United States of America et al. ex rel. Rebecca Miller v. Reckitt Benckiser Group PLC, Inc., et al.
Filing
153
OPINION and ORDER VACATING 140 Order staying case and the Stay is lifted; granting 138 defendant's notice of request to resolve the pending motion to dismiss without oral argument; denying 137 plaintiff relator Miller's request for o ral argument on defendant's motion to dismiss; granting in part and denying in part 90 Motion to Dismiss Relator's Fifth Amended Complaint; the Fifth Amended Complaint is DISMISSED in its entirety without prejudice as to Defendants Reck itt Benckiser Group PLC and Reckitt Benckiser Inc. n/k/a Reckitt Benckiser, LLC.; as for the remaining defendants Count 1, 3, and 36 of the Fifth Amended Complaint are DISMISSED without prejudice; Count 28 is dismissed with prejudice; the claims unde rlying the remaining counts brought under state law are limited as described herein; plaintiff is granted leave to file a Sixth Amended Complaint if she can correct the deficiencies described herein, provided it is filed within 30 days of entry of th is Opinion and Order; and plaintiff must properly serve Defendant Reckitt Benckiser Group PLC within 60 days ofthe filing of the Sixth Amended Complaint in the event it asserts claims against the defendant. Signed by Senior Judge James P. Jones on 10/17/2023. (flc)
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 1 of 54 Pageid#: 1910
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
ABINGDON DIVISION
UNITED STATES OF AMERICA, ET
AL., EX REL. REBECCA MILLER,
)
)
)
Plaintiffs,
)
)
v.
)
)
RECKITT BENCKISER GROUP PLC, )
ET AL.,
)
)
Defendants.
)
Case No. 1:15CV00017
OPINION AND ORDER
JUDGE JAMES P. JONES
Sarah M. Frazier, LAW OFFICE OF SARAH FRAZIER, PLLC, Houston, Texas,
Charles H. Rabon, Jr., RABON LAW FIRM, PLLC, Charlotte, North Carolina, Doug
Landau, ABRAMS LANDAU, LTD., Herndon, Virginia, and John P. Leader, THE LEADER
LAW FIRM, Tucson, Arizona, for Plaintiffs; Mitch Lazris, Gejaa Gobena, and Emily
M. Lyons, HOGEN LOVELLS US LLP, Washington, D.C., for Defendants.
The plaintiff and relator, Rebecca Miller, brings this qui tam action on behalf
of the United States, the District of Columbia, the Commonwealth of Puerto Rico,
and 29 states, alleging that the defendants violated, and conspired to violate, the
False Claims Act (FCA), 31 U.S.C. §§ 3729–3733, and numerous FCA-related local
statutes, by fraudulently reporting to the government the best price of a prescription
drug subject to such reporting under 42 U.S.C. § 1396r-8, by violating the AntiKickback Statute (AKS), 42 U.S.C. § 1320a-7b, and by retaliating against her.
Pharmaceutical manufacturers such as the defendants must report to the
government the lowest price (“best price”) that they sell Medicaid-covered
-1-
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 2 of 54 Pageid#: 1911
prescription drugs to ensure that state Medicaid agencies receive the same benefits
other purchasers receive. Miller alleges that the defendants agreed to provide rebates
for the drug Suboxone in exchange for a customer’s continued preferential treatment
of Suboxone on certain commercial drug formularies, rebates that would have set a
new, reportable best price. However, to avoid triggering a new best price while also
appeasing the customer’s desire for high rebates and therefore ensuring continued
Suboxone sales, the defendants structured its contracts so that it appeared that a
portion of the commercial rebates were negotiated under Medicare because
Medicare prices are excluded from best price reporting requirements. Thus, she
claims, the rebates led to the defendants’ submission of false best price data, which
shortchanged state Medicaid agencies the price to which they were entitled. After
she raised concerns about this so-called bundled sale, Miller says she was fired.
The defendants now move to dismiss the action. The motion has been fully
briefed and is ripe for decision.1 For the reasons set forth below, I will grant the
defendants’ Motion to Dismiss in part with leave to amend but otherwise deny it.
1
I will dispense with oral argument because the facts and legal contentions are
adequately presented in the materials before the court and argument would not significantly
aid the decisional process.
-2-
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 3 of 54 Pageid#: 1912
I. BACKGROUND.
A. The FCA, the AKS, and Best
Price Reporting Requirements.
I begin with a brief overview of the statutes and regulations at issue in this
matter.
1. The FCA.
The FCA imposes civil liability for anyone who –
(A) knowingly presents, or causes to be presented, a false or
fraudulent claim for payment or approval;
(B) knowingly makes, uses, or causes to be made or used, a false
record or statement material to a false or fraudulent claim;
(C) conspire s to commit a violation of [the FCA];
....
[or]
(G) 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 knowingly conceals or
knowingly and improperly avoids or decreases an obligation to
pay or transmit money or property to the Government[.]
31 U.S.C. § 3729(a)(1). The law also provides relief for employees who are
retaliated against because of “lawful acts done by the employee . . . in furtherance
of an action under [the FCA] or other efforts to stop 1 or more violations of [the
FCA].” § 3730(h)(1).
-3-
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 4 of 54 Pageid#: 1913
2. The AKS.
The AKS is a criminal statute that prohibits a person from knowingly and
willfully soliciting, receiving, offering, or paying any remuneration — such as a
kickback, bribe, or rebate — in return for purchasing any good or inducing any
person to purchase a good for which payment may be made under a federal health
care program. 42 U.S.C. § 1320a-7b(b)(1), (2). There is no private action under the
AKS, United States ex rel. Nicholson v. MedCom Carolinas, Inc., No. 1:17CV34,
2020 WL 1245374, at *4 (M.D.N.C. Mar. 16, 2020), but an AKS violation
constitutes a false claim under the FCA. 42 U.S.C. § 1320a-7b(g); see, e.g., United
States ex rel. Banigan v. Organon USA Inc., No. 07-12153-RWZ, 2016 WL
10704126, *2 (D. Mass. Aug. 23, 2016).
3. Best Price Reporting.
Medicaid “authorizes federal financial assistance to States that choose to
reimburse certain costs of medical treatment for needy persons.” Pharm. Rsch. &
Mfrs. of Am. v. Walsh, 538 U.S. 644, 650 (2003). Under the program’s rebate
mechanism, codified at 42 U.S.C. § 1396r-8, a drug manufacturer must enter into a
rebate agreement with the Secretary of Health and Human Services to have its drugs
covered by Medicaid. 42 U.S.C. § 1396r-8(a)(1); United States ex rel. Conrad v.
Grifols Biologicals Inc., No. RDB 07-3176, 2010 WL 2733321, at *2 (D. Md. July
9, 2010).
Pursuant to these agreements and the applicable statute, drug
-4-
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 5 of 54 Pageid#: 1914
manufacturers report certain data points, including their “best price” on certain
drugs, to the Centers for Medicare and Medicaid Services (CMS) on a quarterly
basis. 42 U.S.C. § 1396r-8(b)(3)(A)(i). This allows CMS to calculate the rebate
owed to state Medicaid agencies for each drug. Astra USA, Inc. v. Santa Clara Cnty.,
563 U.S. 110, 114–15 (2011) (“The amount of the rebates depends on the
manufacturer’s ‘average’ and ‘best’ prices, as defined by legislation and
regulation.”).2 The purpose of this mechanism is “to give Medicaid the benefit of
the best price for which a manufacturer sells a prescription drug to any public or
private purchaser.” United States ex rel. Streck v. Allergan, Inc., 894 F. Supp. 2d
584, 588 (E.D. Pa. 2012) (quoting H.R. Rep. No. 101-881, at 96 (1990), reprinted in
1990 U.S.C.C.A.N. 2017, 2108).
Best price is defined as “the lowest price available from the manufacturer
during the rebate period to any wholesaler, retailer, provider, health maintenance
organization, nonprofit entity, or governmental entity.”
42 U.S.C. § 1396r-
8(c)(1)(C)(i). The definition is inclusive of cash discounts, free goods that are
contingent on any purchase requirement, volume discounts, and rebates. § 1396r8(c)(1)(C)(ii)(I). However, certain prices are excluded from the best price definition,
2
I have omitted internal quotation marks, citations, and alterations here and
throughout this opinion, unless otherwise noted.
-5-
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 6 of 54 Pageid#: 1915
including prices that are negotiated under Medicare Part D prescription drug plans.
§ 1396r-8(c)(1)(C)(i)(VI).
B. Factual Background.
The following facts are drawn from the Complaint3 and are assumed to be
true for the purposes of this motion.
1. The Parties.
Miller sues four entities: (1) Reckitt Benckiser Group PLC and (2) Reckitt
Benckiser Inc. n/k/a Reckitt Benckiser, LLC (collectively Reckitt Benckiser
Defendants), as well as (3) Reckitt Benckiser Pharmaceuticals, Inc. n/k/a Indivior,
Inc. and (4) Reckitt Benckiser Pharmaceutical Solutions, Inc. n/k/a Indivior
Solutions, Inc. (collectively Indivior Defendants).
Until December 2014, the Reckitt Benckiser Defendants and the Indivior
Defendants were part of a “unified worldwide business enterprise based in the
United Kingdom.” Compl. ¶ 18, ECF No. 133. The “Reckitt Benckiser parent
entity,” was mostly “a consumer products conglomerate.” Id. A “wing of the
company” was based in Virginia and manufactured and sold specialty
pharmaceuticals, including the drug Suboxone. Id.
3
The Complaint referred to herein means the Fifth Amended Complaint, ECF No.
133.
