PERRI v. NOVARTIS PHARMACEUTICALS CORPORATION et al
Filing
53
OPINION and ORDER denying 48 Motion to Dismiss. Signed by Judge Kevin McNulty on 4/16/2020. (nic, )
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
UNITED STATES OF AMERICA
ex rel. JOSEPH PERRI,
v.
Civ. No. 15-6547
Plaintiff,
OPINION and ORDER
NOVARTIS PHARMACEUTICALS
CORPORATION and EXPRESS
SCRIPTS, INC.,
Defendants.
KEVIN MCNULTY, U.S.D.J.:
This qui tam matter, brought by relator Joseph Perri (“Relator”) on behalf
of the United States, originally alleged that defendants Novartis
Pharmaceuticals Corporation (“Novartis”) and Express Scripts, Inc. (“ESI”)
engaged in a scheme in relation to Gilenya, a prescription drug, a scheme said
to violate the Anti-Kickback Statute (“AKS”). The original complaint asserted
four counts under the False Claims Act (“FCA”), the fourth of which was a
claim that Perri was terminated in retaliation for objecting to the kickback
scheme, in violation of 31 U.S.C. § 3730(h). In a substantial opinion (“Op.”, DE
38), I granted the defendant’s motion to dismiss the original complaint,
granting leave to amend.
Now the plaintiff has filed a First Amended Complaint. (“1AC”, DE 46)
The 1AC nevertheless retains most of the factual allegations of the original,
while adding a few more in response to deficiencies noted in the Court’s prior
opinion. The 1AC does not, however, amend or attempt to reinstate the three
main FCA claims. It reasserts only the claim of retaliatory dismissal, in an
amended version.
Now before the Court is the motion of the defendant, Novartis, to dismiss
the 1AC for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6). (DE 48)
1
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For the reasons stated herein, the motion is denied. Familiarity with the case is
assumed; this opinion should be read in conjunction with my prior Opinion.
I.
Standard
Federal Rule of Civil Procedure 8(a) does not require that a complaint
contain detailed factual allegations. Nevertheless, “a plaintiff’s obligation to
provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will
not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see Phillips v.
Cnty. of Allegheny, 515 F.3d 224, 232 (3d Cir. 2008) (Rule 8 “requires a
‘showing’ rather than a blanket assertion of an entitlement to relief.” (citation
omitted)). Thus, the complaint’s factual allegations must be sufficient to raise a
plaintiff’s right to relief above a speculative level, so that a claim is “plausible
on its face.” Twombly, 550 U.S. at 570; see also West Run Student Hous.
Assocs., LLC v. Huntington Nat. Bank, 712 F.3d 165, 169 (3d Cir. 2013). That
facial-plausibility standard is met “when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citing Twombly, 550 U.S. at 556). While “[t]he plausibility standard is not akin
to a ‘probability requirement’ . . . it asks for more than a sheer possibility.” Id.
Rule 12(b)(6) provides for the dismissal of a complaint if it fails to state a
claim upon which relief can be granted. The defendant, as the moving party,
bears the burden of showing that no claim has been stated. Animal Science
Products, Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n.9 (3d Cir. 2011).
For the purposes of a motion to dismiss, the facts alleged in the complaint are
accepted as true and all reasonable inferences are drawn in favor of the
plaintiff. New Jersey Carpenters & the Trustees Thereof v. Tishman Const. Corp.
of New Jersey, 760 F.3d 297, 302 (3d Cir. 2014). 1
In my prior opinion, I applied the heightened pleading standard of Fed.
R. Civ. P. 9(b) to the allegations of fraud in the submission of false claims.
Those dismissed counts, however, are not reasserted in the 1AC. I apply the
1
2
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II.
