United States of America, ex rel. et al v. Bayer AG et al

Filing 190

MEMORANDUM OF DECISION (re: Text Order entered on 10/1/19). So Ordered by Chief Judge William E. Smith on 10/21/2019. (Jackson, Ryan)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
)
)
Plaintiffs,
)
)
v.
)
)
BAYER HEALTHCARE
)
PHARMACEUTICALS, INC., et al.
)
)
Defendants.
)
___________________________________)
UNITED STATES OF AMERICA et al.,
ex rel. JOHN R. BORZILLERI, M.D.,

C.A. No. 14-031 WES

MEMORANDUM OF DECISION
WILLIAM E. SMITH, Chief Judge.
This case is before the Court on three motions: the United
States’ Motion to Dismiss the Complaint Pursuant to § 3730(c)(2)(A)
of the False Claims Act, ECF No. 166; Manufacturer Defendants’
Joint Motion to Dismiss the Second Amended Complaint, ECF No. 157;
and the Pharmacy Benefit Manager Defendants’ Joint Motion To
Dismiss Relator’s Second Amended Complaint, ECF No. 163.

After

careful consideration, the Court issued a text order on September
27, 2019 1, GRANTING the United States’ Motion to Dismiss and
DENYING both of Defendants’ Motions to Dismiss as moot.

This memo

explains the reasoning behind that order.

1

The Court subsequently issued an amended text order on October
1, 2019.

In this qui tam action, relator John R. Borzilleri alleges
that pharmaceutical manufacturers and “Pharmacy Benefit Managers”
schemed to defraud Medicare Part D, a federal prescription-drug
program, in violation of the False Claims Act (“FCA”), 31 U.S.C.
§ 3729 et seq., and various state laws. 2

Relator’s Second Amended

Compl. (“SAC”), ECF No. 95. The United States (“the Government”)
declined

to

dismissal.

intervene

in

this

action

and

now

moves

for

its

United States’ Mot. to Dismiss the Complaint (“Gov’t

Mot. To Dismiss”), ECF No. 166. Borzilleri also filed an almost
identical action in the United States District Court for the
Southern District of New York. United States ex rel Borzilleri v.
AbbVie, Inc., No. 15-CV-7881 (JMF), 2019 WL 3203000 (S.D.N.Y. July
16, 2019). In that action, Judge Furman granted the Government’s
motion and dismissed all of Borzilleri’s FCA claims. Id. at *3.
This Court agrees with Judge Furman’s well-reasoned opinion.
The FCA is structured to allow private plaintiffs to bring a
civil action on behalf of the United States, but also to allow the
Government substantial control over these actions. See 31 U.S.C.
§ 3730(b). Specifically, the Government has the right to “dismiss
the action notwithstanding the objections of the person initiating
the action if the person has been notified by the Government of

2

For a more detailed recitation of the facts and procedural
history, see the Manufacturer Defendants’ Joint Motion to Dismiss.
ECF No. 157, p.3-10.
2

the filing of the motion and the court has provided the person
with an opportunity for a hearing on the motion.” 31 U.S.C. §
3730(c)(2)(A). However, the statute does not explicitly state what
standard courts should use to review the Government’s motion to
dismiss an action under the FCA.
The courts that have addressed this issue are split on whether
the Government must demonstrate a “rational relation” between its
reasons for dismissal and a legitimate government interest, or
whether the Government has essentially “unfettered” discretion to
dismiss. See United States ex rel. Sequoia Orange Co. v. BairdNeece Packing Corp., 151 F.3d 1139, 1145 (9th Cir. 1998)(holding
that the Government must demonstrate a “valid government purpose”
for dismissal and “a rational relation between dismissal and
accomplishment of [that] purpose”)(internal citation omitted); see
also Ridenour v. Kaiser-Hill Co., L.L.C., 397 F.3d 925, 936 (10th
Cir. 2005) (adopting the “valid government purpose” standard); but
see Swift v. United States, 318 F.3d 250, 252 (D.C. Cir. 2003)
(reading the statute to give the Government an “unfettered right”
to dismiss a qui tam action); Riley v. St. Luke’s Episcopal Hosp.,
252 F.3d 749, 753 (5th Cir. 2001) (explaining in dicta that “the
government retains the unilateral power to dismiss an action” under
section 3730(c)(2)(A)).
adopted

a

standard,

The First Circuit has not yet formally

although

the

District

of

Massachusetts

expressed support for the more discretionary standard espoused in
3

Swift.

Nasuti ex rel. United States v. Savage Farms, Inc., No.

12-30121-GAO,

2014

WL

1327015

at

*1

(D.

