(a)(1)(A). The central question is therefore
whether the “reasonable and necessary” limitation found in 42 U.S.C. § 1395y(a)(1)(A) 5 is a
determination made by the relevant administrative agencies or individual doctors. The substantial
majority of courts that address this question find that the relevant administrative agency determines
what is medically reasonable and necessary under the regulations.
Language from the Supreme Court indicates that the decision is controlled by the agency,
not individual doctors: “The [HHS] Secretary’s decision as to whether a particular medical service
is ‘reasonable and necessary’ and the means by which she implements her decision . . . are clearly
discretionary decisions.” Heckler v. Ringer, 466 U.S. 602, 617 (1984). Other courts frequently
recite that the agency makes the “reasonable and necessary” determination. See, e.g., Hays v.
Leavitt, 583 F. Supp. 2d 62, 65 (D.D.C. 2008) aff'd sub nom. Hays v. Sebelius, 589 F.3d 1279
(D.C. Cir. 2009) (stating that the “reasonable and necessary” determination of section 1395y(a) is
made by the Secretary of HHS, though it may be outsourced to specific contractors); Willowood
of Great Barrington, Inc. v. Sebelius, 638 F. Supp. 2d 98, 105 (D. Mass. 2009) (detailing different
mechanisms by which the Secretary may decide what is “reasonable and necessary”).

5

Though the parties claim a variety of statutory sections provide a “reasonable and necessary”
requirement, the clearest language for such a requirement is found in 42 U.S.C. § 1395y(a)(1)(A).
9

Addressing the more particular context of this case, Judge Linares held that an indication
approved by the FDA or supported by a compendia is “medically accepted” and therefore
“reasonable and necessary.” United States ex rel. Simpson v. Bayer Corp., No. 05-3895, 2013
WL 4710587 (D.N.J. Aug. 30, 2013). Simpson, therefore, directly rejected the theory that doctors
make some individualized assessment or certification that a particular procedure or drug is
“reasonable and necessary.” Simpson also clearly identified the “reasonable and necessary”
standard as coterminous with the “medically accepted” requirement. Earlier in the instant case,
this Court followed Simpson, holding that “Avastin is approved by the FDA and supported by
compendia listings . . . . Relator cannot make this concession and still argue that prescriptions [for]
Avastin were not ‘reasonable and necessary.’” United States ex rel. Petratos v. Genentech, Inc.,
No. 11-3691, 2014 WL 345332, at *3 (D.N.J. Jan. 30, 2014). This Court does not see a compelling
reason to depart from that ruling here.
Another recent opinion in this district supports this outcome. Judge Wolfson recently held
that where the FDA has approved a drug for a particular use, that use is “reasonable and necessary,”
no matter what an individual doctor thinks. In re Plavix Mktg., Sales Practices & Products Liab.
Litig., No. 13-1039, 2015 WL 4997077, at *15 (D.N.J. Aug. 20, 2015) (“[A] drug prescribed for
its on-label use—by definition—means that the prescription is medically reasonable for its
intended purpose by virtue of the FDA approval process.”). That a doctor cannot override the
FDA is implicit in this holding. Though not squarely before her, Judge Wolfson did note that
many cases agreed that “if the particular use of the drug is supported by a listing in a major drug
compendium—even if the use is for an off-label purpose—that drug may fall within the
‘reasonable and necessary’ standard of Medicare.” Id. at *16.