Discussion
The single count of the 1AC alleges that Relator was terminated from
employment in retaliation for his having objected to an illegal kickback scheme,
in violation of 31 U.S.C. § 3730(h). That kickback was the foundation of the
now-dismissed False Claims Act counts. (A claim is said to be “legally false” if
accompanied by a false certification that the claimant is in compliance with
federal law—here, the AKC.) Relator asserts, correctly, that a retaliation claim
does not require that the underlying conduct have turned out to be illegal
under the FCA. See Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d 176, 187
(3d Cir. 2001) (holding that the FCA’s anti-retaliation provisions “do[ ] not
require the plaintiff to have developed a winning qui tam action”; they “only
require [ ] that the plaintiff engage in acts [made] in furtherance of an [FCA]
action.”) (citations, internal quotations, and alterations omitted). The FCA
claims from the original complaint, then, although deceased, continue to haunt
the case; they form the basis of Relator’s alleged whistleblowing, which
allegedly led to his dismissal.
A. Dismissal of Former Counts I, II, and III
I refer only briefly to Relator’s allegations of FCA violations based on the
kickback scheme; they are summarized more thoroughly in my prior opinion.
They arise from the relationship between Novartis, the manufacturer of
Gilenya, and ESI, a Pharmacy Benefit Manager (“PBM”) that sponsors
commercial, Medicare Part D (“Part D”), and Medicaid health plans. PBMs like
ESI administer prescription drug benefits and develop formularies, a list of
prescription drugs that are covered under a member’s prescription drug health
plan. PBMs generally negotiate with drug manufacturers, who offer discounts
and rebates to secure placement of their medications on the formulary.
Relator’s original theory of liability was that Novartis provided substantial
ordinary Rule 8 standard to the remaining retaliation claim, which does not
sound in fraud.
3
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commercial discounts and rebates on Gilenya for ESI’s commercial health
plans in return for ESI’s Medicare Part D business.
Effective January 1, 2013, Novartis and ESI agreed to a 6.375% discount
on Gilenya for ESI’s Part D plans. For commercial plans, however, there was no
discount on Gilenya as of January 1, 2013. In October 2013, Relator alleges,
ESI threatened to remove Gilenya from both its Part D and commercial
formularies after a competitor placed a cheaper, safer, and comparably
efficacious drug on the market. In response, Novartis allegedly provided a
discount on Gilenya for ESI’s commercial plans (but not its Part D plans) in
exchange for the “continued” placement of Gilenya on the formularies. This
arrangement, according to Relator, amounted to a kickback to the commercial
plans at the expense of the Part D plan.
I dismissed the allegations of false claims under the FCA. The “threat” by
ESI was not alleged in a factual manner. Nor were any facts pled to
substantiate the allegation that the Novartis instituted the commercial
discount to induce ESI to retain Gilenya in its formularies. Relator Perri, I
pointed out, was an insider in relation to these transactions, and would know
the facts. The company’s failure to isolate the commercial negotiations from the
Part D negotiations, I held, did not violate any regulation; while perhaps
providing a potential opportunity for fraud, the merger of those functions did
not itself constitute fraud. I further found that the allegations suggested
equally plausible, legitimate justifications for the commercial discount. (Op.
28–32) Thus the factual allegations, I held, failed to satisfy the heightened
fraud-pleading standard of Fed. R. Civ. P. 9(b)
B. Dismissal of Retaliation Claim
I also dismissed the FCA retaliation claim — i.e., former Count IV, the
predecessor of the claim now asserted in the 1AC — for failure to meet the
ordinary Rule 8 pleading standards of Twombly and Iqbal, supra. In doing so, I
summarized the anti-retaliation law thus:
4
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In Count IV, Relator alleges that his employment at Novartis
was terminated because he sought to bring “parity” between the
commercial and Part D discounts, and he expressed his concerns
about this “disparity” to his “supervisors.” . . .
Section 3730(h) provides a cause of action for employees who
assist the government in the investigation and prosecution of FCA
claims. Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d 176, 185–
86 (3d Cir. 2001). 2 The FCA’s anti-retaliation provision provides as
follows:
Any employee, contractor, or agent shall be entitled to all
relief necessary to make that employee, contractor, or agent
whole, if that employee, contractor, or agent is discharged,
demoted, suspended, threatened, harassed, or in any other
manner discriminated against in the terms and conditions of
employment because of lawful acts done by the employee,
contractor, agent or associated others in furtherance of an
action under this section or other efforts to stop 1 or more
violations of this subchapter.
