United States of America ex rel. Steven M. Camburn et al. v. Novartis Pharmaceuticals Corporation

Filing 93

OPINION AND ORDER re: 86 MOTION to Dismiss ("Notice of Novartis Pharmaceuticals Corporation's Motion to Dismiss Relator's Third Amended Complaint"). filed by Novartis Pharmaceuticals Corporation. For the foregoin g reasons, the Court GRANTS Novartis' motion to dismiss pursuant to Rules 12(b)(6) and 9(b), and the TAC is dismissed with prejudice. The Clerk is respectfully directed to close ECF No. 86 and to close the case. SO ORDERED. (Signed by Judge Kimba M. Wood on 9/13/2022) (jca) Transmission to Orders and Judgments Clerk for processing.

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------X
UNITED STATES OF AMERICA; the States
of CALIFORNIA, COLORADO,
CONNECTICUT, DELAWARE, FLORIDA,
GEORGIA, HAWAII, ILLINOIS, INDIANA,
IOWA, LOUISIANA, MASSACHUSETTS,
MICHIGAN, MINNESOTA, MONTANA,
NEVADA, NEW JERSEY, NEW MEXICO,
NEW YORK, NORTH CAROLINA,
OKLAHOMA, RHODE ISLAND,
TENNESSEE, TEXAS, VIRGINIA,
WASHINGTON and WISCONSIN, the
DISTRICT OF COLUMBIA, THE CITY OF
CHICAGO and THE CITY OF NEW YORK ex
rel. STEVEN M. CAMBURN,

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: __________________
DATE FILED: 9/13/2022

13-CV-3700 (KMW)
OPINION & ORDER

Plaintiffs and Relator,
-againstNOVARTIS PHARMACEUTICALS
CORPORATION,
Defendant.
-------------------------------------------------------X
KIMBA M. WOOD, United States District Judge:
In this qui tam action, Relator Steven Camburn (“Relator”) alleges that Defendant
Novartis Pharmaceuticals Corporation (“Novartis”) violated the Anti-Kickback Statute (“AKS”)
and the False Claims Act (“FCA”) by operating a nationwide kickback scheme in which Novartis
improperly induced physicians to prescribe Gilenya, a drug used to treat multiple sclerosis.
Novartis has moved to dismiss Relator’s Third Amended Complaint (“TAC”) pursuant to Rules
9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons stated below,
Novartis’ motion is GRANTED, and the TAC is dismissed, with prejudice.

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BACKGROUND
Relator brings a qui tam action against Novartis for violations of the AKS and FCA,
alleging that Novartis operated a kickback scheme with a purpose of bribing physicians to
prescribe Gilenya. Much of the procedural history of this action was reviewed in the Court’s
prior ruling on the Amended Complaint (“AC”) and does not bear repeating in detail. (See Op.
& Order, ECF No. 44.)1 Only the pertinent portions of this history and facts from the TAC are
summarized below.
I.

Procedural History
Relator initiated this lawsuit on behalf of the United States and several states and

municipalities on May 31, 2013. (Compl., ECF No. 16.) Those governments subsequently
declined to intervene, and the complaint was unsealed. (ECF Nos. 15, 18.) On September 10,
2018, Relator filed the AC, which Novartis moved to dismiss. (ECF Nos. 27–28.) On March 24,
2020, the Court dismissed the AC, holding that Relator had “not adequately pl[ed] the existence
of a kickback scheme with sufficient particularity,” but granted Relator leave to amend his
complaint. (Op. & Order at 13.)
Relator filed a Second Amended Complaint (“SAC”) on May 15, 2020, which added,
inter alia, statements from confidential witnesses. (ECF No. 47.) After Novartis’ discovery
into these statements, Novartis informed Relator that there were mischaracterizations relating to
the statements. (See Gruenstein Decl. ¶¶ 11–12, ECF No. 88; Miller Decl. ¶ 3, ECF No. 90.) On
August 8, 2021 Novartis served Relator with a Rule 11 Notice of Motion for Sanctions.
(Gruenstein Decl. ¶ 12.) Following extensive discussions, the parties agreed that Relator would

1

United States ex rel. Camburn v. Novartis Pharmaceuticals Corp., No. 13-CV-3700, 2020 WL 1436706
(S.D.N.Y. Mar. 24, 2020) (Wood, J.).

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file a TAC to address Novartis’ concerns, with the understanding that Novartis would move to
dismiss. (See Gruenstein Decl. ¶¶ 13–15; Miller Decl. ¶¶ 4–6.) Relator filed the instant TAC on
November 19, 2021. (ECF No. 77.) Novartis moved to dismiss on January 3, 2022. (ECF No.
86.)
II.

