Opinion ID: 1085252
Heading Depth: 2
Heading Rank: 2

Heading: The Federal Health Insurance Reimbursements

Text: Unlike the DoD contracts we have just discussed, there is no direct contractual relationship between the government and Bayer with respect to Simpson's allegations regarding reimbursements under federal health insurance programs. Thus, Simpson's reimbursement claims do not involve an allegedly fraudulently-induced contract contracts and the withdrawal of Baycol from the market. It would be unreasonable to infer, however, that all 400,000 prescriptions described in the SAC were filled prior to the effective dates of the two DoD contracts in early 2001, and that no prescriptions were filled thereafter until the withdrawal of Baycol from the market in August 2001. Likewise, it would be unreasonable to infer that all the government payments Simpson alleges took place in the ten-month period between October 2000 and August 2001 were made prior to the effective dates of the two DoD contracts, and that no funds were paid by the government after the contracts became effective. Thus, the SAC still clearly alleges Baycol prescriptions were filled at Military Treatment Facilities after the two contracts became effective, and that the government made payments to Bayer pursuant to the contracts. The lack of a perfect fit between the specific amounts alleged in the SAC and the effective dates of the DoD contracts is not fatal to the question whether Simpson stated a claim for relief. 6 On appeal, Bayer urges us to affirm the district court's dismissal of the allegations involving the DoD contracts on a number of alternative grounds that have not yet been addressed by the district court. We believe it more prudent to allow the district court to address those issues in the first instance. See, e.g., Lafarge North Am., Inc. v. Discovery Grp. L.L.C., 574 F.3d 973, 986 fn.9 (8th Cir. 2009) (Because we believe it would be beneficial for the district court to address these issues in the first instance, we decline to affirm on these alternative theories.). -13- where claims for payment subsequently submitted under a government contract initially induced by fraud do not have to be false or fraudulent in and of themselves in order to state a cause of action under the FCA. Instead, Simpson alleged Bayer's misleading marketing scheme caused third parties to submit false claims to the government. See 31 U.S.C. § 3729(a)(1)(A) (extending FCA liability to any person who causes to be presented, [to a federal official] a false or fraudulent claim for payment or approval) (emphasis added); see also United States v. Hawley, 619 F.3d 886, 892 (8th Cir. 2010) (noting a claim under the FCA need not be made directly to the government; it may include a request or demand that was originally made to a contractor, grantee, or other recipient of federal funds and then forwarded to the Government) (internal quotation marks and citation omitted); Claire M. Sylvia, The False Claims Act: Fraud Against the Government § 4:2 (April 2013) (Subsection (a)(1)(A) imposes liability not only on a person who 'presents' a false or fraudulent claim, but also on a person who causes another to present a false or fraudulent claim.). With respect to these reimbursement claims, the district court noted Simpson's SAC failed to identify any specific false claims submitted by Bayer to the government and explained that cases decided by the Eighth Circuit post-Joshi reaffirm this Court's previous finding that particularized allegations of representative false claims are required to properly assert a claim under the FCA. In re Baycol, 2012 WL 5358333 at . The district court also compared Simpson's SAC to the complaint found deficient in Roop, 559 F.3d 818. As explained by the district court, Roop involved a relator who alleged a defendant's manufacture and sale of defective glucose monitors and test strips caused the government to pay fraudulent reimbursement claims under Medicare. We held the relator failed to state a claim under the FCA for a number of reasons, including the circumstance that the relator failed to . . . identify specific false or fraudulent Medicare reimbursement claims by Hypoguard -14- distributors[.] Roop, 559 F.3d at 824. Roop affirmed the district court's dismissal of the complaint because the relator merely conclusorily alleged the government would not have paid Medicare reimbursement claims if they had known of the defects in the glucose monitors and test strips. Id. at 825. The district court said Simpson's SAC was similarly deficient because she merely asserts that had the government known of Bayer's misrepresentations and omissions concerning the risks associated with Baycol, the government would not have paid any claims submitted under . . . federal and state health insurance programs. In re Baycol, 2012 WL 5358333 at . The district court reasoned that Simpson failed to make any allegations connecting a government decision to pay Baycol to any alleged fraud because the mere fact that a patient covered by a federal or state funded health care program was prescribed Baycol to lower his/her cholesterol is not, in and of itself, false or fraudulent. Id. The district court concluded [b]ecause there are no allegations