31 U.S.C. § 3730(h)(1). To establish a claim for retaliation under
3730(h), a relator must show that “(1) he engaged in protected
conduct, (i.e., acts done in furtherance of an action under § 3730)”;
and “(2) that he was discriminated against because of his protected
conduct.” U.S. ex rel. Hefner v. Hackensack Univ. Med. Ctr., 495
F.3d 103, 110–11 (3d Cir. 2007) (internal citations omitted); see
DiFiore v. CSL Behring, LLC, 879 F.3d 71, 76 (3d Cir. 2018). To
demonstrate discrimination “because of” his or her activities in
furtherance of an FCA suit, a plaintiff must demonstrate that “(1)
his employer had knowledge he was engaged in protected conduct;
and (2) that his employer’s retaliation was motivated, at least in
part, by the employee’s engaging in protected conduct.” Hefner,
495 F.3d at 111 (internal citation and quotation marks omitted).
A retaliation claim does not require proof of a viable underlying FCA claim. As
the Court in Hutchins explained, the retaliation provisions “do[ ] not require the
plaintiff to have developed a winning qui tam action”; they “only require [ ] that the
plaintiff engage in acts [made] in furtherance of an [FCA] action.” Hutchins, 253 F.3d
at 187 (citations, internal quotations, and alterations omitted); see also Graham Cnty.
Soil & Water Conservation Dist. v. U.S. ex rel. Wilson, 545 U.S. 409, 416 n.1, 125 S. Ct.
2444, 162 L. Ed. 2d 390 (2005) (“[P]roving a violation of [the FCA] is not an element of
a § 3730(h) cause of action.”). [fn. in original]
2
5
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As to “what activities constitute protected conduct, the case
law indicates that protected [conduct] requires a nexus with the in
furtherance of prong of [a False Claims Act] action,” which
“involves determining whether [plaintiff’s] actions sufficiently
furthered an action filed or to be filed under the [False Claims
Act].” Hutchins, 253 F.3d at 187 (alterations in original; internal
citation and quotation marks omitted). “Protected conduct”
includes “investigation for, initiating of, testimony for, or
assistance in” an FCA suit. Id.; 31 U.S.C. § 3730(h). It also
encompasses internal reports of FCA violations. Hutchins, 253 F.3d
at 187. Protected activity does not, however, include “an
employee’s investigation of nothing more than his employer’s noncompliance with federal or state regulations.” Id. at 187-88.
There is also a required causation nexus. The FCA “requires
employees to prove they were discriminated against ‘because of’
their ‘protected conduct.’” Hutchins, 253 F.3d at 188; see also
DiFiore, 879 F.3d at 78 (holding that FCA requires “proof of ‘butfor’ causation.”). In order to meet this “because of” element, “a
plaintiff must show his employer had knowledge that he was
engaged in ‘protected conduct’ and that the employer retaliated
against him because of that conduct.” Hutchins, 253 F.3d at 188.
This element cannot be satisfied unless, at a minimum, the
employee “put his employer on notice of the ‘distinct possibility’ of
[FCA] litigation.” Id.
Such notice of a “distinct possibility” of FCA litigation “is
essential because without knowledge an employee is contemplating
a False Claims Act suit, ‘there would be no basis to conclude that
the employer harbored § 3730(h)’s prohibited motivation, i.e.,
retaliation.’” Id. (citing Mann v. Olsten Certified Healthcare Corp.,
49 F. Supp. 2d 1307, 1314 (M.D. Ala. 1999)). An employer may be
on notice of a “distinct possibility” of litigation “when an employee
takes actions revealing the intent to report or assist the
government in the investigation of a [FCA] violation.” Id. at 189;
see also id. at 188 n.8 (noting that while “the ‘protected conduct’
and notice requirements are separate elements of a prima facie
case of retaliation under § 3730 . . . the inquiry into these elements
involves a similar analytical and factual investigation.”).