TAC Allegations
Novartis manufactures Gilenya, a drug that was approved to treat multiple sclerosis in

September 2010. (TAC ¶ 5.) When it approved Gilenya, the Food and Drug Administration
(“FDA”) imposed a First Dose Observation (“FDO”) requirement, in which a physician had to
monitor a person for potential heart problems for at least six hours after drug administration.
(TAC ¶ 152.) To promote Gilenya, Novartis sales representatives organized speaker programs.
(TAC ¶¶ 7, 165.) At these programs, Novartis-paid speakers addressed other healthcare
professionals (“HCPs”) or potential patients about Gilenya. (Id.) Relator alleges that these
speaker programs did not actually educate HCPs or patients but instead were a pretext for
payments to high-prescribing physician speakers. (TAC ¶¶ 162, 166, 216.)
Relator alleges that the speaker programs were “shams” and “provide[d] little, if any
educational value” for several reasons. (TAC ¶¶ 7, 166.) First, he alleges that the content of
speakers’ presentations was constantly recycled and simply repeated the drug package label
insert information or information sales representatives already provided to physicians. (TAC ¶
166.) Second, he alleges that Novartis conducted an excessive number of speaker programs,
which were not informed by a needs assessment. (TAC ¶¶ 168, 190.) Third, Relator alleges that
the speaker programs were poorly attended, or had no “legitimate Attendees,” and were regularly
conducted at high-end restaurants. (See TAC ¶¶ 186–217.) In support of this allegation, he
provides a series of tables that identify events for which Novartis paid speakers but where there
were “no legitimate Attendees” or too few HCP Attendees. (TAC ¶¶ 221–25.) Fourth, Relator
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alleges that Novartis paid speakers for cancelled events, conduct that often benefitted high
prescribers. (TAC ¶¶ 236, 241.) In support of this allegation, he provides a list of 282 cancelled
programs between 2010 and 2013 for which speakers were still paid. (TAC ¶ 238, Ex. C.)
Finally, according to Relator, Novartis selected physician speakers based on their prescribing
potential and removed physicians who did not prescribe enough Gilenya as speakers. (TAC ¶¶
270, 276, 280.)
Relator also alleges that Novartis found other ways to provide kickbacks to physicians.
He alleges that Novartis produced DVDs and flyers that included information such as
physicians’ names, contact information, photos, and credentials, which were intended to be
distributed at speaker programs. (TAC ¶¶ 320–27.) Additionally, Relator alleges that Novartis
improperly outfitted medical offices with “entertainment centers” to “appease physicians
regarding their resistance to the FDO requirement.” (TAC ¶ 335–36.) According to Relator,
Novartis also provided improper billing assistance by suggesting billing codes that physicians
could use to bill for their time overseeing the FDOs. (TAC ¶ 340.) He alleges that one nurse
educator “worked with physicians to explain how they could bill for 23 hours of time with
respect to the 6 hour FDO period.” (TAC ¶ 342.) Finally, Relator alleges that Novartis “wined
and dined” speakers with an eye toward “relationship building” and with the intent of influencing
prescription-writing. (TAC ¶¶ 344–49, 353.)

LEGAL STANDARD
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In
assessing the plausibility of a plaintiff’s claim for relief, a court “must construe [the complaint]
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liberally, accepting all factual allegations therein as true and drawing all reasonable inferences in
the plaintiffs’ favor,” but “disregard[ing] conclusory allegations, such as ‘formulaic recitation[s]
of the elements of a cause of action.’” Sacerdote v. N.Y. Univ., 9 F.4th 95, 106–7 (2d Cir. 2021)
(quoting Twombly, 550 U.S. at 555), cert. denied sub nom. N.Y. Univ. v. Sacerdote, 142 S. Ct.
1112 (2022) (mem.). If a plaintiff has not “nudged [its] claims across the line from conceivable
to plausible, [the] complaint must be dismissed.” Twombly, 550 U.S. at 570.
In cases involving fraud, a plaintiff must also comply with Rule 9(b)’s requirement that
claims be pled “with particularity.” Fed. R. Civ. P. 9(b). Generally, to comply with Rule 9(b), a
complaint “must: (1) specify the statements that the plaintiff contends were fraudulent, (2)
identify the speaker, (3) state where and when the statements were made, and (4) explain why the
statements were fraudulent.” Lerner v. Fleet Bank, N.A., 459 F.3d 273, 290 (2d Cir. 2006)
(quoting Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993)). Importantly, the
“adequacy of particularized allegations under Rule 9(b) is . . . case- and context-specific.”
United States ex rel. Chorches v. Am. Med. Response, Inc., 865 F.3d 71, 81 (2d Cir. 2017)
(internal quotations and citations omitted).
In addition, “where the alleged fraudulent scheme involved numerous transactions that
occurred over a long period of time, courts have found it impractical to require the plaintiff to
plead the specifics with respect to each and every instance of fraudulent conduct.” United States
v. Wells Fargo Bank, N.A., 972 F. Supp. 2d 593, 616 (S.D.N.Y. 2013) (Furman, J.) (quoting In re
Cardiac Devices Qui Tam Litig., 221 F.R.D. 318, 333 (D. Conn. 2004)). Therefore, “where a
relator pleads a complex and far-reaching fraudulent scheme with particularity, and provides
examples of specific false claims submitted to the government pursuant to that scheme, a relator
may proceed to discovery on the entire fraudulent scheme.” United States ex rel. Tessler v. City

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of New York, No. 14-CV-6455, 2016 WL 7335654, at *2 (S.D.N.Y. Dec. 2016) (Furman, J.)
(quoting United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493, 510 (6th Cir.
2007)). But these examples “will support more generalized allegations of fraud only to the
extent that [they] are representative samples of the broader class of claims.” Id.
Plaintiffs alleging FCA claims premised on violations of the AKS must plead both the
FCA violation and the underlying kickback scheme in compliance with Rule 9(b). See United
States ex rel. Polansky v. Pfizer, Inc., 822 F.3d 613, 617–18 (2d Cir. 2016); United States ex rel.
Bilotta v. Novartis Pharm. Corp., 50 F. Supp. 3d 497, 513–14 (S.D.N.Y. 2014) (Gardephe, J.).
Claims pled under FCA-analogous state and municipal laws must also be pled in compliance
with Rule 9(b). See United States ex rel. Arnstein v. TEVA Pharms. USA, Inc., No. 13-CV-3702,
2016 WL 750720, at *11 (S.D.N.Y. Feb. 22, 2016) (McMahon, J.).