in the SAC that a claim submitted to the government for payment for Baycol, was – in and of itself – fraudulent or false, Relator has failed to sufficiently plead a claim under the FCA. Id. With respect to Simpson's federal health insurance reimbursement claims, we agree with the district court that the pleadings in Simpson's SAC were inadequate to state a cause of action under the FCA because she did not include at least some representative examples of false claims with respect to Bayer's alleged scheme involving federal health insurance reimbursements, or show how any particular reimbursement claim was fraudulent in and of itself. In Vigil, we said [w]ithout sufficient allegations of materially false claims, an FCA complaint fails to state a claim on which relief may be granted. 639 F.3d at 796. As relevant to the issue of pleading representative false claims, we later stated with even more clarity in Joshi that a relator must plead some representative examples [of false claims] within the statute of limitations. 441 F.3d at 560. Joshi -15- found persuasive the reasoning of the Eleventh Circuit in Corsello v. Lincare, Inc., 428 F.3d 1008 (11th Cir. 2005). That case related to an underlying fraudulent scheme where certain health care corporations were allegedly submitting false Medicare claims to the government by falsifying certificates of medical necessity or billing for unnecessary or nonexistent treatment. Similar to Simpson, the relator in Corsello relied upon his allegations of the underlying scheme to argue false claims must have been submitted to the government, but did not include allegations of specific false claims actually submitted to the government for payment. The Eleventh Circuit dismissed the relator's complaint for failure to plead fraud with the particularity required by Rule 9(b). Id. at 1013-14. Applying the same reasoning to the relator's allegations in Joshi, we concluded a relator could not rely merely upon allegations of the underlying scheme to argue all claims submitted for payment to the government pursuant to the scheme were fraudulent because all the nurse anesthetists' work was illegal and thus every invoice for nurse anesthetist work was fraudulent[.] Joshi, 441 F.3d at 556. Instead, we said to satisfy Rule 9(b)'s particularity requirement and to enable St. Luke's and Dr. Bashiti to respond specifically to Dr. Joshi's allegations, Dr. Joshi must provide some representative examples of their alleged fraudulent conduct, specifying the time, place, and content of their acts and the identity of the actors. Dr. Joshi's complaint is void of a single, specific instance of fraud, much less any representative examples. Thus, the district court properly dismissed Dr. Joshi's complaint for failure to comply with Rule 9(b). Id. at 557. (Emphasis in original). Finally, in Roop we dealt with allegations similar to the fraudulent scheme alleged by Simpson because the case involved a defendant who – by manufacturing and marketing a defective medical product – allegedly caused third parties to submit false Medicare reimbursement claims to the government. 559 F.3d at 820. Again, we -16- held that allegations regarding the underlying scheme were insufficient to state a claim for relief without pleading representative examples of some false reimbursement claims submitted to the government: The proposed First Amended Complaint did not plead with particularity the details of any false Medicare reimbursement claim presented to, or paid by, the United States or its agent. Nor did it allege with particularity how any product defect or failure to submit MDR7 reports to the FDA was material to—that is, 'capable of influencing' —the government's decisions to pay countless unidentified Medicare reimbursement claims submitted by Hypoguard distributors. The conclusory allegation that unidentified government agents 'would not have reimbursed through Medicare individuals submitting claims [for Hypoguard systems] if [they] had known of the defects and failure to comply with the rules and regulations of the FDA' does not comply with Rule 9(b). Id. at 824-25 (internal citations omitted). We conclude this case is controlled by our decisions in Joshi and Roop. Simpson alleged that all federal health insurance reimbursement claims submitted by third parties to the government for Baycol prescriptions were false or fraudulent because of the misleading and deceptive manner in which Bayer marketed Baycol. She did not, however, plead at least some representative examples of actual reimbursement claims submitted to the government pursuant to the underlying allegedly fraudulent marketing scheme, or establish how such reimbursement claims were false in and of themselves. Instead, she relied upon a general allegation that the government would not have paid any of the reimbursement claims submitted under the federal health insurance programs had it known of Bayer's underlying allegedly fraudulent marketing scheme. We conclude this allegation is indistinguishable, for 7 Medical Device Reporting. -17- all material purposes, from the allegation we found lacking in Roop. We therefore affirm the district court with respect to the allegations involving federal health insurance reimbursement claims.8