The Court in Hutchins recognized several considerations in
evaluating whether the employer was on notice: whether the
plaintiff’s complaints led to internal or external investigations;
6
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whether the plaintiff used the words, “illegal,” “unlawful,” “qui
tam,” “fraud” or “fraudulent” in characterizing his concerns
regarding the charges; whether the plaintiff’s “regular job duties”
involved “investigating and reporting fraud” or, similarly, whether
the plaintiff uncovered the alleged fraud through his performance
of specifically “assigned task[s]”; and whether the plaintiff can
rebut evidence that his supervisors had no knowledge of the
protected activity. Id. at 189-92 (citations omitted).
(Op. at 33–35)
Discussing the allegations of the original complaint in relation to those
standards, I found them insufficient:
Regarding the notice element, Relator alleges that at some
unspecified time and place, he “voiced his concerns about the
rebate structure to his ESI counterpart, Todd Jeffery.” (Compl.
¶110). This is the only allegation of whistleblowing that even
approaches concreteness. Elsewhere, Relator alleges that he
expressed his concerns about the “disparity” between the rebates
to his “supervisors.” (Compl. ¶¶136, 14). Jeffery, however, was not
Relator’s “supervisor”; he worked for ESI. What Relator appears to
mean is that he “believes” that this conversation with Jeffery
somehow “made its way to Novartis’s management in the second
week of June,” and was therefore equivalent to a statement to
Novartis. (Compl. ¶112). Relator’s allegation that he complained to
ESI is plainly insufficient to put Relator’s employer, Novartis, on
notice of some impropriety. And his factually unsupported,
speculative “belief” that word somehow got back to Novartis does
not bridge the gap. See also United States ex rel. Kester v. Novartis
Pharm. Corp., 23 F. Supp. 3d 242, 266 (S.D.N.Y. 2014) (noting that
FCA allegations made on “information and belief are inherently
speculative”); see also Zavala v. Wal-Mart Stores, Inc., 393 F. Supp.
2d 295, 313 (D.N.J. 2005). 3
Just as important is the complaint’s failure to state that
Relator’s alleged statement to his supervisors at Novartis related to
a violation of the AKS or FCA. Indeed, it is not even clear whether
I observe in passing that a statement that happened to get back to the
employer strains the very meaning of an “internal report” of wrongdoing. [fn. in
original]
3
7
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Relator is saying that he complained to ESI about ESI’s conduct or
about Novartis’s conduct.
Internal reporting, to be sure, can qualify as a protected
activity under the FCA, provided that the protected activity
concerns fraud on the government to obtain Medicare payments.
See Campion v. Ne. Utilities, 598 F. Supp. 2d 638, 658 (M.D. Pa.
2009) (dismissing retaliation complaint where plaintiff reported his
“concern about mischarging the government to his supervisor,” but
allegation “does not suffice to establish that he was acting ‘in
furtherance of’ a qui tam action” and was “unconnected to
exposing fraud or false claims against the federal government.”);
McKenzie v. BellSouth Telecomms., Inc., 219 F.3d 508, 516 (6th Cir.
2000) (“Although internal reporting may constitute protected
activity, the internal reports must allege fraud on the
government.”); see also U.S., ex rel. LaPorte v. Premier Educ. Grp.,
L.P., No. Civ. 11-3523 RBK/AMD, 2014 WL 5449745, at *13
(D.N.J. Oct. 27, 2014) (dismissing retaliation claim where
complaint failed to allege that relators “were investigating,
initiating, testifying for, or assisting with a FCA action when they
alerted [employer] to the alleged wrongdoing,” and failed to connect
alleged wrongdoing to FCA when complaining to employer);
Guerrero v. Total Renal Care, Inc., 2012 WL 2237689, at *5 (W.D.
Tex. Mar. 12, 2012) (finding that, in order for internal report to be
protected, it must “specifically allege fraudulent claims for federal
funds and not merely address concerns about general
misconduct.”). To be actionable under the FCA, however, the
internal report must actually be a report, and it must concern
fraud on the government.