-6-
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 7 of 54 Pageid#: 1916
A demerger occurred in December 2014, and as a result, the Reckitt Benckiser
parent company spun off the pharmaceuticals business under the name Indivior,
PLC, which is nominally based in the United Kingdom, has North American
headquarters located in North Chesterfield, Virginia. The Complaint states that this
North American headquarters comprises the Indivior Defendants. “The Reckitt
Benckiser Defendants are headquartered in the United Kingdom and its North
American headquarters are located in Parsippany-Troy Hills, New Jersey.” Id. All
of the defendants “conduct business” in the Western District of Virginia. Id. ¶ 12.
Relator Miller is a former employee of Reckitt Benckiser Pharmaceuticals,
Inc. n/k/a Indivior, Inc. (hereinafter referred to as RB Pharma). Miller was hired by
RB Pharma to serve as a senior financial analyst in its North Chesterfield, Virginia,
office in May 2012, a position she held until she was fired on July 2, 2014.
Shortly after being hired, Miller became responsible for keeping track of
contractual rebates so that RB Pharma could report to CMS the best price granted
by the company for its drug Suboxone. Miller’s job was not to calculate the best
price figures or to submit any reports to CMS. Rather, she advised a vendor as to
how to identify the highest contractual rebates granted, and she confirmed the
accuracy of those rebates to RB Pharma’s Chief Financial Officer Ryan Preblick and
Senior Government Pricing Contracts Analyst Lisa McNair (later Finance Manager
and Manager for Contracting and Reimbursement). It was McNair who submitted
-7-
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 8 of 54 Pageid#: 1917
the pertinent rebate data to CMS. Nonetheless, because of her job duties, Miller was
privy to certain internal conversations about best price and related contract
negotiations.
2. Pharmacy Benefits Managers
and the Suboxone Landscape.
RB Pharma, as Suboxone’s manufacturer, 4 contracts with companies known
as pharmacy benefits managers (PBMs), middlemen-type organizations that manage
the health insurance benefits that insureds receive. This position makes PBMs
powerful because they can shut drug manufacturers out of certain health plans. Thus,
a PBM can often demand favorable pricing from a drug manufacturer in exchange
for the PBM’s inclusion or favorable treatment of the manufacturer’s drug on the
PBM’s formularies. Favorable pricing comes in the form of rebates. PBMs
adjudicate pharmacy claims, and the rebate process works as follows: “[S]torefront
pharmacies buy the drug from the manufacturer or distributor, dispense the drug to
patients on such plans, then submit a claim for reimbursement to the PBM, which
The Complaint alleges that “Reckitt Benckiser” has manufactured Suboxone
since 2002. Many times, the Complaint refers generally to “Reckitt Benckiser.” At other
times, it refers to “Indivior,” or to RB Pharma. In doing so and as discussed further infra,
it is unclear to which entity Miller is attributing certain conduct. Compl. ¶ 27, ECF No.
133. In the Complaint’s introductory paragraphs, Miller states that the “Reckitt Benckiser
Defendants and/or the Indivior Defendants,” violated the FCA and AKS. Id. ¶¶ 1, 2
(emphasis added). However, Miller alleges she worked for one of the Indivior entities, RB
Pharma, id. ¶¶ 3, 19, and the allegations of supposed wrongdoing seemingly only implicate
RB Pharma employees. Id. ¶¶ 3, 48, 50, 56.
4
-8-
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 9 of 54 Pageid#: 1918
pays the claim out of funds associated with its contract with the insurer. Then [the
PBM] receives a rebate on the back end from the manufacturer.” Id. ¶ 5. PBMs can
also run their own mail order pharmacies and specialty pharmacies, in which the
PBMs purchase their own drugs from manufacturers and directly compete with the
pharmacies for which they adjudicate claims.
Initially, Suboxone had few competitors.
However, in February 2013,
Suboxone lost its exclusivity in the market when manufacturers received approval
to sell a generic buprenorphine/naloxone tablet. By the end of 2013, the large PBM
Express Scripts, Inc. (Express Scripts) had announced that it intended to shut
Suboxone film out in preference to the generic tablet on the plans it managed. The
potential outcome was this: “If generics were more accessible or cheaper for patients
in either the retail or the mail order sector, many would discontinue Suboxone.” Id.
¶ 42.
Around the same time, several contracts with PBMs approached the time for
renewal or amendment, including contracts with Express Scripts. One of these
contracts was its so-called commercial contract, which covered the direct mail order
and specialty purchases (considered retail sales), as well as the pharmacy rebates.
The prices negotiated under this contract implicated best price reporting.5 As
5
The pharmacy rebates are exempt from best price reporting requirements, but the
mail order and specialty prices are best-price reportable. All three types of transactions are
allegedly grouped in the commercial contract and are subject to the same pricing.
-9-
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 10 of 54 Pageid#: 1919
discussed supra, best price reporting allows state Medicaid agencies to receive the
benefit of the same rebates manufacturers provide in retail settings. At the time of
the Express Scripts negotiations, the commercial price for another PBM was set to
become the new best price setter with 33% rebates.
Another, separate but concurrent contract was the Medicare Part D contract.
Prices negotiated under Medicare contracts do not implicate best price reporting
requirements.
It is in this situation that Miller alleges the illegal conduct occurred.
3. Contract Negotiations with Express Scripts.
In the Spring of 2014, several discussions transpired regarding the Express
Scripts contracts. These discussions are summarized below:
Meeting 1 (March 25, 2014). Miller met with several RB Pharma employees,
including the President of RB Pharma, its Finance Director, Controller, Finance
Manager for Government Contracts and Reimbursement, and Rebate Administrator,
and RB Pharma’s Director of PBM and ACA Strategy. Outside counsel also
participated. Citing the presence of counsel, Miller does not describe the content of
this meeting.
Meeting 2 (March 26, 2014). This meeting concerned how to structure rebates
in the Express Scripts commercial contract. RB Pharma’s then head of commercial
contracts, Rob Philo, opined that the company should offer rebates in the low 30%
- 10 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 11 of 54 Pageid#: 1920
range for highly managed plans and in the high 20% range for the Managed
Medicaid, and it could “throw in” rebates in the high 20s for Medicare Part D. Id. ¶
52. Miller objected that “RB Pharma could not bundle commercial and Part D
pricing — these must be separate conversations.” Id. ¶ 53. RB Pharma President
Richard Simkin responded that the company could not put such conversations in
writing, but that he or someone would have to take Express Scripts to dinner and
verbally promise high rebates on Medicare Part D to be put in writing after the
commercial contract was signed. President Simkin told Philo and the Director of
PBM and ACA Strategy, Keith Lockwood, that they would have to discuss further
“offline.” Id. Miller “understood Simkin’s comments to mean that RB Pharma was
planning to disguise larger commercial discounts to Express Scripts as Part D
discounts so that RB Pharma would not have to trigger a new best price.” Id. ¶ 54.
Meeting 3 (March 26, 2014). Ryan Preblick, RB Pharma’s Controller,
“warned Miller not to repeat anything that had been said in the previous meeting.”
Id. ¶ 57. Miller interpreted this as an admission of fraud and a threat of retaliation.
Meeting 4 (April 9, 2014). Miller visited Lockwood’s office and inquired
about the Express Scripts negotiations. Lockwood expressed his belief that RB
Pharma should offer a 48% rebate on highly managed plans. Allegedly,
RB Pharma had taken the position that the blended average rate needed
to be 33% or less so as not to create a new best price. Express Scripts
had responded that its people could tell RB Pharma how to structure the
deal with rebates across commercial, Medicare Part D, and managed
- 11 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 12 of 54 Pageid#: 1921
Medicaid, so as to not create a new best price on the commercial
contract.
Id. ¶ 59. 6 Miller asked Lockwood, “Is that legal?” and Lockwood responded that it
was. Id.
During this meeting, Lockwood showed Miller a spreadsheet that represented
RB Pharma’s sales and rebates applied to Express Scripts Medicare Part D plans,
which is incorporated into the Complaint.7 The spreadsheet showed that PDP plans
accounted for 42% of Express Scripts Part D business. “Miller understood that PDP
stands for Medicare Prescription Drug Plans not subject to Medicare Advantage.”
Id. ¶ 61. The spreadsheet also indicated that RB Pharma planned to sell Suboxone
to Express Scripts at a 43% discount on those PDP plans, and a smaller discount on
other Part D plans, producing an average rebate rate of 33.09% for Part D plans.
This deepened Miller’s suspicions. No other Part D contracts received a rebate that
high. Because RB Pharma “did not get any value for paying such a high rebate for
open access where the PBM exerted little formulary control . . . it was clear that [RB
Pharma] and Express Scripts were using Part D as an illegal ‘sweetener’ — an illegal
6
Miller does not allege who from RB Pharma had taken the position that the
company needed a 33% blended rate or who from Express Scripts had offered help on how
to structure the deal to avoid a new best price.
7
Miller received a copy of the spreadsheet from Lockwood via email a couple
weeks later on April 24 or 25. Because this spreadsheet is attached to and incorporated into
the Complaint, I have considered it in deciding the defendants’ Motion to Dismiss. Zak v.
Chelsea Therapeutics Int’l, Ltd., 780 F.3d 597, 606 (4th Cir. 2015).
- 12 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 13 of 54 Pageid#: 1922
kickback in exchange for which Express Scripts would recommend Suboxone on
plans it controlled.” Id. ¶ 62.8
Meeting 5 and Correspondence (May 28, 2014).
Miller met with RB
Pharma’s Compliance Officer, Brandy C. Duso, to discuss her fears that “what
Reckitt Benckiser was doing was illegal.” Id. ¶ 64. Duso advised Miller to contact
the company’s then VP General Counsel. Miller did so to report “her concerns about
contract negotiations and their best price implications.” Id. ¶ 65.
Meetings 6 and 7 and Correspondence (May 29, 2014). Miller participated in
several phone calls about the negotiations with outside counsel and an in-house
paralegal. Miller met with in-house counsel because of her emails with the VP
General Counsel the day before. The Complaint does not include details about these
interactions. Miller and the in-house attorney then met with President Simkin.