Mass.

Mar.

27,

2014)(adopting the Magistrate Judge’s recommendation and noting
that the court finds the “Swift rationale more persuasive” but
declines to formally resolve which standard applies).
The Court does not need to decide which standard to adopt
today since the Government’s motion would be granted under either
standard. See, e.g. Nasuti, 2014 WL 1327015 at *1 (holding that
the government’s motion to dismiss should be granted under either
standard of review); Chang v. Children’s Advocacy Ctr. of Del.,
No.

18-2311,

2019

WL

4309516,

*2

(3rd

Cir.

Sept.

12,

2019)(declining to take a side in this circuit split because
relator failed “even the more restrictive standard”); AbbVie, 2019
WL 3203000, at *2. Under the stricter standard, the Government has
shown at least one “valid government purpose” for dismissing this
action -- the burden this continuing litigation would place on the
Government’s resources.

See Gov’t Mot. to Dismiss 13-16. For

example, Bozilleri’s Complaint alleges, among many other things,
“widespread” fraud among all the parties involved in Medicare Part
D

drug

coverage.

SAC

at

¶33.

The

Government

explained

that

litigating that allegation alone would necessitate an “inquiry
into

a

wide

array

of

contractual,

billing,

reporting,

and

analytical material by means of potentially vast and intrusive
discovery

that

will

impact

both
4

the

United

States

and

third

parties.” Gov’t Mot. to Dismiss 14. The Court has no reason to
doubt the Government’s contention that further litigation in this
action will impose a significant burden on several federal agencies
and take resources away from the administration of parts of the
Medicare program. Id. at 15.
The Government’s desire not to expend more resources on this
lawsuit, especially where it has declined to intervene because it
“does not believe that it is in the public interest to pursue this
lawsuit,”

is

a

valid

Government’s dismissal.

and

sufficient

justification

for

the

Id. at 15; See e.g. Sequoia Orange, 151

F.3d at 1146 (“The district court . . . properly noted that the
government can legitimately consider the burden imposed on the
taxpayers by its litigation, and that, even if the relators were
to litigate the FCA claims, the government would continue to incur
enormous internal staff costs.”); Swift, 318 F.3d at 254 (noting
that dismissal would also be proper under Sequoia Orange because
the Government’s interest in not “expending resources monitoring
the case, complying with discovery requests, and so forth” was “a
legitimate objective, and dismissal of the suit furthered that
objective.”). Similarly, the Nasuti Court concluded that dismissal
was appropriate because of the Government’s concern over incurring
“substantial costs in monitoring the litigation, . . . responding
to discovery requests, and clarifying Relator’s misstatements of
the law.” 2014 WL 1327015, at *11.
5

Despite Bozilleri’s contention to the contrary, the potential
merit of his claims does not overcome the Government’s arguments
for dismissal. Relator’s Opp’n to United States’ Mot. to Dismiss
(“Rel. Opp’n”), ECF No. 170;

see Sequoia Orange, 151 F.3d at 1144

(rejecting the contention that lack of merit is the exclusive
ground on which the government can seek dismissal); United States
ex rel. Wickliffe v. EMC Corp., 473 F. App’x 849, 854 (10th Cir.
2012) (“[T]he potential merit of a qui tam action is insufficient
to overcome the government’s rational reasons for dismissing the
suit.”); Ridenour,

397

F.3d

at

936,

940

(affirming

grant

of

Government’s motion to dismiss despite the Government’s concession
that the relator’s claims have merit). Moreover, the Government’s
position is strengthened by its steadfast refusal to concede the
merits of Borzilleri’s claims. See Gov’t Mot. to Dismiss 15-16;
Nasuti, 2014 WL 1327015, at *11 (finding that litigation costs
represent a valid governmental interest especially “in a case like
this . . . where the Government contends that Relator’s claims
lack merit.”).
Under

the

“valid

government

purpose”

standard,

once

the

Government has articulated that purpose, and a rational relation
between dismissal and accomplishment of that purpose, the burden
shifts to the relator to show that, nonetheless, the dismissal is
“fraudulent,

arbitrary

and

capricious,

or

illegal.”

Orange, 151 F.3d at 1145 (internal citation omitted).
6

Sequoia
To meet

that burden, the relator must offer actual evidence of impropriety
or fraud, not mere speculation.