DISCUSSION
The Court previously dismissed Relator’s Amended Complaint because Relator had
“fail[ed] to plead the existence of a kickback scheme with adequate particularity.” (Op. & Order
at 5.) Accordingly, the Court begins here by considering whether Relator has cured the
deficiencies in his complaint relating to the alleged kickback scheme and thus meets the Rule
9(b) standard. The Court holds that he has not.
I.

Relator Has Not Sufficiently Pled the Existence of a Kickback Scheme
Relator’s central allegation is that Novartis violated the AKS, and by extension the FCA,

by operating a nationwide kickback scheme in which Novartis improperly induced physicians to
prescribe Gilenya. (TAC ¶ 162.) The FCA imposes liability on “any person who . . . knowingly
presents, or causes to be presented, a false or fraudulent claim for payment or approval.” 31
U.S.C. § 3729(a)(1)(A). A claim that results from a violation of the AKS “constitutes a false or
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fraudulent claim for the purposes of [the FCA].” 42 U.S.C. § 1320a-7b(g). Therefore, any
person who violates the AKS by “knowingly and willfully offer[ing] or pay[ing] any
remuneration” to induce a person to submit a claim to a federal health care program is also liable
under the FCA. 42 U.S.C. § 1320a-7b(b)(2).
In support of this central allegation, Relator describes certain events and conduct that, he
asserts, demonstrate Novartis had an improper purpose to bribe prescribers. Relator alleges
several features of the speaker events that he claims establish the existence of a kickback
scheme, namely that: (1) they lacked educational value, (2) they were poorly attended, (3)
speakers were paid for cancelled events, and (4) speakers were chosen on the basis of their
prescription potential. Relator also describes other Novartis conduct he alleges constitute
kickbacks: (1) provision of “promotional materials” to physicians, (2) outfitting of medical
offices for FDOs, (3) conduct regarding billing codes, and (4) “wining and dining” speakers.
The Court addresses each of these two broad categories of conduct in turn.
A. Novartis’ Allegedly “Sham” Speaker Events
To promote Gilenya, Novartis held speaker programs around the country. At these
events, a healthcare professional, typically a physician, was paid to educate an audience about
Gilenya. Relator alleges these speaker events did not serve an educational purpose and were
instead a pretext for Novartis to provide compensation to physician speakers for prescribing
Gilenya.
1. Speaker Events Had No Educational Value
Relator has not cured the deficiencies the Court identified in the AC regarding his
allegations about the educational value of the speaker events. He argues that these events lacked
educational value because they were thin on substance, were largely social in nature, and were
conducted so frequently that “the repeated content left nothing new to learn.” (Pl.’s Mem. in
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Opp’n at 9, ECF No. 89.)
With respect to content, Relator alleges that the slide decks presented at speaker events
“provide[d] little, if any, educational value, as the content [was] rudimentary, overly simplistic
and repetitive.” (TAC ¶ 166.) He further alleges that “the slide deck content repeat[ed] the drug
package label insert information, and also repeat[ed] the information that sales representatives
provide to each doctor during weekly office visits . . . .” (Id.) But Relator’s allegations remain
essentially unchanged from the AC, which the Court found insufficiently pled. (See Op. & Order
at 9.)2 Relator has not provided additional information that the Court identified in its prior order,
for example “whether events at which the slide deck was partially or fully presented served an
educational purpose.” (Id.)
Relator also alleges that the speaker events were “largely social events” and thus not
educational in nature. (TAC ¶ 206.) In support of this assertion, Relator alleges that the speaker
events occurred at “high-end restaurants” and often went over budget. (TAC ¶¶ 213, 215–17.)
Additionally, he details efforts by some sales representatives to conceal this excessive spending,
and he identifies locations of some events and the amounts spent. (TAC ¶¶ 211–218.) He does
not, however, explain “why sales personnel concealed the excessive spending . . . or what role
the falsification played in the alleged kickback scheme.” (Op. & Order at 9.) Instead, Relator
concludes without explanation that meal limits were “being exceeded as part of its campaign to
bribe.” (TAC ¶ 218.) Accordingly, Relator has not provided sufficient information from which