All of the above-mentioned communications “reinforce[d] Miller’s . . . belief”
that RB Pharma planned to shift commercial price discounts to pricing in the Part D
contract. Id. ¶ 69. “It was obvious to Miller that the contract changes Reckitt
Benckiser adopted in its contrast with Express Scripts were an attempt to evade a
lower best price while actually offering new and deeper rebates to Express Scripts.”
Id. ¶ 70. The 43% rebate on non-Advantage Medicare plans, plans over which
Elsewhere in the Complaint, Miller alleges that Express Scripts has “no control
over the formulary that applies to Medicare patients who are not enrolled in a Medicare
Advantage plan.” Id. ¶ 7.
8
- 13 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 14 of 54 Pageid#: 1923
Express Scripts exerts no formulary control, was eventually included in the Medicare
contract which was signed months after Miller was terminated in July 2014, but was
backdated to May 2014.
The new draft commercial contract was created in March 2014, was signed on
May 29, 2014, and was set to become effective in the third quarter of 2014. Miller
alleges that she refused to sign “a required Contract Approval Form giving her
consent to the signing of the Express Scripts contract” because she “knew that the
contract was tainted by the illegal rebate averaging scheme which was designed
solely to benefit [RB Pharma] by avoiding ‘breaking’ best price, which would have
required paying higher rebates to Government payors.” Id. ¶ 102.
Miller was fired on July 2, 2014.
C. Procedural History.
Miller originally filed her qui tam Complaint in the District of Arizona in
2015. The case was transferred to this Court, and over the course of the last six
years, Miller filed various iterations of the Complaint, although never because of a
motion to dismiss. In 2018, the United States declined to intervene in the case.
In the fifth version of the complaint in question here, Miller alleges five counts
under the FCA. In Count 1, Miller asserts that the Reckitt Benckiser Defendants,
including RB Pharma, violated the FCA by manipulating and misreporting best price
and/or by violating the AKS, § 1320a(b), which resulted in the defendants knowingly
- 14 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 15 of 54 Pageid#: 1924
causing to be presented false or fraudulent claims for Suboxone-related payment or
approval. In Count 2, Miller contends that the Reckitt Benckiser Defendants entered
into a conspiracy with Express Scripts for the purpose of defrauding the United
States and the Medicaid States. In Count 3, Miller alleges that the Reckitt Benckiser
Defendants knowingly caused to be made or used false records or statements for
payment or approval by the United States and continue to do so. In Count 4, Miller
contends that the Reckitt Benckiser Defendants knowingly made and continue to
make false records or statements material to an obligation to pay or transmit money
or property to the Government — a reverse false claim under the FCA. In Count 36,
Miller brings a claim in her own name individually for retaliation prohibited by the
FCA.
Counts 5 through 35 reincorporate the factual allegations underlying the
federal claims, and Miller claims that such conduct violates state law false claims
acts and taxpayer fraud acts, or in the case of Count 7, the District of Columbia False
Claims Act and in the case of Count 35, the False Claims to Government of Puerto
Rico Programs, Contracts, and Services Act.
The defendants have moved to dismiss the Complaint citing numerous
grounds, including that the Complaint fails to satisfy Rules 8 and 9(b) of the Federal
Rules of Civil Procedure, fails to allege underlying FCA and AKS violations, and
fails to sufficiently allege each defendant’s participation in the alleged acts. The
- 15 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 16 of 54 Pageid#: 1925
defendants further argue that all claims against Defendant Reckitt Benckiser Group
PLC, should be dismissed for lack of personal jurisdiction and because it has not
been properly served.
On July 21, 2022, this Court stayed the case in light of the Fourth Circuit’s
decision to rehear en banc a case involving issues presented by the Motion to
Dismiss. But upon rehearing en banc, the previous panel opinions were vacated and
the district court’s judgment was affirmed by an equally divided court. United States
ex rel. Sheldon v. Allergan Sales, LLC, 49 F.4th 873, 873 (4th Cir. 2022).9
The stay was thereafter continued pending the decision of the Supreme Court
in the consolidated cases of United States ex rel. Proctor v. Safeway, Inc., No. 22111, and United States ex rel. Schutte v. SuperValu Inc., No. 21-1326, in which the
issue involved the legal standard for scienter under the FCA. The Supreme Court
rendered its decision on June 1, 2023. United States ex rel. Schutte v. SuperValu
Inc., 143 S. Ct. 1391 (2023). The parties have filed briefs addressing the decision’s
impact on the Motion to Dismiss. Accordingly, the motion is ripe for decision.
9
The Supreme Court has since vacated the judgment and remanded it to the court
of appeals. United States ex rel. Sheldon v. Allergan Sales, LLC., No. 22-593, 2023 WL
4278440 (U.S. June 30, 2023).
- 16 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 17 of 54 Pageid#: 1926
II. PERSONAL JURISDICTION AND SERVICE OF PROCESS
AS TO DEFENDANT RECKITT BENCKISER GROUP PLC.
The defendants argue, in part, that the action should be dismissed against
Reckitt Benckiser Group PLC under Federal Rule of Civil Procedure 12(b)(2) for
lack of personal jurisdiction and Rule 12(b)(5) for ineffective service of process.10 I
agree.
“[A] plaintiff must establish personal jurisdiction by a preponderance of the
evidence but need only make a prima facie showing.” UMG Recordings, Inc. v.
Kurbanov, 963 F.3d 344, 350 (4th Cir. 2020). To do so, a court considers the
allegations and supporting evidence regarding the defendant’s contacts with the
forum in a light most favorable to the plaintiff. Id.
The FCA contains a broad jurisdictional provision that permits worldwide
service, 31 U.S.C. § 3732(a), and therefore, personal jurisdiction hinges on
constitutional limits, or “whether the defendants have minimum contacts with the
United States as a whole.” United States ex rel. Thistlethwaite v. Dowty Woodville
10
In her latest filing, Miller contends that the defendants have waived these
defenses by not properly raising them in the Motion to Dismiss. Resp. to Corrected Br. 11,
ECF No. 152. While the motion itself lacks reference to 12(b)(2) and 12(b)(5), Mot. 1,
ECF No. 90, the defendants expressly raised the defenses in the accompanying
memorandum in support, which was incorporated by reference into the motion. “[T]his is
not a situation in which the defendant has exhibited conduct, such as extensive participation
in the discovery process or other aspects of the litigation, that would suggest waiver is
appropriate.” Goldsborough v. Marriott Int’l, Inc., No. 3:18-cv-02502-SAL, 2020 WL
13470961, at *4 (D.S.C. Nov. 10, 2020). Accordingly, I find that the defendants have not
waived the defenses.
- 17 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 18 of 54 Pageid#: 1927
Polymer, Ltd., 976 F. Supp. 207, 210 (S.D.N.Y. 1997). This requires a due process
analysis under the Fifth Amendment, and “an examination of the extent to which the
defendant availed himself of the privileges of American law and the extent to which
he could reasonably anticipate being involved in litigation in the United States.”
Boon Partners v. Advanced Fin. Concepts, Inc., 917 F. Supp. 392, 397 (E.D.N.C.
1996). “The focus on the defendant’s relationship with the forum underlies the
general-specific jurisdiction dichotomy.” Douglass ex rel. Douglass v. Nippon
Yusen Kabushiki Kaisha, 46 F.4th 226, 242 (5th Cir. 2022).
A proper challenge to personal jurisdiction is a question for the court, and the
burden is on the plaintiff to ultimately prove grounds for jurisdiction. Mylan Lab’ys,
Inc. v. Akzo, N.V., 2 F.3d 56, 59–60 (4th Cir. 1993). The court has broad discretion
to determine the procedure for resolving such a challenge, but it is often appropriate
for courts to dispose of such motions “as a preliminary matter.”
Grayson v.
Anderson, 816 F.3d 262, 268 (4th Cir. 2016). A court may decide the jurisdictional
issue without an evidentiary hearing, and when doing so, a plaintiff only needs to
establish a prima facie case of personal jurisdiction. Mylan Lab’ys., Inc., 2 F.3d at
60. Accordingly, the court must “take the allegations and available evidence relating
to personal jurisdiction in the light most favorable to the plaintiff.” Grayson 816
F.3d at 268. However, courts need not credit conclusory allegations, and a plaintiff
must base his claim for personal jurisdiction “on specific facts set forth in the
- 18 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 19 of 54 Pageid#: 1928
record.” Sonoco Prods. Co. v. ACE INA Ins., 877 F. Supp. 2d 398, 405 (D.S.C.
2012). I find that Miller has failed to make a prima facie showing that this Court
should exercise jurisdiction over Reckitt Benckiser Group PLC. General jurisdiction
requires that the company’s contacts with the United States are such that it is
essentially “at home” here. Daimler AG v. Bauman, 571 U.S. 117, 137 (2014).
Typically, a corporation is at home in the place of its incorporation and where its
principal place of business is located. Id. However, there may be “exceptional
case[s]” in which a court may exercise general jurisdiction when “a corporation’s
operations in a forum other than its formal place of incorporation or principal place
of business may be so substantial and of such a nature as to render the corporation
at home.” Id. at 139 n.19.
Reckitt Benckiser Group PLC is a United Kingdom-based company and there
are no allegations or evidence suggesting that its principal place of business is in the
United States. There is no doubt the company’s contacts with the United States are
significant. It has one of its headquarters in New Jersey, as is alleged in the
Complaint. The company’s website11 indicates that one-third of its total global
revenue comes from the United States. It has three research and development
facilities and six manufacturing facilities in the United States.
Reckitt U.S.
The court takes judicial notice of the company’s website pursuant to Federal Rule
of Evidence 201.