10

Dealing with a somewhat different issue, one district court noted that “[w]hether
prescribing a drug for a particular condition is reasonable and necessary is typically determined by
considering whether the drug is prescribed for a ‘medically accepted indication’ that is
reimbursable under Medicare and Medicaid.” U.S. ex rel. Cestra v. Cephalon, Inc., No. 14-1842,
2015 WL 3498761, at *8 (E.D. Pa. June 3, 2015).
Several cases that deny motions to dismiss FCA claims are consistent with this holding. In
Strom ex rel. U.S. v. Scios, Inc., a district court denied a motion to dismiss an FCA claim. 676 F.
Supp. 2d 884 (N.D. Cal. 2009). The claim there was premised on an alleged scheme to promote
certain off-label uses. CMS found those off-label uses were not covered and a relator action
followed. Id. at 889. Strom does not contradict this Court’s holding. There was no indication that
the alleged false claims in Strom were actually covered by the Medicare or Medicaid “medically
accepted” standard. There was only one mention of drug compendia within the opinion, and that
mention actually directly supports this Court’s holding—indicating that “medically accepted”
clarified “reasonable and necessary.” Id. at 886 (“[T]his ‘medically accepted’ terminology
clarifies the applicable statutory language, which provides coverage for uses that are ‘reasonable
and necessary.’”).
In United States ex rel. Brown v. Celgene Corp., another district court permitted a claim to
survive a motion to dismiss. No. 10-3165, 2014 WL 3605896 (C.D. Cal. July 10, 2014). The
relator in that case alleged that false claims were submitted for off-label uses that were not
“medically accepted,” as defined in the statute. Id. at * 5. Though the parties disputed whether
certain claims were medically accepted—i.e. supported by specified compendia and not precluded
by any compendia—the court there found this dispute was a “complex, case-by-case inquiry not
susceptible to resolution on a motion to dismiss.” Id. Here, by contrast, Plaintiff does not allege

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that any claim was submitted that was not “medically accepted” (or would not be medically
accepted but-for the alleged misconduct). Brown v. Celgene, therefore, has little application here.
Two district courts denied motions to dismiss FCA claims based on similar arguments as
those made by Defendants here. The Court is not persuaded by these decisions. In United States
ex rel. Galmines v. Novartis Pharm. Corp., the court addressed a voluminous motion to dismiss
FCA claims concerning off-label promotion of a drug. No. 06-3213, 2013 WL 2649704, at *2
(E.D. Pa. June 13, 2013). The Galmines court rejected the argument that defendant’s off-label
marketing did not affect government payment decisions, juxtaposing “risky” procedures with
“necessary” ones. Id. at *12. Because this opinion did not discuss who makes the determination
of whether a procedure is medically reasonable and necessary, it is not persuasive here. United
States ex rel. Bergman v. Abbot Laboratories also denied a motion to dismiss an FCA claim based
on off-label marketing. 995 F. Supp. 2d 357, 370 (E.D. Pa. 2014). Defendant Abbot Laboratories
argued a listed compendia supported “use of fenofibrates such as TriCor” for the disputed
indications. The Bergman court rejected that argument, assuming without discussion that at least
some off-label uses in that case were not covered. Id. at 369. Because the Bergman court did not
discuss whether the “reasonable and necessary” determination (1) is made by a doctor or the
relevant agency or (2) is coterminous with the “medically-accepted” definition, this Court is
unpersuaded by Bergman’s assumption that some claims would not be covered.
Put simply, this dispute comes down to whether medically “reasonable and necessary” is
assessed by doctors individually or is defined by the regulatory scheme. Here that scheme requires
approval by the FDA for a particular use or approval in a specified compendia without rejection
by any specified compendia for that use. Reasoning from the Supreme Court and the majority of

12

courts that have directly discussed this issue make clear that medically “reasonable and necessary”
is a determination made by the relevant agency, not individual doctors. 6
Given that, the Amended Complaint is clearly deficient. It does not allege any facts to
show that CMS would find Avastin not to be medically reasonable and necessary for any particular
use in the but-for world. This is fatal to Plaintiff’s claim that some doctors would not have
prescribed Avastin had they been given more information about its risks. Plaintiff does not allege
that CMS would have changed its reimbursement schedule or that any compendia would have
changed its indication from supporting to non-supporting or to opposing use for any given
indication. Thus, Avastin would have legally still been reasonable and necessary for the uses at
issue.