In his AC, Relator alleged: “Novartis gives the speakers a slide deck to present to attendees. However,
these slide decks provide little, if any, educational value, as the content is rudimentary, overly simplistic and
repetitive. In fact, the slide deck content repeats the drug package label insert information, and also repeats the
information that sales representatives provide to each doctor during their weekly office visits when they ‘detail’ the
physicians. Unsurprisingly, based on Plaintiff-Relator’s experience . . . only approximately 10% of the Peer-to-Peer
speakers and 20-30% of the patient program speakers present the entire slide deck . . . . In addition, because the
slide deck material is so rudimentary and repetitive . . . there is usually no substantive discussion among the
attendees . . . .” (AC ¶ 96.)
2

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the Court could reasonably infer that that speaker events were improper social events that
amounted to bribes.
As for frequency, Relator alleges that the speaker events were so numerous that they
should be considered “shams.” In support of this allegation, Relator points to several witness
statements to emphasize that the speaker events were excessive in number. (See TAC ¶¶ 167–
185, 303, 306.) He also alleges that Novartis failed to conduct a needs assessment “to
legitimately determine the appropriate number of [speakers or programs] . . . to legitimately
promote Gilenya.” (TAC ¶ 190.) But Relator does not provide a sufficient basis for the Court to
infer that the speaker events lacked educational value because they were excessive in number.
Relator does not explain, for example, why a given number of events was excessive for a
particular area, or why conducting a large number of events indicates that the events themselves
were shams.3 His allegation that sales representatives’ compensation was based in part on the
number of events they conducted does no more to establish a sufficient link between frequency
and improper purpose. Accordingly, Relator’s allegations regarding the speaking events’ lack of
educational value have not been sufficiently pled to support the inference that the events were a
“sham.”
2. Attendance at Speaker Events
Relator alleges that many speaker events lacked “legitimate Attendees”4 and thus

For example, Relator alleges that sales representatives in the Philadelphia region were “required to
schedule 96 Patient Events and 32 Peer-to-Peer programs in 2012.” (TAC ¶ 303.) He then compares these figures
to the number of “similar events conducted by competitors, which normally would not exceed five per annum for
either event in the same geographical region.” (Id.) First, Relator seems to compare Novartis’ allegedly target
number with competitors’ actual number of events. Second, the fact that Novartis purportedly conducted more
events than competitors in a given area does not by itself demonstrate that the events were excessive in number.
More is required for the Court to reasonably infer that Relator’s allegations establish an improper purpose.
3

Relator does not clearly define “legitimate Attendee.” He defines “Attendee” as someone who is an
“attendee[] at . . . [Speaker] Programs.” (TAC ¶ 39.) Elsewhere in the TAC, Relator alleges that “Speaker
Programs must have at least three HCPs [healthcare providers] in attendance, that at least one Novartis sales
representative must be present at every Speaker Program, and that doctors or other practitioners from the Speaker’s
4

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amounted to payments to physicians for “attending dinners with Novartis sales representatives”
and underscoring the “fraudulent nature of [Novartis’] Speaker Programs.” (TAC ¶ 197, 220.)
He also alleges that many speaker events had repeat attendees, in some cases up to “80 to 90
percent.” (TAC ¶ 256.)
a. Few or No “Legitimate Attendees”
In support of his allegations regarding “legitimate Attendees,” Relator provides several
tables that list events at which there were allegedly no legitimate attendees or not enough
legitimate attendees. (See TAC ¶¶ 221–25.) With respect to this information, Novartis argues
that Relator “has failed to provide the details required to address th[e] Court’s criticisms of the
AC.” (Def.’s Reply Supp. Mot. to Dismiss at 5, ECF No. 91.) Two of the tables include the date
of the event, the speaker’s initials, the program code, and the territory. (TAC ¶ 221, 224.)
Another two of the tables include only the date, program code, and territory. (TAC ¶ 222, 225.)
Although he has added more detail, Relator still has not provided a basis on which to reasonably
infer that these events were fraudulent. For example, Relator does not specify the content of
these events or who else was in the audience. His assertion that the events had no legitimate
attendees, or not enough of them, suggests that he is familiar with the composition of the
audience at these events. Yet he does not provide that detail in his TAC.
Relator also alleges that several speaker programs included other Novartis speakers in the
audience, thus undermining the programs’ educational purpose. (TAC ¶ 228.) Although he

own practice cannot be included in determining whether a Program has at least the minimum three attendees.”
(TAC ¶ 57.) Further in the TAC, Relator alleges that “non-prescribers, such as office managers, receptionists and
secretaries do not qualify as HCPs and, therefore, would not be legitimate attends [sic] at Speaker Programs[.]”
(TAC ¶ 197.) Relator also appears to use “legitimate Attendee” and “legitimate HCP Attendee[]” interchangeably.
(See, e.g., TAC ¶ 197.) Additionally, he equates “illegitimate Attendees” with “Speakers.” (TAC ¶ 229.)
Therefore, it seems that “legitimate Attendee” means: a prescriber of Gilenya who does not work with the physician
who is speaking at an event. But Relator does not adequately explain why only speaker events to audiences of these
attendees can be legitimate and thus not “shams.”