11
- 19 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 20 of 54 Pageid#: 1929
Overview, https://perma.cc/TDQ6-MBH6 (captured Aug. 4, 2023). Nevertheless,
there is no indication that the company’s operations are managed in the United
States. Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 448 (1952) (finding a
court could exercise jurisdiction over a foreign company whose president relocated
to the state and ran operations from there). Nor is there any indication what, if any,
high-level decision making takes place in the United States. Furthermore, of the
over 40,000 employees, only 4,600 employees are in the United States, and it is
unclear if these employees are actually employees of Reckitt Benckiser Group PLC
or of separate subsidiary entities. Therefore, there is nothing to suggest that “the
United States is [ ] the center of [Reckitt Benckiser Group PLC’s] activities or a
surrogate for [Reckitt Benckiser Group PLC’s] place of incorporation or head
office.” Douglass, 46 F.4th at 243.
I also find that Miller has failed to establish that it would be appropriate to
exercise specific jurisdiction over Reckitt Benckiser Group PLC. Miller’s claims as
pled arise out of RB Pharma’s activities, and as described in more detail infra, it is
unclear what connection or control, if any, the British parent entity had over
Suboxone manufacturing or best price reporting. Daimler AG, 571 U.S. at 127
(“Adjudicatory authority of this order, in which the suit arises out of or relates to the
defendant’s contacts with the forum is today called specific jurisdiction.”). Miller
argues on brief that the company “owned the company that is now Indivior and
- 20 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 21 of 54 Pageid#: 1930
through that company manufactured and distributed the drug Suboxone.” Resp.
Opp’n Mot. Dismiss 45, ECF No. 115. However, the Complaint is devoid of any
facts to show that RB Pharma’s or any of the other named defendants’ contacts
should be imputed to Reckitt Benckiser Group PLC. Saudi v. Northrop Grumman
Corp., 427 F.3d 271, 276–77 (4th Cir. 2005).
Although Miller alleges in a
conclusory fashion that the defendants were part of a “unified worldwide business
enterprise,” Compl. ¶ 18, ECF No. 133, even drawing all reasonable inferences in
favor of Miller, nothing suggests that the separate corporate form should be
disregarded because the subsidiaries were alter egos or agents of the British parent
company or vice versa. Accordingly, I find that Miller has not met her burden to
show that this court has personal jurisdiction over Reckitt Benckiser Group PLC.
Furthermore, Miller has failed show that Reckitt Benckiser Group PLC was
properly served, which is also necessary for the court to exercise jurisdiction over it.
Murphy Brothers, Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 350 (1999).
“Because the United Kingdom is a signatory to the Hague Convention with the
United States, Plaintiff[] . . . w[as] required to comply with the Hague Convention’s
procedures and requirements as mandated by Federal Rule of Civil Procedure
4(f)(1).” Brown-Thomas ex rel. Brown v. Hynie, 367 F. Supp. 3d. 452, 463 (D.S.C.
2019). The Hague Convention “provides a variety of methods for international
service.” Id. For example, Article 10 of the Convention provides the freedom of
- 21 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 22 of 54 Pageid#: 1931
“any person interested in a judicial proceeding to effect service of judicial documents
directly through the judicial officers, officials or other competent persons of the State
of destination.” Service Abroad of Judicial and Extrajudicial Documents in Civil or
Commercial Matters (“Hague Convention”) art. 10, Nov. 15, 1965, 20 U.S.T. 361.
Private process servers are competent persons to effect service pursuant to Article
10. Brown-Thomas, 367 F. Supp. 3d at 464–65.
The question here is “whether that service was properly executed by the
server.” Id. at 465. To make such determination, I must examine United Kingdom
service rules. Id. United Kingdom Civil Procedure Rules 6.3 and 6.5 permit
personal service on a company by leaving it with a person holding a “senior
position.”
U.K. Civ. P. Rule 6.3(2), 6.5(3)(b), https://perma.cc/A82R-87C7
(captured Aug. 6, 2023). “Senior position” is defined as “a director, the treasurer,
the secretary . . ., the chief executive, a manager or other officer . . . .” U.K. Civ. P.
Rules, Practice Direction 6A, https://perma.cc/Y2LG-QXAT (captured Aug. 6,
2023).
Here, the Proof of Service (Proof) indicates that an individual named George
Attfua accepted the service on behalf of the company. Aff. of Process Server, ECF
No. 86.12 The Proof does not indicate Attfua’s position at Reckitt Benckiser Group
12
It was the Fourth Amended Complaint and the summons for that version of the
complaint that Mr. Attufua received. The Fourth Amended Complaint was the first version
- 22 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 23 of 54 Pageid#: 1932
PLC, and there are no other affidavits filed that identify his role at the company.
Thus, I find that Miller has not met her burden to show service was properly executed
on the British company.
Miller argues in part that even if service was technically imperfect, in light of
the other circumstances, including the COVID-19 pandemic, the court should not
require strict compliance with the service of process rules. I disagree. Although
“mere technicalities should not stand in the way of consideration of a case on its
merits,” Scott v. Md. State Dep’t of Lab., 673 F. App’x 299, 304 (4th Cir. 2016)
(unpublished), service upon some unidentified person “was more than a technical
error.” C&SM Int’l v. Prettylittlething.com Ltd., No. CV 19-4046-CBM-KSx, 2019
WL 7882077, at *2 (C.D. Cal. Oct. 8, 2019). Although actual notice affects whether
Rule 4 should be liberally construed, it is not the standard. Robertson v. Dameron,
No. 7:22-CV-00086, 2023 WL 2760078, at *2 (W.D. Va. Mar. 31, 2023). “[T]he
rules are there to be followed, and plain requirements for the means of effecting
service of process may not be ignored.” Armco, Inc. v. Penrod-Stauffer Bldg. Sys,
Inc., 733 F.2d 1087, 1089 (4th Cir. 1984). Miller could have served one of the
company’s senior officials at their home if the company’s offices were closed due
to the COVID-19 pandemic at the time she attempted to execute service in January
of the Complaint ordered to be served upon the defendants because the earlier filings were
under seal.
- 23 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 24 of 54 Pageid#: 1933
2021.13 Alternatively, she could have requested an extension of time to serve the
proper senior official. Sparks v. Mamer, 2:20-CV-00661-KJD-VCF, 2020 WL
5077732, at *2 (D. Nev. Aug. 27, 2020). All and all, Miller has failed to meet her
burden to show service of process was valid. Buzztime Ent., Inc. v. Sony Comput.
Ent. Eur. Ltd., No. 08-CV-0122 W (LSP), 2008 WL 11337017, at *3 (S.D. Cal. July
10, 2008) (finding that service was insufficient in part because the person serviced
did not hold a senior company position as defined by United Kingdom service of
process rules). Therefore, I will dismiss the action against Reckitt Benckiser Group
PLC with leave to serve the company within 60 days of the filing of a new Complaint
if the other deficiencies described herein are cured.
III. SUFFICIENCY OF THE ALLEGATIONS.
I turn next to the defendants’ motion to dismiss for failure to state a claim.
Generally, 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)). “A
claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. (citing Twombly, 550 U.S. at 556). Further, “the tenet that a court must
It does not appear that the company’s offices were completely closed because of
the pandemic if Attfua was there to accept service.
13
- 24 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 25 of 54 Pageid#: 1934
accept as true all of the allegations contained in a complaint is inapplicable to legal
conclusions.”
Id. “While legal conclusions can provide the framework of a
complaint, they must be supported by factual allegations.” Id. at 679. Although a
complaint need not contain detailed factual allegations, it must contain “more than
labels and conclusions, and a formulaic recitation of the elements of a cause of action
will not do.” Twombly, 550 U.S. at 555.
Federal Rule of Civil Procedure Rule 9(b) requires that in alleging fraud, “a
party must state with particularity the circumstances constituting fraud.” Fed. R.
Civ. P. 9(b). Claims brought under the FCA must comply with Rule 9(b). Smith v.
Clark/Smoot/Russell, 796 F.3d 424, 432 (4th Cir. 2015). In fact, the Fourth Circuit
has noted that the rule applies with “special force” to FCA claims. United States ex
rel. Grant v. United Airlines Inc., 912 F.3d 190, 197 (4th Cir. 2018).
“With respect to allegations of fraud, the circumstances required to be pled
with particularity under Rule 9(b) are the time, place, and contents of the false
representations, as wells as the identity of the person making the misrepresentation
and what he obtained thereby.” United States ex rel. Radcliffe v. Purdue Pharma,
L.P., No. 1:05CV00089, 2009 WL 161003, *1 (W.D. Va. Jan. 25, 2009). Fraudulent
intent may be alleged generally. Fed. R. Civ. P. 9(b). A fraud claim likely survives
Rule 9(b)’s heightened pleading standard if “the court is satisfied (1) that the
defendant has been made aware of the particular circumstances for which [it] will
- 25 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 26 of 54 Pageid#: 1935
have to prepare a defense at trial, and (2) that plaintiff has substantial prediscovery
evidence of those facts.” Harrison v. Westinghouse Savannah River Co., 176 F.3d
776, 784 (4th Cir. 1999). “At a minimum, for an FCA relator to satisfy Rule 9(b),
he 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;
describing a mere opportunity for fraud will not suffice.” United States v. Omnicare,
Inc., 903 F.3d 78, 91 (3d Cir. 2018). Lack of compliance with Rule 9(b) is treated
as a failure to state a claim under Rule 12(b)(6). United States ex rel. Taylor v.
Boyko, 39 F.4th 177, 189 (4th Cir. 2022).
A. Allegations against Reckitt Benckiser Group PLC
and Reckitt Benckiser Inc.
In addition to the Complaint’s flaws regarding jurisdiction and service of
process as to Reckitt Benckiser Group PLC, the defendants also contend that the
Complaint should be dismissed against both Reckitt Benckiser Defendants because
the Complaint does not sufficiently allege conduct by either entity or their
employees. I agree.
Rule 9(b) mandates that a plaintiff identify each defendant’s participation in
an alleged fraud. Haley v. Corcoran, 659 F. Supp. 2d 714, 721 (D. Md. 2009). “In
FCA cases, the relator must show that the parent company ‘is liable under a veil
piercing or alter ego theory, or that it is directly liable for its own role in the
submission of false claims.’” United States ex rel. Lisitza v. Par Pharm. Cos., No.