Plaintiff has not alleged any false claim based on the “reasonable and necessary”

requirement.
2. Regulatory Violations
Plaintiff also argues that the claims were false based on an implied certification that
Defendants complied with certain regulations. Plaintiff alleges three violations of an implied
certification: (1) reliance on self-serving data sources; (2) inadequate examination or reporting of
dose-related effects of Avastin; and (3) delay in reporting adverse events. 7

6

Local medical contractors approved by CMS may also make decisions concerning what is
“reasonable and necessary” for their area of coverage, but such coverage decisions may not conflict
with a national coverage decision, if one is active. See, e.g., Medicare Program; Negotiated
Rulemaking: Coverage and Administrative Policies for Clinical Diagnostic Laboratory Services,
66 FR 58788-01 (Nov. 23, 2001) (detailing that CMS and contractors may make coverage
decisions concerning what is “reasonable and necessary”).
7
Plaintiff also argues in a footnote that some claims for Avastin were a “worthless service,” thus
implicating the FCA. The Amended Complaint is plainly inadequate to state a claim for a
worthless service FCA violation; it never alleges that Avastin had no medical use for certain
indications. Plaintiff cites nothing to the contrary in the Amended Complaint.
13

Violations of regulations only give rise to FCA liability if such regulations are
preconditions of payment. The fact that a company “may have knowingly violated these statutes
and regulations, without more, does not suffice to state a FCA claim.” United States ex rel. Campie
v. Gilead Sci., Inc., 2015 WL 106255, at *8 (N.D. Cal. 2015); see also United States ex rel. Hopper
v. Anton, 91 F.3d 1261, 1266 (9th Cir. 1996) (“Violation of laws, rules, or regulations alone do
not create a cause of action under the FCA.”); Wilkins, 659 F.3d at 307 (“[T]he implied
certification theory of liability should not be applied expansively, particularly when advanced on
the basis of FCA allegations arising from the Government's payment of claims under federally
funded health care programs.”); Mikes v. Straus, 274 F.3d 687, 696 (2d Cir. 2001) (“The language
of [the FCA] plainly links [a defendant’s] wrongful activity to the government’s decision to pay.”).
“There must be a direct and immediate link between a false statement or fraudulent conduct and
the resulting request for payment; payment must be conditioned on the falsity.” Campie, 2015 WL
106255, at *9; accord Foglia v. Renal Ventures Mgmt., LLC, 830 F. Supp. 2d 8, 19 (D.N.J. 2011).
Plaintiff cites nothing to show that the databases used violated any regulation at all, much
less one which was a precondition of payment. Nor does Plaintiff cite anything showing that the
alleged inadequacy in examining and reporting adverse effects violated any regulation. And this
Court has already held that compliance with adverse-event reporting requirements is not a material
precondition to payment here. Dkt. No. 43, at 6 (citing United States ex rel. Ge v. Takeda
Pharmaceuticals Co., No. 10-11043, 2012 WL 5398564 (D. Mass. Nov. 1, 2012), aff’d, 737 F.3d
116 (1st Cir. 2013)).
Therefore, Plaintiff alleges no facts showing that a precondition of payment has been
violated. There are no factual allegations showing that CMS would not have reimbursed these
claims had these deficiencies been cured. There are no allegations that the FDA would not have

14

approved Avastin for particular indications. There are no allegations dealing with preconditions
of payment at all. This absence is fatal. As in Wilkins, the Amended Complaint “does not cite to
any regulation demonstrating that a participant’s compliance with [the disputed regulation] is a
condition for its receipt of payment from the Government.” Id. at 309-10.
This limitation is critical.

Otherwise, the FCA could be used as a relator-driven

enforcement mechanism for all healthcare regulations. That is not the purpose of the FCA. See
Wilkins, 659 F.3d at 307; Mikes, 274 F.3d at 699 (“[T]he False Claims Act was not designed for
use as a blunt instrument to enforce compliance with all medical regulations—but rather only those
regulations that are a precondition to payment”). Merely alleging a false statement is not enough
to state a claim for violation of the FCA.
3. Fraud on the Compendia
Finally, Plaintiff claims to assert a fraud on the compendia theory. Only a single paragraph
in the Amended Complaint provides any support for this theory, and it is plainly insufficient:
As described previously, Roche/Genentech intentionally withheld
such information from Dr. Lafayette, the Stanford expert in kidney
function, after he had specifically asked for it. Had Relator’s
proteinuria-risk analysis been disclosed to Dr. Lafayette, it is likely
that his opinion on the risk-benefit profile for Avastin would have
changed. Given Dr. Lafayette’s status as a Key Opinion Leader in
the field, his opinion would certainly have a significant impact on
prescribing habits of oncologists.
Am. Compl. ¶ 221. Conspicuously absent is any allegation that the compendia would have
changed, either by making a particular indication non-approved or by including additional
warnings. Even if there were more warnings, based on the Amended Complaint, the drug would
be supported by specified compendia for the relevant indications and not excluded in any specified
compendia. Thus, Plaintiff has not alleged any claims submitted for indications which would not
be “medically accepted” under the regulations but-for the alleged misconduct. No alleged facts
15