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provides names, dates, and locations, he does not specify who else attended those events. The
fact that another physician speaker was in the audience does not automatically render a speaker
event illegitimate. Without more detail as to the composition of the audience at these events, and
the content covered, Relator’s claim that they are “shams” is merely a “conclusory allegation.”5
See Sacerdote, 9 F.4th at 107. Relator provides only a single example of an event at which
“[t]he only attendees were Gilenya speakers.” (TAC ¶ 228(n) (emphasis added).) But he has not
shown that this event is a representative example. To the contrary, Relator’s other alleged
instances of physician speaker attendance, for which Relator does not detail who else attended,
suggest this single example is not representative. Therefore, Relator has not adequately
explained why the events with few or no “legitimate Attendees” were fraudulent and has not
“nudged [these] claims across the line from conceivable to plausible.” See Twombly, 550 U.S. at
570.
b. Repeat Attendees
Relator alleges that the many repeat attendees at speaker programs for potential patients
undermine the legitimacy of these programs. Specifically, he argues, “[t]here was little
educational value in the programs for repeat attendees who would hear the same presentation
over again.” (Pl.’s Mem. in Opp’n at 11.) In support of this contention, Relator provides several
witness statements regarding repeat attendees. (See, e.g., TAC ¶¶ 254–264.) Witnesses describe
their experience with patient programs and allege that repeat attendance could be as low as “10
to 15 percent” and as high as “90 . . . to 100 percent.” (TAC ¶¶ 258, 298.) Others allege that
repeat attendance “averaged 30-40 percent” or “70 to 80 percent.” (Id. at ¶ 261–62.)

By contrast, in Bilotta, the complaint alleged that “groups of the same doctors would repeatedly attend
speaker events on the same topic within a short period of time, with the doctors taking turns in the roles of attendees
and ‘speakers.’ For example, one doctor attended the same presentation ten times between July 2010 and October
2011, and the same three doctors were consistently present at nine of those events.” Bilotta, 50 F. Supp. 3d at 502.
5

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These allegations suffer from a lack of particularity. Relator does not provide the type of
concrete details regarding the allegedly repeat attendees, or the content of speakers’
presentations at events with repeat attendees, that the Court previously indicated could
substantiate his allegations. (See Op. & Order at 9.) Notwithstanding Relator’s allegation that
“no attendance lists are maintained with respect to patient[]” programs, he also alleges that sales
representatives received “RSVPs for Patient Programs.” (TAC ¶ 252, 263.) Based on these
facts, the composition of the audience at patient programs seems at least somewhat knowable.
Moreover, it is difficult to conclude that witnesses’ alleged estimates of repeat attendance, which
range from 10 to 100 percent, are consistent enough to constitute “representative samples of the
broader class of claims.” See Bledsoe, 501 F.3d at 510. Therefore, Relator’s allegations
regarding repeat attendees have not been sufficiently pled with particularity.
3. Payment for Cancelled Events
Relator alleges that Novartis had a “deliberate practice of scheduling and then cancelling
Speaker Programs.” (TAC ¶ 236.) Because speakers were paid for these programs, nonetheless,
Relator alleges that this practice facilitated “illegal payments to doctors.” (Id.) In support of
these allegations, Relator provides an exhibit listing speaker programs between 2010 and 2013 in
which “Novartis paid doctors approximately $1,000,000 in connection with four hundred and
sixty-nine (469) 6 Speaker Programs that were cancelled . . . [constituting an] excess of 10
percent of Programs scheduled during this period[.]” (Id.; see also TAC Ex. C.) Although that
exhibit identifies specific events, Relator does not “identify . . . the circumstances or timing of
the cancellation” for any of these events. (Op. & Order at 10.) Moreover, the information

Relator appears to correct this number to 282 in his memorandum in opposition to Defendant’s motion to
dismiss. (Pl.’s Mem. in Opp’n at 12.)
6

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regarding the three doctors who allegedly had received payments for cancelled events is
unchanged from the AC. (See TAC ¶ 241; AC ¶ 99.) The Court previously concluded that this
information was insufficient to evaluate the legitimacy of the alleged cancellations. (See Op. &
Order at 10.) Therefore, it is not reasonable to infer, on the basis of the information Relator now
provides, that the events he identifies were improperly cancelled and thus were a means of
providing kickbacks to Gilenya prescribers.
4. ROI Analysis and Physicians’ Prescription Potential
Relator alleges that Novartis “performed return on investment [ROI] analysis with
respect to Speakers’ prescribing habits” and prioritized physicians for speaking engagements
based on their prescribing potential. (TAC ¶¶ 290, 300, 351.) He argues that “Novartis only
wanted to pay speakers who would reciprocate by writing prescriptions” and therefore “us[ed]
the Speaker Programs as a tool to increase prescriptions.” (Pl.’s Mem. in Opp’n at 13.) But
Relator’s allegations do not link the ROI analysis and speaker prioritization to physicians’ actual
prescribing habits, and thus it is not reasonable to infer that a speaker’s receipt of large payments
was contingent on the number of prescriptions the speaker/physician wrote. Cf. Arnstein, 2016
WL 750720, at *17 (holding that the complaint’s allegations supported the inference that
physicians could become speakers and remain speakers only if they generated sufficient
prescriptions).
In addition, Relator alleges that Novartis tracked whether speakers’ prescriptions
increased after participation in speaking events. (See TAC ¶¶ 286, 290, 293.) But Relator
provides only one example of a speaker, Dr. A.O., whose prescribing allegedly “increase[d] after
she was made a speaker.” (TAC ¶ 300.) Notably, Relator does not list Dr. A.O. in any of the