- 26 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 27 of 54 Pageid#: 1936
06 C 06131, 2013 WL 870623, at *5 n.6 (N.D. Ill. Mar. 7, 2013) (quoting United
States ex rel. Hockett v. Columbia/HCA Healthcare Corp., 498 F. Supp. 2d 25, 60
(D.D.C. 2007)). Allegations of general corporate overlap are not enough to support
that one entity controlled or directed another to participate in a fraudulent scheme.
Id. at *5.
Here, Miller collectively refers to defendants Reckitt Benckiser Group PLC
and Reckitt Benckiser, Inc. as the “Reckitt Benckiser Defendants,” and defendants
Reckitt Benckiser Pharmaceuticals, Inc. and Reckitt Benckiser Pharmaceutical
Solutions, Inc. as the “Indivior Defendants” or “Indivior.” Compl. at 2, ECF No.
133. She sometimes phrases her claims against the defendants generally, or vaguely
against the “Reckitt Benckiser Defendants and/or the Indivior Defendants,” id. ¶ 2
(emphasis added).
The Complaint includes no allegations about the role either Reckitt Benckiser
defendant played in the Express Scripts negotiations. Nor does she allege she was
employed by either entity or that any of the other individuals implicated were
employed by either entity. Rather, Miller alleges that she was employed by “Reckitt
Benckiser Pharmaceuticals, now known as Indivior, Inc,” (RB Pharma) and that “its
executives concocted the plan to violate the AKS and Medicaid best price laws.” Id.
¶ 3 (emphasis added). Ryan Preblick and Lisa McNair, the individuals to whom
Miller confirmed rebates, are identified as RB Pharma employees. Id. ¶ 48. Keith
- 27 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 28 of 54 Pageid#: 1937
Lockwood, the individual who took part in the internal negotiation strategy
discussion and who sent Miller the Medicare Part D pricing spreadsheet, is described
as RB Pharma’s Director of PBM and ACA Strategy. Miller refers to Richard
Simkin as the “RB Pharma President.” Id. ¶ 47.
All in all, the Complaint is devoid of any allegations that identify participation
of the Reckitt Benckiser Defendants in the purported fraud, and it fails to include
any allegation that would suggest that the entities were or are alter egos of one
another. United States ex rel. Yu v. Grifols USA, LLC, No. 1:17-CV-2226-GHW,
2021 WL 5827047, at *13 n.7 (S.D.N.Y. Dec. 8, 2021).
Nor does the Complaint indicate that Miller expressed concerns about the
Express Scripts negotiations to employees of the Reckitt Benckiser Defendants or
that employees from either entity participated in her termination so as to suggest that
either entity plausibly retaliated against her.14 All in all, the involvement of Reckitt
Benckiser Group PLC and Reckitt Benckiser Inc. is undeterminable, and the
Complaint does not suggest more than a mere possibility of misconduct on either
entity’s part. United States v. Universal Health Servs., Inc., No. 1:07CV00054, 2010
WL 4323082, at *3 (W.D. Va. Oct. 31, 2010). Therefore, I also find that the
14
As discussed infra, Rule 9(b) does not apply to FCA retaliation claims. However,
because the Complaint lacks any facts implicating these other entities in Miller’s
termination, the Complaint fails to satisfy even Rule 8(a)’s less stringent pleading standard.
I find the same regarding Miller’s state law claims.
- 28 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 29 of 54 Pageid#: 1938
dismissal of all claims against defendants Reckitt Benckiser Group PLC and Reckitt
Benckiser Inc. n/k/a/ Reckitt Benckiser, LLC is warranted pursuant to Federal Rule
of Civil Procedure 12(b)(6).
B. Sufficiency of the Allegations against the
Remaining Indivior Defendants.
1. Counts 1, 3, and 4: Presentment,
False Records, and Reverse Claims.
To plead a claim under the FCA,
a relator must plausibly allege four distinct elements: “(1) [ ] there was
a false statement or fraudulent course of conduct; (2) made or carried
out with the requisite scienter [knowledge]; (3) that was material; and
(4) that caused the government to pay out money or to forfeit moneys
due (i.e., that involved a ‘claim’).”
United States ex rel. Rostholder v. Omnicare, Inc., 745 F.3d 694, 700 (4th Cir. 2014)
(quoting Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 788 (4th Cir.
1999). The defendants argue that Miller has not established falsity or scienter. They
also argue that Counts 1 and 3 fail because the Complaint does not allege that
Indivior presented any claim to the government for reimbursement. I’ll address each
argument, starting with whether Miller has sufficiently alleged an illegal quid pro
quo amounting to fraudulent conduct.
“False” and “fraudulent” are not defined in the FCA, but “it is a settled
principle of interpretation that, absent other indication, Congress intends to
incorporate the well-settled meaning of the common-law terms it uses.” Universal
- 29 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 30 of 54 Pageid#: 1939
Health Servs., Inc. v. United States, 579 U.S. 176, 187 (2016). Thus, falsity
encompasses express falsehoods, as well as omissions and misrepresentations
amounting to half-truths. Id. at 187–89.
The alleged fraudulent conduct can be summarized as follows. Miller took
part in internal RB Pharma meetings and was privy to internal documents
purportedly showing that RB Pharma offered, and Express Scripts accepted, price
concessions through rebates in a 2014 Medicare contract that constituted
consideration for preferential treatment of Suboxone on formularies associated with
the RB Pharma and Express Scripts commercial contract. Had these rebates been
properly accounted for on the commercial contract, they would set a new best price,
and RB Pharma would have reported the new best price to the federal government
and would owe more money to state Medicaid agencies in the form of rebates. The
best price data submitted to CMS by RB Pharma was inaccurate, which violated both
the certification contained within its mandatory rebate agreement that it would
comply with the governing drug rebate program, as well as its certifications
associated with its best price data submissions. Thus, Miller’s theory of liability is
that the 2014 Express Scripts contracts resulted in the violation of Medicaid best
price regulations and amounted to an illegal kickback under the AKS, which she
argues constitutes fraudulent conduct under the FCA.
- 30 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 31 of 54 Pageid#: 1940
I must decide if Miller’s theory is cognizable under the FCA and also if Miller
has sufficiently pled it. I first find that exchange of Medicare Part D discounts for
the purpose of obtaining or maintaining commercial business, along with the alleged
certifications pertaining to best price data within the rebate agreement and that
accompanied data submissions, can constitute false or fraudulent conduct under the
FCA. I agree with the defendants’ primary argument that best price regulations
explicitly exclude prices negotiated under Medicare Part D. 42 C.F.R. § 447.505. I
also agree that CMS guidance exists which permits simultaneous negotiations for
commercial and Medicare prices. Medicare Program; Medicare Prescription Drug
Benefit, 70 Fed. Reg. 4194-01, 4246 (Jan. 28, 2005). But Miller’s contention is not
that prices negotiated under Medicare plans should have been reported or that the
simultaneous negotiations were illegal, but rather that they were undisclosed
discounts cloaked under the Medicare exemption but were not actually negotiated
under Medicare Part D. The reporting of such discounts would not penalize RB
Pharma “indirectly for the discounts they offer by law under other Federal drug
programs,” id., because they constituted rebates not actually offered under Medicare
Part D. Rather, they were concessions allegedly offered and accepted in exchange
for favorable commercial contract formulary placement, concessions that would
have affected RB Pharma’s reportable “lowest price available.”
447.505.
- 31 -
42 C.F.R. §
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 32 of 54 Pageid#: 1941
Furthermore, Miller also hinges her falsity argument on the AKS, a violation
of which constitutes a predicate under the FCA. United States ex rel. Nicholson v.
MedCom Carolinas, Inc., 42 F.4th 185, 194 (4th Cir. 2022). “Under the [AKS], it
is illegal for any person to knowingly solicit or receive ‘remuneration’ in return for
referring any ‘good, facility, service, or item to someone that will be paid for, at least
in part, by a Federal health care program.” Id. Given the statute’s breath, I find that
hidden renumeration given in the form of a rebate, in exchange for placement on
formularies associated with a best-price-reportable contract, for a drug that is
reimbursable by federal health care programs, is encompassed by the AKS.
It is notable that disguised discounts that circumvent best price reporting is
mentioned in agency guidance as something to be monitored by the health care
community to avoid running afoul of the AKS. OIG Compliance Program Guidance
for Pharm. Mfrs., 68 Fed. Reg. 23,731-01, 23,734 (May 5, 2003). Furthermore,
“Congress intended that ‘remuneration’ under § 1320a-7b(b)(1) be interpreted
broadly to reach all types of fraudulent financial arrangements that were paid for by
federal healthcare programs, including Medicare and Medicaid. The focus of the
remuneration element of the statute is that something of value was exchanged.”
United States ex rel. Perri v. Novartis Pharms. Corp., No. 15-6547, 2019 WL
6880006, at *14 (D.N.J. Feb. 21, 2019) (finding that a relator sufficiently alleged
that a previously unavailable discount amount was something of value and therefore
- 32 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 33 of 54 Pageid#: 1942
constitutes remuneration under the AKS). All in all, I recognize that this is not the
typical kickback theory involving personal bribes or the billing of unperformed
services. However, the theory’s novelty does not render it non-cognizable. Id. at *8
n.9. I find that Miller’s theory does constitute a plausible FCA violation, as she
alleges that the inducement, in the form of rebates, was an undisclosed side deal not
properly accounted for on the correct contract and that such inducement resulted
inpatient access to Suboxone on Medicaid-paid plans and underpayment to state
Medicaid agencies.
I turn next to whether Miller has sufficiently alleged facts supporting her
theory of liability. That is, does the Complaint satisfy Rules 8(a) and 9(b), and has
she plausibly alleged falsity, scienter, and that any claims for payment were
submitted to the government to support her FCA presentment and false records
claims?
