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United States, ex rel. SCEF, LLC v. Astrazeneca, Inc.

United States District Court, W.D. Washington, Seattle

November 5, 2019

UNITED STATES OF AMERICA, ex rel. SCEF, LLC, et al., Plaintiffs,
ASTRAZENECA, INC. et al., Defendants.


          Robert S. Lasnik United States District Judge.

         This matter comes before the Court on the United States' “Motion to Dismiss Relators' Complaint.” Dkt. #15. The Court reviewed supplemental declarations from the parties (Dkt. #50-52) and heard oral argument on the motion on October 30, 2019.


         On September 1, 2017, relators SCEF, LLC (“SCEF”) Lynne Levin-Guzman and Stanley Jean brought a civil qui tam action against AstraZeneca, PLC, AstraZeneca Pharmaceuticals, L.P., Virtual Marketing Strategies Inc., InVentiv Health, Inc., Publicis Healthcare Solutions, Inc., and Triplefun, LLC pursuant to the False Claims Act (“FCA”), see 31 U.S.C. §§ 3729-33, and provisions of applicable state False Claims Act laws. Dkt. #1 (Compl.). SCEF is a limited liability company established by Venari Partners, LLC, dba National Health Care Analysis Group (“NHCA Group”) to file qui tam cases. Ex. A, Dkt. #16-1 at 2; see Compl. at ¶ 20. NHCA Group itself is a limited liability corporation formed by four separate corporate entities, which were in turn formed by six individual investors. Dkt. #16 (McCabe Decl.) at ¶ 3; see Ex. A, Dkt. #16-1; Ex. B, Dkt. #16-2. As of December 2018, NHCA Group had filed eleven qui tam complaints against 38 different defendants for similar conduct. Dkt. #15 at 2.[1]

         This action concerns the drugs Brilinta, Bydureon and Symbicort (“Covered Drugs”). Id. at ¶¶ 79-85. In their complaint, relators allege that defendants violated the Anti-Kickback Statute (“AKS”), see 42 U.S.C. §§ 1320a-7(b), by engaging in “white coat marketing” and unlawfully promoting the Covered Drugs using Clinical Educators, Compl. at ¶¶ 88-123, by providing free nursing services to physicians as illegal remuneration in exchange for the providers prescribing the Covered Drugs, id. at ¶¶ 124-44, and by offering free reimbursement support services, like benefit verifications and follow-ups on referrals, as illegal remuneration to incentivize providers to prescribe the Covered Drugs, id. at ¶¶ 145-170.

         On September 20, 2018, the United States filed a “Notice of Election to Decline Intervention, ” pursuant to 31 U.S.C. § 3730(b)(4)(B). Dkt. #7. Attorneys from the Department of Justice (“DOJ”) notified counsel for relators that the United States planned to seek dismissal of ten of the qui tam complaints, see 31 U.S.C. § 3730(c)(2)(A), on October 3, 2018. Dkt. #40 (Huntley Decl.) on ¶ 2. The United States filed a motion to dismiss all claims in this action on December 17, 2018. Dkt. #15.


         A. Legal Standard

         A private person is entitled to bring a civil qui tam action “for the person and for the United States Government” to recover monies for false claims. 31 U.S.C. § 3730(b)(1). A copy of the complaint and “written disclosure of substantially all material evidence the person possesses” must be served on the government. Id § 3730(b)(2). The complaint must be filed in camera and remain under seal for 60 days. Id. The government may “elect to intervene and proceed with the action within 60 days after it receives both the complaint and the material evidence and information.” Id. If the United States intervenes, “it shall have primary responsibility for prosecuting the action, and shall not be bound by an act of the person bringing the action.” Id. at § 3730(c)(1). It may “dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.” Id. at § 3730(c)(2)(A). If the United States “elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action.” Id. at § 3730(c)(3). “Nothing in [the sub-section] purports to limit the government's dismissal authority based upon the manner of intervention. [The Ninth Circuit] has noted that § 3730(c)(2)(A) may permit the government to dismiss a qui tam action without actually intervening in the case at all.” U.S. ex rel, Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139, 1145 (9th Cir. 1998) (citing U.S. ex rel. Kelly v. Boeing Co., 9 F.3d 743, 753 n.10 (9th Cir. 1993)).

         “[T]he decision to dismiss has been likened to a matter within the government's prosecutorial discretion in enforcing federal laws.” Sequoia Orange Co., 151 F.3d at 1143. The power to dismiss is broad. Id. at 1144. Courts apply a two-step analysis to “test the justification for dismissal: (1) identification of a valid government purpose; and (2) a rational relation between dismissal and accomplishment of the purpose.” Id. at 1145 (internal citation omitted). “If the government satisfies the two-step test, the burden switches to the relator to demonstrate that dismissal is fraudulent, arbitrary and capricious, or illegal.” Id. (internal citation and quotation marks omitted). Courts “have suggested that [they] should grant some deference to the government and its exercise of prosecutorial discretion to avoid violating the separation of powers doctrine.” United States v. Ctr. for Diagnostic Imaging, Inc., No. C05-0058RSL, 2011 WL 13249405, at *3 (W.D. Wash. Apr. 4, 2011). “[R]espect for the Executive Branch's prosecutorial discretion requires “no greater justification for the dismissal than is mandated by the Constitution itself.”” Id. (quoting Sequoia Orange Co., 151 F.3d at 1146).

         B. Legitimate Government Interests

         The government asserts that, following an extensive investigation of all the complaints filed by NHCA Group, it concluded that relators' allegations lack sufficient factual and legal support. Dkt. #15 at 11. Dismissing this action would therefore serve the “legitimate governmental purposes of conserving governmental resources and protecting important policy prerogatives of the federal government's healthcare programs.” Id. at 10.

         Conserving government resources is a legitimate governmental purpose. U.S. ex rel. Mateski v. Mateski, 634 Fed.Appx. 192, 193 (9th Cir. 2015); see Sequoia Orange Co., 151 F.3d at 1146 (“The district court, however, 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.”). The government also argues that the federal healthcare programs have a “strong interest in ensuring that, after a physician has appropriately prescribed a medication, patients have access to basic product support relating to their medication, such as access to a toll-free patient-assistance line or instructions on how to properly inject or store their medication.” Dkt. #15 at 12-13. Relators' claims would “undermine common industry practices the federal government has determined are, in this particular case, appropriate and beneficial to federal healthcare programs and their beneficiaries.” Id. at 13.

         Relators argue that the government fails to provide any evidence that dismissing the action will accomplish these purposes. Dkt. #34 at 23-26. The Ninth Circuit's decision in Sequoia Orange does not state that the government must make an evidentiary showing, it merely calls for “the identification of a valid government purpose; and [] a rational relation between dismissal and accomplishment of the purpose.” 151 F.2d at 1145. Regardless, the allegations contained within the complaint span a six-year period and involve nationwide misconduct. Seegenerally Compl. It is obvious that the government would incur ...

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