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exhibits that he alleges are evidence of Novartis’ fraudulent inducement.7 Finally, alleging that a
physician’s prescriptions merely “increase[d],” without more detail, is not enough. Cf. Bilotta,
50 F. Supp. 3d at 517–18 (court denied motion to dismiss because, inter alia, complaint
described the change in the number of prescriptions doctors wrote compared to their earlier
prescription-writing).
Relator also alleges that Novartis employees “frequently made comments about the
prescribing habits of Speakers,” and nominated speakers based on their prescribing potential.
(TAC ¶¶ 270–71, 279.) But he does not provide specific examples of speakers who were
selected on that basis.8 Relator gives three examples of speakers who allegedly “were removed
from the [speaking] bureau” because they “did not write sufficient amounts of Gilenya.” (TAC ¶
276.) These examples, however, do not demonstrate that Novartis selected speakers because of
their prescribing potential.
In one example, Relator’s witness alleges that, although the “official reason” Dr. C.R.
was removed as a speaker was because s/he “had not conducted enough programs,” the “real
reason was that Dr. C.R. was not writing enough Gilenya prescriptions.” (TAC ¶ 276.) These
reasons, which the Court assumes to be true, are in conflict. Relator has not provided additional
facts that would allow the Court to conclude that the alleged official reason should be ignored.
Accordingly, it is not reasonable to infer, based on these allegations, that Dr. C.R. was removed
because s/he was not prescribing enough Gilenya.

7

Exhibits C and D list physicians who allegedly were paid for cancelled events and physicians who
allegedly submitted false claims, respectively. (See ECF No. 77.)
8

Relator seems to suggest that the Court should conclude that speakers were selected on the basis of their
prescribing habits because, for example, a witness alleged that Novartis employees “frequently made comments
about the prescribing habits of Speakers . . . [and were] tracking the prescriptions of Speakers.” (TAC ¶ 270.) That
same witness, however, specifically stated that the “[Area Business Manager] never stated that individuals were
being chosen as Speakers or Scheduled as speakers to influence their prescribing habits” and that the Area Business
Manager never “explicitly link[ed] Speaking and prescribing.” (Id.)

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In a second example, Relator alleges that Dr. E.F. was removed as a speaker “for
presenting off-label material regarding Gilenya, after which he completely stopped writing
prescriptions for Gilenya.” (TAC ¶ 280.) Relator’s allegation regarding Dr. E.F. plainly states
that Dr. E.F. was removed for a reason unconnected to his prescribing activity. (Id.) Therefore,
Relator’s claims do not support the conclusion that Dr. E.F. was removed as a speaker because
he stopped prescribing Gilenya.
Finally, Relator alleges that a witness was “told to cease using Dr. J.H.” because Dr. J.H.
“wrote less and less Gilenya . . . after a competitor to Gilenya came to market.” (TAC ¶ 302.)
Unlike in Bilotta, in which plaintiffs alleged that “Novartis invited doctors to be speakers . . .
based on the number of prescriptions they wrote for Novartis drugs, and that the doctors were
aware of this practice,” 50 F. Supp. 3d at 516, there is no indication here that Dr. J.H. was invited
to be a speaker because of his prescribing habits or that he was aware of the reason for his
purported removal. Moreover, Relator’s witness conceded that s/he “was not completely certain
if” Dr. J.H. was actually removed. (TAC ¶ 302.) Accordingly, these three examples do not
reasonably support the inference that the speaker programs were “a tool to increase
prescriptions.” (Pl.’s Mem. in Opp’n at 13.)
B. Novartis’ Other Alleged Conduct
In addition to the allegedly “sham” speaker programs, Relator alleges that Novartis
engaged in other activities that were designed to reward physicians who prescribed Gilenya or
induce them to increase their prescriptions. Specifically, Relator alleges that Novartis
improperly: provided promotional materials to physicians, outfitted medical offices for FDOs,
provided billing assistance, and “wined and dined” speakers. The Court considers each of these
activities in turn.

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1. Promotional Materials
Relator alleges that Novartis “provide[d] illegal remuneration to its Speakers by
providing them with marketing materials and services to promote their medical practices and
attract patients.” (TAC ¶ 319.) These materials included DVDs that “contained doctors’ names,
contact information and professionally-rendered photos of each doctor.” (TAC ¶ 320.)
Although Relator alleges that they were “designed to be handed out to patients at Speaker
Programs . . . to help the Speakers build their practices,” Relator also alleges, inconsistently, that
they were “provided to the doctor for distribution to their patient base as an educational tool.”
(TAC ¶¶ 320, 324.) Novartis allegedly compensated the physicians featured in these DVDs for
their time. (TAC ¶ 319.)
Relator has failed to connect the DVD initiative to changes in physician prescribing
behavior. Cf., Bilotta, 50 F. Supp. 3d at 517–18 (“The Amended Complaint identifies at least ten
doctors . . . and the change in their prescribing of Novartis cardiovascular drugs during [the
relevant] time periods”; “Complaint also describes . . . the change in the number of prescriptions
for Novartis drugs these doctors wrote compared to their earlier prescription-writing”; “During
the time period that these doctors were being paid as ‘speakers’ . . . they wrote more
prescriptions for Novartis’s cardiovascular division drugs.”). In the several paragraphs Relator
devotes to describing the DVD initiative, he does not provide an example of a physician who
changed his or her prescribing behavior while they participated in the initiative. (See TAC ¶
319–33.) Relator identifies six examples of physicians who prescribed Gilenya and were
featured in DVDs.9 But the concurrence of these alleged facts does not automatically create an