The defendants contend in part that Miller’s allegations are threadbare and
relate only to internal negotiating strategies that do not “make fraud a necessary
hypothesis.” Defs.’ Reply Supp. Mot. Dismiss 15, ECF No. 119. In essence, the
defendants argue that Miller has failed to allege sufficient facts to show an exchange
and inducement, which pertain to falsity. I disagree.
I find that the Complaint meets Rule 8’s plausibility standard, as well as the
higher Rule 9(b) standard by including the “who, what, when, where, and how” of
- 33 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 34 of 54 Pageid#: 1943
the alleged illegal inducement, which serves as the underpinning for the alleged
fraud in the form of underreported data submissions to CMS affecting state Medicaid
agencies. Bakery & Confectionary Union & Indus. Int’l Pension Fund v. Just Born
II, Inc., 888 F.3d 696, 705 (4th Cir. 2018). The who is RB Pharma and Express
Scripts, including RB Pharma employees President Simkin, head of commercial
contracts Philo, Finance Director Neary, Controller Preblick, Director of PBM and
ACA Strategy Lockwood, as well as Lisa McNair, the RB Pharma employee who
was responsible for the actual data submissions to the government. The what is the
inducement in the form of rebates on the Medicare contract used, at least in part, as
sweetener for the commercial contract, which led to underreported best price
submissions. The where is RB Pharma’s Midlothian, Virginia, office. Finally, the
how is 2014 contract negotiations between two entities that had an interest in the
inducement, Express Scripts in the form of high rebates and RB Pharma in the form
of a need to keep Suboxone favored on Express Scripts formularies and a desire to
keep from setting a new best price. I note that there are some details missing from
the Complaint, such as who from Express Scripts was involved in the negotiations,
whether the proposed dinner President Simkin mentioned in Meeting 2 actually
occurred, and the specific dates and methods of communications with Express
Scripts.
- 34 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 35 of 54 Pageid#: 1944
Nonetheless, I find that the allegations of inducement satisfy Rule 9(b) as to
the falsity element. The alleged facts supporting the illegal inducement contrast
sharply with those present in a case involving a similar, but inverted, theory of
liability in which the district court found that a Complaint failed to satisfy the Rule
9(b) standard. Perri, 2019 WL 6880006, at *17. There, the allegations supporting
the exchange were that there had been no commercial discount in place prior to the
alleged illegal exchange, that PBM had threated to remove the drug at issue from
both commercial and Part D formularies, and that relator and his PBM counterpart
handled both commercial and Part D contracting functions. Id. at *2, 17–18. The
court found that this merely amounted to an opportunity for fraud, which was not
sufficient under Rule 9(b). The Perri court also emphasized the fact that the relator
was directly involved in the negotiations and that the Complaint lacked specifics
regarding matters the relator would have known from his own observations as the
person responsible for handling such negotiations. Id. at 17.
Here, Miller took part in some of the internal discussions regarding the
Express Scripts contracts, and she alleges details about those meetings that did not
involve counsel, including dates, who participated, and the comments made.
However, some of the missing facts, such as whether the dinner with Express Scripts
occurred and who from Express Scripts participate in the negotiations, would be
solely within other employees’ knowledge, not Miller’s, and unlike in Perri, Miller
- 35 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 36 of 54 Pageid#: 1945
was not the one responsible for negotiating the rebates. More importantly, Miller
goes beyond alleging an opportunity for fraud by simply alleging that RB Pharma
failed to maintain a firewall between commercial and Medicare Part D negotiations
at a time when the PBM threatened to remove the drug from the relevant formulary.
Rather, the Complaint includes the specific allegation that RB Pharma employee
Keith Lockwood stated that Express Scripts sought high rebates in April 2014, that
RB Pharma had taken the position that its rate should not exceed 33% to avoid setting
a new best price, and importantly, that Express Scripts responded that it could
structure the deal across the contracts so as to not create a new best price on the
commercial contract.
Miller then alleges that the rebates on the executed
commercial contract were 33% and the rebates on the executed Medicare Part D
contract for the non-Advantage line of business was 43%, and the average Part D
rebate was 33%, which was “unusually high” and that “[n]o current Part D contracts
were receiving such a high rebate.” Compl. ¶ 62. In other words, Miller alleges that
RB pharma sought a way to structure the rebates across its commercial and Medicare
contracts so as not to create a new best price. Express Scripts, seeking high rebates,
offered to structure the contracts in that way, and the contracts involving the mixed
consideration (rebates) were actually executed, contracts that implicated patient
access to Suboxone on Medicaid-paid plans.
- 36 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 37 of 54 Pageid#: 1946
The defendants also argue that the secret inducement theory makes little sense
considering the PBM can exert some control over the Medicare Part D formularies
and that Suboxone was at risk of losing its status across all Express Scripts’
formularies. That very well may have been the case, but I find that assertion will
come down to a matter of proof. In light of Miller’s allegations regarding Express
Scripts’ actual offer to structure the rebates across contracts so as to not create a new
best price, and the execution of those contracts with the alleged bundled
consideration, I find that I cannot accept defendants’ alternate explanation for the
higher Medicare Part D rebates at this juncture.
The defendants also contend that Miller has failed to satisfy the FCA falsity
element because she has not sufficiently alleged the predicate AKS scienter.
I
disagree. The AKS requires that the remuneration be offered, solicited, or received
“knowingly and willfully.” § 1320a-7b(b). Miller alleges that the RB Pharma
employees who were involved in Express Scripts engaged in such conduct — the
secret inducement and the subsequent underpayment of rebates — knowingly.
Compl. ¶¶ 116, 117. Moreover, she alleges facts to back up this claimed intent as
to the alleged kickback scheme: RB Pharma employees’ discussions of the bundling
of not just the commercial and Medicare Part D contract negotiations, but also the
contracts’ pricing, as well as Express Scripts offer to structure the rebates across the
contracts so that RB Pharma would not have a new best price to report. Moreover,
- 37 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 38 of 54 Pageid#: 1947
Miller alleges that President Simkin stated that RB Pharma should not put the deal
in writing and that he or someone else from RB Pharma would have to take Express
Scripts to dinner to promise higher Medicare Part D rebates to be put in writing after
the commercial contract was signed. Given these allegations and the fact that Rule
9(b) permits malice, intent, and knowledge to be alleged generally, I find that Miller
has sufficiently alleged a plausible AKS violation. United States ex rel. Lutz v.
Berkeley Heartlab, Inc., 225 F. Supp. 3d 487, 498, 500 (D.S.C. 2016). All in all, I
find that Miller has sufficiently alleged the existence of a quid pro quo — that the
Indivior Defendants knowingly and willfully exchanged Medicare Part D discounts
in the form of rebates to maintain business on Express Scripts commercial
formularies.
Notably, sufficiently alleging an improper quid pro quo is not enough. “In
order for a false statement to be actionable under the False Claims Act, it must be
made as part of a false or fraudulent claim.” Taylor, 39 F.4th at 195. The “central
question in all False Claims Act cases is whether the defendant ever directly or
indirectly presented a false or fraudulent claim to the government, resulting in a call
upon the government fisc.” Id. The defendants contend that Counts 1 and 3 must
be dismissed because there is no allegation that these defendants presented any
claims to the government for reimbursement. I agree.
- 38 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 39 of 54 Pageid#: 1948
Counts 1 and 3 of the Complaint invoke the FCA provisions deeming persons
liable for “knowingly present[ing] or caus[ing] to be presented, a false of fraudulent
claim” and “knowingly mak[ing], us[ing], or caus[ing] to be made or used a false
record or statement material to a false or fraudulent claim.” § 3729(a)(1)(A), (B).
The FCA defines “claim” as “any request or demand . . . for money or property.” §
3729(b)(2). In contrast, Count 4 invokes the FCA’s reverse false claims provision,
which creates liability for a person 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 knowingly conceals or knowingly and
improperly avoids or decreases an obligation to pay or transmit money or property
to the Government.” § 3729(a)(1)(G).
Miller acknowledges that “Indivior is correct that best price submissions do
not constitute claims,” but contends that “allegations of kickbacks allowing
circumvention of best price reporting . . . have been approved multiple times.” Resp.
Opp’n Mot. Dismiss 32, ECF No. 115. Miller also argues that she sufficiently
alleges as false claims not only best price reports, “but also claims made to
pharmacies for Suboxone on behalf of beneficiaries under the Managed Medicaid
and Part D plans at issue.” Id. at 33. In her latest filings, Miller doubles down on
this indirect claim theory, that RB Pharma caused others to submit false claims,
arguing that the “demands for payment . . . are pharmacy reimbursement claims
- 39 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 40 of 54 Pageid#: 1949
stemming from the use of Suboxone by Medicaid enrollees in plans administered by
Express Scripts, and Indivior caused these claims to be submitted by negotiating the
contracts at issue, including via false statements and records.” Resp. to Corrected
Brief 6, ECF No. 152. In other words, because RB Pharma and then Indivior
submitted rebates, that proves that Suboxone sales to Medicaid occurred, and
therefore the company’s “scheme necessarily led to the presentment of claims to the
government for payment.” Id. at 8–9.
Rule 9(b)’s particularity requirement does not allow a plaintiff to describe a
private scheme in detail but then allege that “claims requesting illegal payments must
have been submitted, were likely submitted or should have been submitted to the
Government.” United States ex. rel. Nathan v. Takeda Pharms. N. Am., Inc., 707
F.3d 451, 457 (4th Cir. 2012). However, Rule 9(b) may also be satisfied in the
absence of allegations of specific false claims if there are specific allegations that
necessarily led to the plausible inference that false claims were presented to the
government. Id.; Grant, 912 F.3d at 197.15
Miller argues that the latter theory is what occurred because of RB Pharma’s
conduct here. I agree that the payment of rebates, an after-the-fact discount,
indicates that claims for payment were made to the government. The problem,
15
There is some ambiguity as to whether relators are required to plead presentment
as an element when alleging a § 3729(a)(1)(B) violation. Taylor, 39 F.4th at 195 n.12. Two
recent Fourth Circuit cases suggest that presentment is an element of such claims. Id.
