Specialty pharmacy secures dismissal of qui tam lawsuit under False Claims Act

Client(s) Specialty pharmacy

Jones Day recently secured dismissal of all claims against a specialty pharmacy serving long-term care facilities in a qui tam lawsuit accusing Jones Day's client of violating the federal False Claims Act, including the FCA's recently amended prohibition on "reverse" false claims in 31 U.S.C. 3729(a)(1)(G). Relator generally asserted that Defendants violated the federal False Claims Act by, among other things, accepting returns of pharmaceuticals from nursing facilities and not issuing a refund or credit either to the appropriate government payors (Medicaid and Medicare, among others) or to the facilities. Relator also contended that Defendants double-billed the government for medications.

In two orders, Magistrate Judge John C. Nivison recommended granting Defendants' motion to dismiss on all counts and denying Plaintiff further leave to amend. Judge Nivison found that Plaintiff failed to state a reverse False Claims Act claim because he failed to identify an obligation to pay or transmit money to the government that Defendants had improperly avoided. He also rejected Plaintiff's attempt to amend to add a claim under § 3729(a)(1)(A) and (a)(1)(B) for failure to meet Rule 9(b)'s heightened pleading standard. Upon Relator's objections, the District Judge adopted the Recommended Decisions, granted Defendants' motion to dismiss, and denied Plaintiff further leave to amend. "The Magistrate Judge fairly applied current First Circuit law" regarding the False Claims Act, the Court explained, so dismissal was appropriate.

U.S. ex rel. Webb v. Miller Family Enterprise, et al., No. 1:13-cv-00169 (D. Me.)