Drs. L.H. and J.S. “in the Philadelphia territories” (TAC ¶ 320) and Drs. T.S., E.M., J.S.S., and K.D.
(locations unspecified, TAC ¶ 330).
9

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inference that a purpose of the DVD initiative was to induce more prescriptions. Relator has not
provided enough information to support that inference. Accordingly, Relator’s allegations
regarding the promotional materials are not sufficiently pled. 10
2. Outfitting Medical Offices for FDOs
The FDA imposed an FDO requirement that any patient receiving Gilenya for the first
time be observed for six hours thereafter because the drug can affect a person’s heart rate. (TAC
¶ 152.) Relator alleges that, because “it was challenging to market Gilenya at the time of launch
due to the FDO requirement,” Novartis outfitted medical offices with “entertainment rooms,” for
the use of patients being observed.11 (TAC ¶¶ 337, 339.) Relator argues that these rooms were
“quid pro quo exchanges” to benefit Gilenya prescribers. (Pl.’s Mem. in Opp’n at 35.)
Relator’s allegations regarding the “entertainment rooms” do not establish that the rooms
were part of a campaign to bribe prescribers. Relator does not allege evidence of prescriber
behavior in response to Novartis’ provision of the rooms—the other side of the quid pro quo he
seeks to establish. Accordingly, he has not provided sufficient information to infer that “the only
reason that Novartis would have to facilitate the FDO . . . was to increase prescriptions . . . .”
(TAC ¶ 337.)
3. Conduct Regarding Billing Codes
Relator alleges that Novartis “taught physicians how to defraud the government by
overbilling for the FDO.” (TAC ¶ 340.) Novartis allegedly did this by providing “visual aid[s]”
that listed billing codes physicians could use to bill for their time spend administering the FDO.

Relator also alleges that “Novartis created flyers to invite attendees to the Speaker Programs.” (TAC ¶ 325,
327.) Those allegations lack sufficient detail and suffer from the same deficiency as explained regarding the DVD
initiative.
10

11

Relator alleges that these rooms benefitted both physicians and their patients; by making patients more
comfortable during the six-hour observation period, Novartis made it easier to convince physicians to prescribe
Gilenya for first-time patients. (TAC ¶ 336–38.)

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(Id.) One witness stated that a “nurse educator in his/her area worked with physicians to explain
how they could bill for 23 hours of time with respect to the 6 hour FDO period.” (TAC ¶ 342.)
But Relator has not demonstrated that this example of allegedly fraudulent billing conduct is
representative of activity on a broader scale.
Importantly, Relator does not allege that physicians’ billing for FDO time was improper.
Instead, he argues that Novartis was “improperly detailing physicians on billing codes as a
service for those who were hesitant to spend long hours on FDOs without proper compensation.”
(Pl.’s Mem. in Opp’n at 36.) That is, “[a]lthough medical practices typically hire medical billing
and coding specialists, Novartis took it upon itself to provide such assistance in order to induce
prescription writing of [Gilenya].” (Id.)
Relator’s allegations here fail in two key respects. First, they do not connect Novartis’
alleged billing conduct to physician prescription activity. The fact that Novartis provided billing
assistance for FDOs, for which physicians could properly bill their time, does not create a
reasonable inference of fraudulent inducement. Second, Relator’s allegations do not support an
inference that Novartis “eliminate[d] an expense that the physician would have otherwise
incurred.” (See id.) The TAC does not provide examples of physicians who did not have to hire
billing and coding staff because the physician effectively outsourced those functions to Novartis.
Accordingly, Relator has not pled facts sufficient to infer a fraudulent scheme to generate
Gilenya prescriptions.
4. “Wining and Dining” Speakers
Relator’s allegations regarding Novartis’ “schmoozing” scheme do not provide a
coherent basis on which to infer improper inducement. (TAC ¶ 348.) Relator alleges that
Novartis “bribed its Speakers and other high prescribers of Gilenya directly by having Key
Account Managers throughout the United States ‘wine and dine’ these physicians for purposes of
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influencing their prescription writing . . . .” (TAC ¶ 353.) These account managers allegedly
focused their efforts on “one-on-one” dinners with physicians to “build . . . relationship[s].”
(TAC ¶¶ 344, 349–50.) But it is not clear from Relator’s allegations how this conduct was
supposed to “get them [physicians] to prescribe Gilenya.” (See TAC ¶ 348.)
The witness anecdotes in the relevant portion of the TAC lack particularity and are
largely contentions that, when cobbled together, allegedly amount to some form of impropriety.
Exactly what form is unclear. For example, Relator alleges that account managers could not
“provide any greater information at these dinners to physicians regarding Gilenya than the
information that sales representatives provided,” without explaining why this is significant.
(TAC ¶ 345.) In another example, Relator alleges that a witness “arranged meetings between
key Speakers and potential Speakers . . . as part of his duties of cultivating relationships between
[Novartis] and high prescribers who were targeted as potential speakers.” (TAC ¶ 351.) In a
third example, Relator alleges that an account manager provided “training [to] secretaries and
other medical office staff at physician offices,” including at one medical practice “which had
doctors who were high prescribers of Gilenya.” (TAC ¶ 352.) Relator then concludes that
Novartis did these things “to convince [physicians] to become Speakers . . . . There can be no
other explanation for these interactions.” (Pl.’s Mem. in Opp’n at 37.) But Relator does not
adequately explain why these interactions amount to improper inducement. Accordingly, these
allegations are insufficient to plead a fraudulent kickback scheme.
II.

