United States District Court, W.D. Washington, Seattle
UNITED STATES OF AMERICA, ex rel. SCEF, LLC, et al., Plaintiffs,
ASTRAZENECA, INC. et al., Defendants.
ORDER GRANTING UNITED STATES' MOTION TO DISMISS
S. Lasnik United States District Judge.
matter comes before the Court on the United States'
âMotion to Dismiss Relators' Complaint.â Dkt. #15. The
Court reviewed supplemental declarations from the parties
(Dkt. #50-52) and heard oral argument on the motion on
October 30, 2019.
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.
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
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.
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.
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).
Legitimate Government Interests
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.
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.
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 ...