- 40 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 41 of 54 Pageid#: 1950
though, is that despite Miller’s arguments on brief, the third-party submissions of
claims for payment for Suboxone is not the theory she pled. The inference created
by the allegations in the Complaint is not that the defendants caused pharmacies or
some other entity or individual to submit kickback-tainted claims to the government.
Rather, the Complaint alleges that presentment came in the form of “any and all
claims for payment during this period by Defendants for Suboxone from the federal
government and/or the Medicaid States under the Medicaid program were rendered
false claims.” Compl. ¶ 111, ECF No. 133 (emphasis added).
Miller refers
specifically to the rebates themselves as the claims the defendants presented or
caused to be presented for payment from the government. Id. ¶¶ 115, 128. She
herself concedes that her pleading as to presentment and false records claims is “not
perfect.” Resp. Opp’n Mot. Dismiss 34, ECF No. 115.
Given Rule 9(b)’s “stringent pleading standard” and the “quasi-criminal
nature of FCA liability,” Grant, 912 F.3d at 197, I find that Miller cannot use her
briefs to amend her Complaint to allege that it was not the defendants who submitted
claims for payment to the government and that it was not the rebates themselves that
were claims. Burgess v. Wehn, No. TDC-18-2168, 2019 WL 4277402, at *3 (D.
Md. Sept. 10, 2019) (“Briefs in opposition to a dispositive motion may not be used
to amend a complaint or add new claims.”); cf. Grant, 912 F.3d at 199 (“Rule 9(b)’s
heightened pleading standard requires that plaintiffs connect the dots, even if
- 41 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 42 of 54 Pageid#: 1951
unsupported by precise documentation, between the alleged false claims and
government payment.”).16 Accordingly, I will dismiss Counts 1 and 3 with leave to
amend.
The defendants also assert that Miller has failed to adequately allege that RB
Pharma acted with the requisite scienter. Under the FCA, one acts with the requisite
scienter if they “(1) have actual knowledge of the falsity of the information; (2) act
in deliberate ignorance of the truth or falsity of the information; or (3) act in reckless
disregard of the truth or falsity of the information.” Taylor, 39 F.4th at 197. The
Supreme Court recently clarified that the FCA’s scienter requirement tracks the
common-law requirements for claims of fraud. Schutte, 143 S. Ct. at 1400.
Thus, actual knowledge “refers to whether a person is aware of information,”
or the falsity of the submitted claims, deliberate ignorance refers to persons who are
aware of a substantial risk that their statements are false, but avoid taking steps to
confirm the truth, and reckless disregard encompasses those who are “conscious of
a substantial and unjustifiable risk that their claims are false, but submit the claims
anyway.” Id. at 1400–01. The Supreme Court held in Schutte that what matters is
the defendant’s knowledge and subjective beliefs when submitting the claim (or
reverse claim), not what the defendant may have though after the submission, or
16
The allegations about how the rebate process generally works and that
pharmacies submit claims for reimbursement with PBMs, Compl. ¶¶ 5, 32, ECF No. 133,
does not cure the Complaint’s deficiencies.
- 42 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 43 of 54 Pageid#: 1952
what an objectively reasonable person may have known or believed. Id. at 1399,
1401.
Thus, “FCA’s scienter standards are plainly satisfied by a defendant’s
conscious belief that his claims are false.” Id. at 1402. If such an allegation is
sufficiently pled, there is no need to determine whether the defendant’s reading of
the statute was objectively unreasonable. Id.
In their initial brief, the defendants argued that Miller failed to plausibly allege
FCA scienter because Indivior’s reading of the applicable law was objectively
reasonable. Specifically, the defendants point to the CMS guidance that there is no
prohibition on simultaneous negotiations of commercial and Medicare Part D
contracts. In their Reply, the defendants reassert that position, and they also argue
that the Complaint fails to plausibly allege that “Indivior acted with ‘actual
knowledge’ that it was acting wrongfully and contrary to law.” Defs.’ Reply Supp.
Mot. Dismiss 14, ECF No. 119. Now, in light of the Supreme Court’s holding in
Schutte, the defendants argue that Miller “cannot allege that Indivior consciously
disregarded a substantial and unjustifiable risk that its claims were false because the
Medicaid Best Price statute, regulations, and guidance are unambiguous.” Corrected
Brief on Impact of the SuperValu Decision 4, ECF No. 149. In response, Miller
contends that RB Pharma had actual knowledge of these false claims (reverse
claims), that she has sufficiently pleaded facts showing that state of mind, and that
- 43 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 44 of 54 Pageid#: 1953
the defendants are improperly collapsing the falsity and scienter analysis by arguing
that their interpretation of best price laws are correct.
Rule 9(b) permits malice, intent, and knowledge to be alleged generally.
However, relators must still satisfy Rule 8 and include more than conclusory
allegations pertaining to scienter. Taylor, 39 F.4th at 199. I find that Miller has
satisfied this standard by plausibly alleging actual knowledge. Again, the Complaint
includes allegations that create a plausible inference that RB Pharma had actual
knowledge of its alleged false submissions resulting in underpaid rebates, It is
alleged that RB Pharma President Simkin understood that the bundling of Medicare
Part D and commercial contract pricing, not just the negotiations, needed to be
discussed under the table, that Express Scripts offered to help structure the rebates
across the contracts to avoid setting a new best price, that the contracts were actually
executed, and that RB Pharma, and then Indivior, submitted best price reports to
CMS based on these contracts from 2014 until 2018, which resulted in the alleged
underpayment of rebates to Medicaid agencies.
This amounts to a plausible
allegation of actual knowledge.
I agree with Miller that the defendants are attempting to collapse falsity and
scienter by now arguing that the applicable law is unambiguous, and that RB Pharma
complied with it. I now hold that Miller’s theory, if proven, does constitute a best
price violation and illegal kickback. As the Schutte decision makes clear, even if it
- 44 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 45 of 54 Pageid#: 1954
were true that a reasonable person could read the guidance as permitting
simultaneous negotiations and the regulations excluding Medicare Part D negated
pricing from best price reporting requirements as permitting the alleged quid pro quo
arrangement, it is RB Pharma’s subjective knowledge at the time of its submission,
not its post hoc rationalizations or an interpretation that is objectively reasonable,
that matters.
Schutte, 143 S. Ct. at 1404. “For scienter, it is enough if [the
defendants] believed that their claims were not accurate.” Id. Miller has sufficiently
alleged that here.
2. Counts 2 and 36: FCA Conspiracy and Retaliation.
Miller also brings two other federal claims: FCA conspiracy and retaliation.
The defendants argue that Miller’s conspiracy claim fails because the Complaint
fails to include facts that show a meeting of the minds. As for retaliation, they argue
that Miller has failed to allege she engaged in any protected activity and that Indivior
had no notice of any protected activity. I will address each claim in turn.
“To plead a claim for an FCA conspiracy, the relator must allege that the
conspirators ‘agreed that a false record or statement would have a material effect on
the Government’s decision to pay a false or fraudulent claim.” United States ex rel.
Ahumada v. NISH, 756 F.3d 268, 280 (4th Cir. 2014) (quoting Allison Engine Co. v.
United States ex rel. Sanders, 553 U.S. 662, 673 (2008)). To survive a motion to
dismiss, the relator “must do more than simply show that the alleged conspirators
- 45 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 46 of 54 Pageid#: 1955
agreed to make a false record or statement; the relator must also show that the
conspirators had the purpose of getting the false record or statement to bring about
the Government’s payment of a false or fraudulent claim.” Id. at 282. The relator
must also allege that each member of the conspiracy joined the agreement and one
or more conspirators knowingly committed at least one overt act in furtherance of
the conspiracy. Pencheng Si v. Laogai Rsch. Found., 71 F. Supp. 3d 73, 89 (D.D.C.
2014).
Here, Miller does not allege who from Express Scripts stated that the company
could help structure the rebates across the contracts. However, she does allege that
Express Scripts and RB Pharma entered into the contracts at issue in 2014 and what
each company sought to gain from the agreements that allegedly resulted in
fraudulent submissions to the government — high rebates for Express Scripts and
the avoidance of additional rebates to the government and formulary maintenance
for RB Pharma.
Moreover, the defendants’ challenge to the conspiracy charge is confined to
the argument that the Complaint lacks a showing of a meeting of the minds.
However, Miller’s allegation that Express Scripts offered to structure the deal so that
best price was not implicated undercuts the defendants’ argument that there was no
meeting of the minds to defraud the government. Rather, this fact, assumed true at
this juncture, indicates that the parties executed the contracts at issue with the intent
- 46 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 47 of 54 Pageid#: 1956
to submit underreported best price data, or in Express Scripts’ case, assist RB
Pharma to do so in a way that also benefited itself. For this reason, I will deny the
Motion to Dismiss as to the conspiracy charge (Count 2) against the remaining
Indivior Defendants.
The defendants also challenge Miller’s retaliation claim. To establish a prima
facie case of FCA retaliation, it must be alleged that (1) the employee engaged in a
protected activity; (2) the employer knew about the protected activity; and (3) the
employer retaliated against the employee in response. Carlson v. DynCorp Int’l
LLC, 657 F. App’x 168, 170 (4th Cir. 2016). Proving a violation of the FCA is not
an element of an FCA retaliation claim. Id. at 174. Nor does Rule 9(b)’s heightened
pleading standard apply to FCA retaliation claims. Grant, 912 F.3d at 200.