Relator’s Allegations Regarding False Claims
A claim that results from a violation of the AKS “constitutes a false or fraudulent claim

for purposes of [the FCA].” 42 U.S.C. § 1320a-7b(g). Novartis argues that the TAC should be
dismissed because Relator has not pled the existence of false claims with particularity. (Def.’s
Mem. Supp. Mot. to Dismiss at 43.) As noted in the Court’s prior ruling on Novartis’ motion to
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dismiss the AC, “[t]he Court cannot productively address” this argument “until (and if) Relator
sufficiently alleges the existence of the kickback scheme upon which the falsity of the alleged
claims is premised.” (Op. & Order at 14.) As explained above, Relator has failed to sufficiently
plead a kickback scheme in his TAC. Therefore, he has not established the alleged AKS
violations on which his FCA-related claims are premised. Accordingly, the Court does not
address Relator’s claims regarding the FCA.
III.

No Leave to Amend
Taken together, the allegations in the TAC do not adequately plead the existence of a

kickback scheme with sufficient particularity.12 Because the Court previously granted Relator
leave to amend his Complaint, the question arises whether the Court should do so again here.
The Court declines to grant leave to amend. Relator has not cured the deficiencies
identified in the AC, even after the Court provided specific guidance as to how Plaintiffs could
comply with Rule 9(b)’s particularity requirement. (See Op. & Order at 6–13.) Relator has had
four opportunities to plead his claims. Nothing suggests he will be successful if given a fifth.
See, e.g., De Jesus v. Sears, Roebuck & Co., Inc., 87 F.3d 65, 71–72 (2d Cir. 1996) (upholding

12

Plaintiff submits as supplemental authority U.S. ex rel. Travis v. Gilead Sciences, Inc., No. 17-1183, 2022
WL 991382 (E.D. Pa. Apr. 1, 2022), in which a court denied defendant Gilead’s motion to dismiss with respect to
plaintiffs’ allegations that defendant had used physician speaker programs to compensate high prescribers. (See
ECF No. 92.) While there are some similarities between the complaint at issue in Travis and Plaintiffs’ TAC, the
Travis complaint provides the type of explanatory detail that is absent here. For example, “[i]n most cases, the
physician speaker would simply sit with the Gilead sales representative in the provider’s office and chat with the
physician, nurses, and office staff as they at lunch.” (Gilead Third Am. Compl. ¶¶ 103–104 [hereinafter Gilead
TAC], ECF No. 49.) In another example, “the physician speaker did not put on a presentation, but rather just sat in
the lunch area, without ever speaking or giving a presentation . . . [and] was still paid.” (Gilead TAC ¶ 105.)
By contrast, Relator does not allege that physicians neglected to make their presentations. Although he
alleges physician speakers were often more interested in socializing, he still acknowledges that speakers made their
presentations, even if for “15 to 20 minutes . . . to run through a slide deck.” (TAC ¶ 286.) But he does not allege
that these events were fraudulent because the deck was only partially presented. Even had he alleged partial
presentation, his TAC does not “explain whether events at which the slide deck was partially or fully presented
served an educational purpose.” (Op. & Order at 9.) The Gilead TAC also describes a key feature of the Gilead
speaker program—namely using “less well-known speakers and some who were completely unqualified to give such
educational presentations”—that is not central to this case. (See Gilead TAC ¶ 109 et seq.) Furthermore, Travis
does not bind this Court.

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district court decision to dismiss complaint alleging fraud without leave to replead a fifth time
because plaintiffs had not cured complaint’s deficiency); Decker v. Massey-Ferguson, Ltd., 681
F.2d 111, 115 (2d Cir. 1982) (holding that district court did not abuse its discretion in refusing
plaintiff a third attempt to restate defective fraud allegations); Weinstein v. Appelbaum, 193 F.
Supp. 2d 774, 782 (S.D.N.Y. 2002) (McMahon, J.) (dismissing with prejudice plaintiffs’
amended complaint, their fourth attempt overall, after holding that plaintiffs had not pled fraud
with particularity). The Court therefore dismisses the TAC, with prejudice.

CONCLUSION
For the foregoing reasons, the Court GRANTS Novartis’ motion to dismiss pursuant to
Rules 12(b)(6) and 9(b), and the TAC is dismissed with prejudice.
The Clerk is respectfully directed to close ECF No. 86 and to close the case.

SO ORDERED.
Dated: New York, New York
September 13, 2022

/s/ Kimba M. Wood
KIMBA M. WOOD
United States District Judge

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