On May 6, the U.S. District Court for the District of South Carolina entered final judgment dismissing with prejudice a relator’s qui tam False Claims Act (FCA) suit against the defendant wholesale pharmacy. The relator, a former pharmacist who worked for the defendant, alleged that the defendant submitted false claims to government healthcare programs in connection with prescription medications dispensed for use at nursing homes and assisted living facilities. The relator alleged a scheme in which the defendant manually filled “thousands” of prescriptions with less-expensive generic medications while billing for more-expensive alternative medications stocked in its automated dispensing system.

A qui tam complaint containing similar allegations filed against Omnicare Inc. in the U.S. District Court for the District of New Jersey resulted in an $8 million settlement in 2017. In this lawsuit, however, the defendant, represented by Bass, Berry & Sims and others, obtained full dismissal with prejudice of the relator’s FCA and retaliation claims.

Complaint Failed to Plead Presentment of Claims with Sufficient Particularity

Federal Rule of Civil Procedure 9(b) requires an FCA complaint to plead with particularity the presentment of false claims to the government for payment. The district court held that under Fourth Circuit precedent, a relator can satisfy the presentment requirement either by pleading the details of actual, specific false claims or by alleging a scheme that “necessarily” led to the submission of false claims. The district court found that the relator’s allegations related to the presentment of claims failed to meet this standard.

  • The complaint, using information from prescription labels, described 11 medications allegedly dispensed by the defendant as part of its scheme. The court, however, found those allegations insufficient because the complaint failed to allege the details of allegedly false claims connected with the medications.  For example, the complaint did not plead the date or amount of any allegedly false claims, the entity that submitted the claims, or the federal payor from which reimbursement was sought or obtained. Moreover, the complaint did not allege facts to show that the dispensed drugs were, in fact, cheaper than the drugs billed to the government.
  • The court also found that the complaint did not plead a scheme that necessarily led to the submission of false claims because it failed to “connect the dots” between the defendant’s alleged conduct and any government payment. The court noted that the relator conceded that the defendant submitted claims through intermediaries, but pleaded no details about the claims submission process. Such allegations, the court concluded, left open the possibility that the intermediaries either never submitted the claims or billed the government the allegedly correct amount or that the government declined to overpay on the claims.

Complaint Failed to Plead Specific Facts to Support Other FCA Claims

Besides alleging that the defendant submitted false claims, the relator also alleged that the defendant was liable under the FCA’s false statements and reverse false claims provisions, 31 U.S.C. §§ 3729(a)(1)(B) and 3729(a)(1)(G), respectively. The court found these claims also should be dismissed because they were essentially “rehashed” versions of the relator’s main fraud claims under § 3729(a)(1)(A), and were insufficiently pleaded because the relator did not allege the details necessary to support those independent claims.

Retaliation Claim Also Dismissed

Finally, the relator alleged that he had been unlawfully terminated in violation of the FCA’s anti-retaliation provision for raising concerns about the defendant’s purported scheme. The court dismissed the retaliation claim because it “reads like a threadbare recitation of the elements of an FCA retaliation cause of action.” The court held that the complaint failed to plead facts describing the concerns the relator allegedly raised. The complaint also alleged that over two years elapsed between when the relator allegedly raised his concerns and when he was terminated, which barred the court from inferring any causal connection. The relator also admitted that the reason given for his termination was that he, a licensed pharmacist, had obtained prescription medications from another employee.

For further discussion of pleading requirements in FCA cases and other updates related to FCA enforcement, contact a member of the Bass, Berry & Sims Healthcare Fraud Task Force, or download our Healthcare Fraud & Abuse Annual Review.