There are two categories of conduct that constitute protected activities under
the FCA. First is activity that supports an FCA action. Carlson, 657 F. App’x at
170. This type of conduct invokes a “distinct possibility” standard, that is, the
conduct “reasonably could lead to a viable FCA action, or when litigation is a
reasonable possibility.” Id. at 171.
The second type of protected activity is that which is part of an effort to stop
an FCA violation. Id. at 170. This encompasses a much broader array of activity –
–– conduct in which efforts are motivated by an objectively reasonable belief that
the employer is violating or will violate the FCA. Grant, 912 F.3d at 201. Under
- 47 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 48 of 54 Pageid#: 1957
this test, “while the plaintiff’s actions need not lead to a viable FCA action as
required under the distinct possibility standard, they must still have a nexus to an
FCA violation.” Id. at 202. Internal reporting of violations can constitute protected
activity, but merely expressing concern about regulatory non-compliance is not
enough. Id.; Perri, 2019 WL 6880006, *19.
The activities at issue here are as follows:
• On March 26, 2014, Miller objected that RB Pharma “could not bundle
commercial and Part D pricing – these must be separate conversations.”
Compl. ¶ 53, ECF No. 133.
• On April 9, 2014, Miller asked Lockwood if it was legal to structure the
deal with rebates across commercial, Medicare Part D, and managed
Medicaid plans so as not to create a new best price.
• On May 28 and 29, Miller corresponded with outside counsel and in-house
counsel to report her “concerns about contract negotiations and their best
price implications.” Id. ¶¶ 64–68. The details of these conversations are
not included in the Complaint.
Although there are some facts missing from the alleged conversations
involving corporate counsel, the specific allegations that are included in the
Complaint constitute more than just general concerns of illegality. United States ex
rel. Branscome v. Blue Ridge Home Health Servs., Inc., No. 7:16cv00087, 2018 WL
- 48 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 49 of 54 Pageid#: 1958
1309734, at *5 (W.D. Va. Mar. 13, 2018). Miller alleges that she repeatedly
expressed concerns not just about simultaneous negotiations, but about bundled
pricing between the contracts and the potential best price implications.
Nonetheless, the defendants argue that the Complaint is inadequate in that it
fails to adequately allege notice. Notice is viewed from the employer’s perspective
and “turns on whether the employer is aware of the employee’s conduct.” United
States ex rel. Parks v. Alpharma, Inc., 493 F. App’x 380, 388 (4th Cir. 2012)
(unpublished). It requires that the employer be on notice that “litigation is a
reasonable possibility.” Id. I agree with the defendants that this is where Miller’s
Complaint fails.
Although Miller adequately alleges that she raised specific
concerns regarding best price implications before she was terminated, nothing in the
Complaint suggests that any employee of the remaining Indivior defendants might
have known of a potential FCA action. Zahodnick v. Int’l Bus. Machs. Corp., 135
F.3d 911, 914 (4th Cir. 1997); Branscome, 2018 WL 1309734, at *6 (citing cases).
I also note that the Complaint indicates that some of the alleged retaliatory
activity appears to have occurred before the Express Scripts negotiations. Miller
alleges that one of her colleagues falsely sent an email from her computer and her
unnamed superiors retaliated against her for mishandling accounts. Compl. ¶ 95,
ECF No. 133. This appears to have occurred sometime shortly after January 2013.
Furthermore, Miller allegedly received lower performance ratings in her 2013
- 49 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 50 of 54 Pageid#: 1959
performance review, also prior to the Express Scripts negotiations at issue. Id. ¶ 96.
These allegations undercut the causal connection between Miller’s termination and
her expressed concerns regarding the 2014 Express Scripts negotiations.
For these reasons, I find that Miller’s FCA retaliation claim (Count 36) must
be dismissed.
3. Counts 5–35: Miller’s State Law Claims.
Miller also asserts that the defendants have violated various state laws. The
defendants argue that certain counts are subject to dismissal for specific reasons
pertinent to those state’s laws. They also maintain that all the state law claims are
subject to dismissal for the same reasons they assert the federal claims must be
dismissed.
Miller concedes that Count 28 (Maryland) is subject to dismissal because the
state did not intervene, Count 34 (Wisconsin) is partially subject to dismissal as to
damages that arose after July 14, 2015, and Count 35 (Puerto Rico) is partially
subject to dismissal as to damages that arose before July 23, 2018. Consequently, I
will dismiss Count 28 entirely with prejudice, as well as limit Counts 34 and 35 as
they pertain to allegations and damages that arose after July 14, 2015, and before
July 23, 2018, respectively.
The defendants also assert that Count 9 (Georgia) should be dismissed
because Miller failed to allege that the attorney general approved the suit and cites
- 50 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 51 of 54 Pageid#: 1960
to one of the two Georgia laws under which Miller sues. Miller brings Count 9 under
the Georgia False Medicaid Claims Act, Ga. Code Ann. §§ 49-4-168 through 49-4168.6, and the Georgia Taxpayer Protection False Claims Act, Ga. Code Ann. §§
23-3-120 through 23-3-127. The defendants are correct that Georgia Taxpayer
Protection False Claims Act requires Georgia Attorney General approval. Ga. Code
Ann. § 23-3-122(b)(1). Moreover, the statute also provides that if a civil action can
be commenced pursuant to the False Medicaid Claims Act, the claimant should
proceed under that statute. Id. § 23-3-127. Accordingly, I will dismiss Count 9 as
it pertains to the Georgia Taxpayer Protection False Claims Act but allow Miller to
proceed under the Georgia False Medicaid Claims Act to the extent described below.
The defendants also assert that Count 19 (New Mexico) should be dismissed
because Miller has not alleged or shown that the New Mexico Department of Human
Services determined that substantial evidence of a violation of state law has
occurred. Again, Miller brings Count 19 under two state laws, the New Mexico
Medicaid False Claims Act, N.M. Stat. Ann. §§ 27-14-1 through 27-14-15, and the
New Mexico Fraud Against Taxpayers Act, N.M. Stat. Ann. §§ 44-9-1 through 449-14. The defendants cite specifically to the Medicaid False Claims Act which
requires service of a copy of the complaint on the state and requiring the state to
make a written determination of whether there is substantial evidence of a violation.
N.M. Stat. Ann. § 27-14-7(C). A motion to dismiss an original complaint is not the
- 51 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 52 of 54 Pageid#: 1961
appropriate time to resolve this issue under New Mexico law because New Mexico
makes its determination after the filing of the complaint. United States ex rel. Ellis
v. CVS Health Corp., No. 16-1582, 2023 WL 3204015, at *9 (E.D. Pa. May 2, 2023).
However, where a relator has filed an amended complaint and had the opportunity
to allege whether New Mexico has made a substantial evidence determination, the
claim is subject to dismissal. United States ex rel. Cestra v. Cephalon, Inc., No. 14–
1842, 2015 WL 3498761, at *14 (E.D. Pa. June 3, 2015). Here, the operative
Complaint is the Fifth Amended Complaint. The case was unsealed in 2018, and
Miller was directed to serve the Fourth Amended Complaint on the defendants as
well as all court orders in the plaintiff states. Order 2, ECF No. 61. Thus, Miller
has had an opportunity to determine and allege whether New Mexico has issued her
a determination. Because she had not done so, I will grant the motion as to the New
Mexico Medicaid False Claims Act with leave to amend if she wishes to proceed
under that statute.
As for the remaining state laws, the defendants assert that the counts should
be dismissed for the same reasons the federal claims should be dismissed. Because
Miller has insufficiently pled allegations against the Reckitt Benckiser Defendants,
I will also dismiss Miller’s state law claims against those defendants. As for the
remaining Indivior defendants, given the insufficient allegations regarding the
presentment, false records, and retaliation counts, I will also dismiss the state law
- 52 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 53 of 54 Pageid#: 1962
claims against those defendants with regard to the presentment, false records, and
retaliation counts, with leave to amend. United States ex rel. Schneider ex rel
Schneider v. J.P. Morgan Chase Bank, N.A., 224 F. Supp. 3d 48, 61 (D.D.C . 2016).
However, given that the defendants do not argue that the various state laws raised
do not permit reverse false claims and conspiracy actions and my finding that Miller
has sufficiently alleged facts supporting those counts, Miller’s case may proceed
pursuant to those counts under the various state laws she raises, except as otherwise
indicated in this subsection.
IV.
For the foregoing reasons, it is ORDERED as follows:
1. The Order Staying Case, ECF 140, is VACATED and the stay is lifted;
2. Defendants’ Notice of Request to Resolve the Pending Motion to Dismiss
Without Oral Argument, ECF No. 138, is GRANTED, and PlaintiffRelator Miller’s Request for Oral Argument on Defendants’ Motion to
Dismiss, ECF No. 137, is DENIED;
3. Defendants’ Motion to Dismiss Relator’s Fifth Amended Complaint, ECF
No. 90 is GRANTED IN PART and DENIED IN PART;
4. The Fifth Amended Complaint is DISMISSED in its entirety without
prejudice as to Defendants Reckitt Benckiser Group PLC and Reckitt
Benckiser Inc. n/k/a Reckitt Benckiser, LLC.
- 53 -
Case 1:15-cv-00017-JPJ-PMS Document 153 Filed 10/17/23 Page 54 of 54 Pageid#: 1963
5. As for the remaining defendants, Count 1, Count 3, and Count 36 of the
Fifth Amended Complaint are DISMISSED without prejudice. Count 28
is dismissed with prejudice. The claims underlying the remaining counts
brought under state law are limited as described herein.
6. Plaintiff is granted leave to file a Sixth Amended Complaint if she can
correct the deficiencies described herein, provided it is filed within 30 days
of entry of this Opinion and Order; and
7. Plaintiff must properly serve Defendant Reckitt Benckiser Group PLC
within 60 days of the filing of the Sixth Amended Complaint in the event
it asserts claims against this defendant.
ENTER: October 17, 2023
/s/ JAMES P. JONES
Senior United States District Judge
- 54 -
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?