Nasuti, 2014 Wl 1327015, at *12;

United States ex rel. Toomer v. TerraPower, LLC, No. 4:16-cv00226-DCN, 2018 WL 4934070, at *6 (D. Idaho Oct. 10, 2018).
Borzilleri fails to meet this burden.
Borzilleri’s

argument

that

the

Government

failed

to

adequately investigate his claims is roundly rebutted by the
Government’s detailed description of the lengthy, costly, and
substantial investigation it undertook over the course of several
years using multiple offices and agencies. Rel. Opp’n. 22-26; Gov’t
Mot. to Dismiss 15-16; United States’ Reply Memorandum of Law in
Further Support of its Motion to Dismiss (“Gov’t Reply”), ECF No.
177, 9-11; see United States v. EMD Serono, Inc., 370 F. Supp.3d
483, 489 n.15 (E.D. Pa. Apr. 3, 2019) (concluding, based on the
Government’s briefing, that the Government expended “substantial
time and resources” on its investigation). The Relator has pointed
the Court to United States ex rel. Cimznhca, LLC v. UCB Inc., 17CV-765-SMY-MAB, 2019 WL 1598109 (S.D. Ill. Apr. 15, 2019), in
support of his arguments, but that case is distinguishable. There,
the

Court

found

that

the

Government

had

not

conducted

an

investigation of the relator’s specific claims, instead pursuing
only a collective investigation of eleven cases filed by the
relator against various defendants. Id. at *3.

Moreover, even a

failure to adequately investigate would prove, at the most, mere
7

negligence

on

the

part

of

the

Government.

As

Judge

Furman

concluded, “nothing put forward by Borzilleri suggests, let alone
shows, that the Government’s stated reason for dismissing this
action

is

fraudulent,

arbitrary

and

capricious,

or

illegal.”

AbbVie, 2019 WL 3203000, at *3.
Many of Borzilleri’s remaining arguments can be boiled down
to his subjective disagreement with the underlying conclusions of
the Government’s investigation. Rel. Opp’n 18-22. But this Court
declines

to

second-guess

the

Government’s

investigation

and

conclusions when that is clearly not the Court’s role under §
3730(c)(2)(A).
Borzilleri

See Gov’t Reply 4.
is

also

not

entitled

to

the

discovery

evidentiary hearing that he seeks. See Rel. Opp’n 2.

or

To allow

such a costly process based merely on the relator’s speculation
would defeat the very reason that the Government seeks dismissal
–

to

preserve

its

limited

resources.

United

States

ex

rel.

Nicholson v. Spigelman, No. 10 C 3361, 2011 WL 2683161, at *3 (N.D.
Ill. July 8, 2011) (explaining that permitting the relator to
conduct discovery would “allow[] what the Government was trying to
avoid in moving to dismiss the action—costly and time consuming .
.

.

discovery

with

little

prospect

of

significant

recovery”

(quoting Ridenour, 397 F.3d at 938)); accord Toomer, 2018 WL
4934070, at *6.

8

In sum, the Government has met its burden for dismissal under
either standard, and, as required by the statute, Borzilleri was
afforded the opportunity for a hearing.

See Min. Entry for Sept.

26, 2019; 31 U.S.C. § 3730(c)(2)(A). Accordingly, Borzilleri’s FCA
claims are dismissed.
and

common-law

His common law claims for unjust enrichment

fraud,

SAC

¶¶

800-06,

are

dismissed

because

Borzilleri does not have standing under the FCA to bring these
claims on behalf of the United States. See United States ex rel.
Walsh v. Eastman Kodak Co., 98 F. Supp. 2d 141, 149 (D. Mass.
2000); In re Pharm. Indus. Average Wholesale Price Litig, No.0112257-PBS, 2007 WL 4287572 at *5 (D. Mass. Dec. 6, 2007). This
Court

declines

to

exercise

supplemental

jurisdiction

Borzilleri’s remaining state law claims, SAC ¶¶717-803.

over

Rodriguez

v. Dual Mort. Corp., 57 F.3d 1168, 1177 (1st Cir. 1995) (“As a
general principle, the unfavorable disposition of a plaintiff’s
federal claims at the early stages of a suit . . . will trigger
the dismissal without prejudice of any supplemental state-law
claims.”).
For the foregoing reasons, the Government’s Motion to Dismiss
is GRANTED. Borzilleri’s FCA claims are thereby dismissed with
prejudice as related to Borzilleri, but without prejudice as
related to the United States.

Additionally, Borzilleri’s state

law claims are dismissed without prejudice.

Pursuant to this

ruling, Defendants’ Motions to Dismiss, ECF Nos. 157 and 163 are
9

DENIED as moot.

The Clerk of Court is directed to terminate all

motions and close the case.

IT IS SO ORDERED.

William E. Smith
Chief Judge
Date: October 21, 2019

10