Relator may be saying that the protected FCA activity
consisted of his statements that commercial and Part D
contracting responsibilities should be separated. Such a
notification, if it occurred, would not be a notification of an FCA
violation, i.e., fraud on the government; at most, it is a notification
of non-compliance with industry guidelines. Cf. Hutchins, 253 F.3d
at 187-88. (noting that “employer’s non-compliance with federal or
state regulations” is insufficient). To the extent Relator argues that
this request put his employer on “notice,” it is insufficient. 4
I add that Relator’s employer surely already knew whether negotiating
functions were merged or separate; Relator alleged that he was required by his
employer to take on that dual function. And the employer likewise was surely
4
8
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In short, the complaint does not make clear what Relator
said, whether it was said to anyone at Novartis and if so to whom,
and whether the conversation notified the employer of any actual
fraud under the FCA. Cf. United States ex rel. Marlar v. BWXT Y-12,
LLC, 525 F.3d 439 (6th Cir. 2008) (reversing district court
dismissal of § 3130(h) retaliation claim where plaintiff alleged that
she “observed purportedly fraudulent activity and confronted her
employer about it,” she told employer that employer “was receiving
illegal large incentive payments under its contract with DOE
because [employer] was ‘underreporting [its employees’] workrelated injuries and illnesses. . . .She therefore connected her
complaint of [employer’s] actions, under-reporting, to a concern
about fraud on the federal government.”).
I conclude that the allegations fail to allege that Relator
notified his employer of conduct that was fraudulent under the
FCA. The only conversation concretely described is one with an ESI
representative, which Relator vaguely alleges must have gotten
back to his supervisors. But even directly advising a supervisor of
a difference in discounts or the failure to separate negotiating
responsibilities, without more, is not a protected report of fraud on
the government. Relator’s failure to plead sufficient facts to
establish these required elements warrants dismissal of this count.
Accordingly, Novartis’s motion to dismiss Count IV is
granted. This dismissal, too, is without prejudice.
(Op. at 35–38)
C. Discussion of Supplemental Allegations in the 1AC
Relator Perri believes that the supplemental allegations of the 1AC have
remedied the deficiencies of the retaliation claim in the original complaint. As
he notes, the anti-retaliation provision defines as protected conduct (a) acts “in
furtherance of” an FCA action, and (b) “other efforts to stop” an FCA violation.
See 31 U.S.C. § 3730(h).
Section 3730(h), in its pre-2010 form, contained only theory (a), and even
that appeared in a form arguably narrower form than the one contained in the
current version. The prior version of the statute listed examples, nonexclusive
already aware of the terms of the Part D and commercial contracts. [fn. in
original]
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to be sure, of acts in furtherance of an FCA action: “investigation for, initiation
of, testimony for, or assistance in an action filed or to be filed under this
section . . . .” 5 The implication seemed to be that the protected act needed to be
fairly closely tied to the pursuit of a potential FCA claim. See Hutchins, 253
F.3d at 187 (A protected internal complaint must at least place the employer
“on notice of the ‘distinct possibility’ of False Claims Act litigation.”). 6
Section 3730(h), as enacted in the False Claims Act of 1986, read as
follows:
5
Any employee who is discharged, demoted, suspended,
threatened, harassed, or in any other manner discriminated against in
the terms and conditions of employment by his or her employer because
of lawful acts done by the employee on behalf of the employee or others
in furtherance of an action under this section, including investigation for,
initiation of, testimony for, or assistance in an action filed or to be filed
under this section, shall be entitled to all relief necessary to make the
employee whole.