show that any disclosure would cause CMS to refuse payment for any claim. As such, Plaintiff
has failed to adequately plead a fraud on the compendia theory.
A false statement is not the same as a false claim for payment. Congress used particular
words, and this statutory scheme is not a broad-based consumer protection statute designed to
punish generalized wrongdoing. The allegations in this Complaint do not include any allegations
showing any false claim for payment was ever made. Therefore, these claims are dismissed.
B. Reverse False Claims under Section 3729(a)(1)(G)
Plaintiff also seeks to allege a reverse false claim. In essence, a reverse false claim requires
the failure to pay money owed to the government.

The controlling statute, 31 U.S.C. §

3729(a)(1)(G), creates liability for two categories: one who “knowingly makes, uses, or causes to
be made or used, a false record or statement material to an obligation to pay or transmit money or
property to the Government” or one who “knowingly conceals or knowingly and improperly
avoids or decreases an obligation to pay or transmit money or property to the Government.” Both
of these prongs only apply where there is an obligation to pay the Government. An “obligation”
is defined as an “established duty.” 31 U.S.C. § 3729(b)(3). There must be “a ‘clear’ obligation
or liability to the [G]overnment.” United States ex rel. Thomas v. Siemens, 708 F. Supp. 2d 505,
514 (E.D. Pa. 2010) (citing United States ex rel. Quinn v. Omnicare Inc., 382 F.3d 432, 444 (3d
Cir. 2004)).
Claims raised under the FCA’s reverse false claims provision “may not be redundant of
FCA claims asserted under other provisions of [the FCA].” Sobek, 2013 WL 2404082, at *29; see
also Siemens, 708 F. Supp. 2d at 514-15 (same). Siemens is almost identical to this case, in that
the plaintiff was “essentially alleging that [the defendant] failed to refund the false claims that the
government paid. He is merely recasting his false statement claim under § 3729(a)(2).” 708 F.

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Supp. 2d at 514. The Court dismissed that claim. Here too, the allegations do not plausibly show
that Defendants were obligated to pay funds to the Government. The allegedly false claims of the
doctors have already been dismissed for not being false. Plaintiff provides no other basis for
reverse false claims liability.
C. State Law Claims
Defendants argue that state law claims must be dismissed here for the same reasons as the
federal claims. Plaintiff’s only rebuttal is that the federal claims should not be dismissed, so the
state claims should not either.
The Court has dismissed all federal claims. Because Plaintiff does not provide any
allegations or analysis differentiating the state claims from the FCA claims, they are dismissed as
well. See United States ex rel. Judd v. Quest Diagnostics Inc., No. 10-4914, 2014 WL 2435659,
at *17 (D.N.J. May 30, 2014) (dismissing both FCA and state claims with prejudice concurrently);
United States ex rel. Ge v. Takeda Pharm. Co., No. 10-11043, 2012 WL 5398564, at *6 (D. Mass.
Nov. 1, 2012) (dismissing state law claims where complaint did not differentiate the state claims
from the dismissed FCA claims).
IV.

CONCLUSION
For the reasons stated above, Defendant Genentech, Inc.’s and Defendant Hoffman La-

Roche Inc.’s motions to dismiss are GRANTED. An appropriate order follows.
Date: October 29, 2015

/s Madeline Cox Arleo
MADELINE COX ARLEO
UNITED STATES DISTRICT JUDGE

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