This standard does (or did) not require an announcement that a qui tam
is imminent or underway, but it does require more than general grumbling
about allegedly unethical practices:
6
Determining what activities constitute “protected conduct” is a
fact specific inquiry. But the case law indicates that “the protected
conduct element ... does not require the plaintiff to have developed a
winning qui tam action.... It only requires that the plaintiff engage[ ] in
‘acts ... in furtherance of an action under[the False Claims Act].’ ”
Yesudian, 153 F.3d at 739 (quoting 31 U.S.C. § 3730(h)). Under the
appropriate set of facts, these activities can include internal reporting
and investigation of an employer's false or fraudulent claims. Id. at 742
(“[It] would [not] ... be in the interest of law-abiding employers for the
[False Claims Act] to force employees to report their concerns outside the
corporation in order to gain whistleblower protection. Such a
requirement would bypass internal controls and hotlines, damage
corporate efforts at self-policing, and make it difficult for corporations
and boards of directors to discover and correct on their own false claims
made by rogue employees or managers.”); see also Childree v. UAP/GA
CHEM, Inc., 92 F.3d 1140, 1146 (11th Cir. 1996), cert. denied, 519 U.S.
1148, 117 S. Ct. 1080, 137 L.Ed.2d 216 (1997); Hopper, 91 F.3d at 1269
(“[P]laintiff must be investigating matters which are calculated, or
reasonably could lead to a viable [False Claims Act] action.”); Neal, 33
F.3d at 864. “Mere dissatisfaction with one's treatment on the job is not,
of course, enough. Nor is an employee's investigation of nothing more
than his employer's non-compliance with federal or state regulations.”
Yesudian, 153 F.3d at 740 (citing Hopper, 91 F.3d at 1269); see also
Zahodnick, 135 F.3d at 914 (“Simply reporting his concern of a
10
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The current version of the anti-retaliation provision, however, is broader.
Current Section 3730(h) defines protected conduct as including “lawful acts
done by the employee . . . in furtherance of an action under this section.” 7 It
deletes the examples (investigation, initiation, testimony, etc.) that tended to tie
such conduct to an identifiable FCA case. And the current version adds new
language, explicitly expanding the definition of protected conduct to include
“other efforts to stop 1 or more violations of this subchapter.” “The apparent
purpose of the amendment is to untether these newly protected efforts from the
need to show that an FCA action is in the offing. Indeed, we and other circuits
mischarging to the government to his supervisor does not suffice to
establish that Zahodnick was acting ‘in furtherance of’ a qui tam
action.”); United States ex rel. Ramseyer v. Century Healthcare Corp., 90
F.3d 1514, 1523 (10th Cir.1996).
As noted, employees need not actually file a False Claims Act suit
to assert a cause of action under § 3730. Requiring an employee to
actually file a qui tam suit would blunt the incentive to investigate and
report activity that may lead to viable False Claims Act suits. The False
Claims Act was enacted to encourage parties to report fraudulent activity
and was intended to “protect employees while they are collecting
information about a possible fraud, before they have put all the pieces of
the puzzle together.” Yesudian, 153 F.3d at 740 (citing Neal, 33 F.3d at
864).
Hutchins, 253 F.3d at 187–88. The abbreviated citations in the quotation are to
U.S. ex rel. Yesudian v. Howard Univ., 153 F.3d 731 (D.C. Cir. 1998); U.S. ex rel.
Hopper v. Anton, 91 F.3d 1261 (9th Cir. 1996); Neal v. Honeywell Inc., 33 F.3d
860, 864 (7th Cir. 1994), abrogated by Graham Cty. Soil & Water Conservation
Dist. v. U.S. ex rel. Wilson, 545 U.S. 409, 125 S. Ct. 2444 (2005); Zahodnick v.
Int'l Bus. Machines Corp., 135 F.3d 911, 914 (4th Cir. 1997).
7
The current version of Section 3730(h) reads as follows:
(h) Relief from retaliatory actions.-(1) In general.--Any employee, contractor, or agent shall be entitled
to all relief necessary to make that employee, contractor, or agent
whole, if that employee, contractor, or agent is discharged,
demoted, suspended, threatened, harassed, or in any other
manner discriminated against in the terms and conditions of
employment because of lawful acts done by the employee,
contractor, agent or associated others in furtherance of an action
under this section or other efforts to stop 1 or more violations of
this subchapter.
31 U.S.C. § 3730(h).
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have recognized that the amended language broadens the scope of protected
activity.” United States ex rel. Grant v. United Airlines Inc., 912 F.3d 190, 200–
01 (4th Cir. 2018) (citing cases).
In the 1AC, Perri now alleges more clearly that he made a direct “internal
complaint to his supervisor” that implicated not just the rebate disparity but its
illegality. (DE 51, Opp. Brf. at 6) The 1AC describes that internal complaint as
follows:
70. Perri requested an in-person meeting with Birch[ 8] to
express his concerns. The meeting occurred near the end of the
first, and beginning of the second, fiscal quarter of 2014, and was
uncharacteristically formal. Usually the two met over meals or sat
at the conference table in Birch’s office. This time, however, Birch
remained behind his desk. Perri conveyed his concerns to Birch,
and explained how increasing the disparity between the
commercial and Part D rebate rates would expose the swap,
subjecting Perri and Novartis to government prosecution. Perri
went as far as to say that he “did not want to go to jail.” Birch’s
response was, “f**k the government.”
(1AC ¶ 70) Earlier in the 1AC, Perri defines the “swap” as the purposeful use of
the commercial rebate to bring about what amounted to a disguised kickback
at the expense of the Medicare and Medicaid side of the business. (E.g., 1AC
§§ 27–30, 42, 64–65).
In addition, Perri invokes the second prong of the current version of
section 3730(h). His theory is no longer that his statements to Jeffery at ESI
somehow got back to Novartis and therefore constituted an internal complaint.
Now he says that his statements to Jeffery were “efforts to stop 1 or more
violations” of the FCA:
72. Perri eventually decided to relay his concerns to his
counterpart at ESI, Todd Jeffrey, in hopes that ESI would demand
parity. Perri thought Jeffrey would be sympathetic to his concerns
The reference is to Greg Birch, Novartis’s Vice President of Managed
Care, to whom Perri reported. (1AC § 51)
8
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since each were being used by their respective companies to carry
out this scheme.
73. After Perri’s conversation with Jeffrey, ESI did demand
an equal Part D rebate rate.
(1AC ¶¶ 72, 73)
These allegations, I find, are sufficient to set forth a claim of FCA
retaliation. Employing a heightened Rule 9(b) standard of review, I ruled that
the original complaint failed to set forth an FCA claim as such, but that is not a
prerequisite to a retaliation claim. Section 3730(h) is broader than that. It
never required a successful or even viable FCA claim, because it was aimed at
encouraging whistleblowing. See p.5 n.2, supra. And now, in its current
version, the statute encompasses “other efforts” to head off a potential FCA
violation. These allegations will bear the interpretation that Perri intended his
statements to be understood by his audience — sophisticated players in the
pharmaceutical industry — as a warning against violation of the FCA.
The 1AC also contains allegations from which retaliation could be
inferred. It alleges that Perri had received outstanding performance reviews in
the days preceding his dismissal on June 17, 2018. His dismissal occurred
within a reasonably short time (how short is not quite clear) after the alleged
protected activity. Perri alleges on information and belief that word of his
conversation with Jeffery got back to Novartis in June 2018, although his basis
for that belief is unstated. He alleges that his sudden firing took place the day
before a scheduled meeting with ESI on the subject of the Gilenya discount.
That his severance package was accompanied by a demand that he waive any
whistleblower claim is hardly conclusive, but is suggestive, of a retaliatory
mindset. (1AC ¶¶ 75–78)
Perri’s, of course, is not the only possible interpretation. It may be an
issue of fact whether the dismissal was in retaliation for the whistleblowing, or
the other way around. But such comparisons are not within the scope of a
motion to dismiss governed by Rule 8 (as opposed to Rule 9(b)). I am
constrained to credit the allegations of the complaint as true.
13
Case 2:15-cv-06547-KM-JBC Document 53 Filed 04/16/20 Page 14 of 14 PageID: 612
ORDER
IT IS THEREFORE, this 16th day of April, 2020
ORDERED that the motion (DE 48) of defendant Novartis to dismiss the
First Amended Complaint is DENIED.
/s/ Kevin McNulty
____________________________________
Kevin McNulty
United States District Judge
14
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