Opinion ID: 2793321
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: According to the allegations in the complaint, which we accept as true for purposes of this appeal, see Fox v. Am. Alt. Ins. Corp., 757 F.3d 680, 681 (7th Cir. 2014), Abbott engaged in a scheme from 1998 to 2012 to illegally market Depakote for applications that had not been approved by the Food and Drug Administration (“FDA”). Unapproved applications are known as “off-label” uses. See United States v. King-Vassal, 728 F.3d 707, 709 (7th Cir. 2013). Physicians may, and often do, prescribe drugs for off-label uses, id., but pharmaceutical companies are generally prohibited from marketing drugs for those same applications, see, e.g., United States ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111, 113 (1st Cir. 2014); Wash. Legal Found. v. Henney, 202 F.3d 331, 332–33 (D.C. Cir. 2010). The funds allege that Abbott, in promoting Depakote, not only misrepresented its safety and efficacy for off-label uses but also paid kickbacks to physicians, and established and funded intermediary entities like the Council for Excellence in Neuroscience Education, to promote the drug for off-label uses. Abbott then took steps to conceal its role in these activities. These efforts dramatically increased Depakote sales, which reached a high of $1.5 billion by 2007. The funds were not the first to bring Abbott’s marketing scheme to light. Four qui tam actions were filed against Abbott between October 2007 and January 2010, alleging Nos. 14-2282 & 14-2909 3 that its off-label marketing of Depakote violated the False Claims Act and caused excessive charges to government benefit programs. These actions were unsealed in February 2011, when the federal government and multiple state governments intervened. Meanwhile, in November 2009, Abbott disclosed in a public filing with the Securities and Exchange Commission (“SEC”) that the Department of Justice (“DOJ”) was investigating its marketing of Depakote. In May 2012, Abbott pleaded guilty to illegally promoting Depakote from 2001 through 2006 for uses that had not been shown to be effective in clinical trials. In connection with this plea, Abbott agreed to pay $1.6 billion to settle the criminal and qui tam actions against it. Fifteen months later, in August 2013, the funds filed this lawsuit asserting that Abbott’s off-label marketing of Depakote constituted a civil RICO violation. The funds sought to represent a class of “[a]ll third party purchasers in the United States and its territories who, during the period from 1998 through 2012, reimbursed and/or paid some or all of the purchase price for Depakote for indications not approved by the FDA.” They also sought to bring state-law claims of deceptive business practices and unjust enrichment on behalf of New York, Illinois, and Massachusetts subclasses. Abbott moved to dismiss in part on the basis of timeliness, arguing that, because the lawsuit alleges injury dating back to 1998, it falls outside the four-year statute of limitations for civil RICO claims. In response, the funds argued that equitable tolling or estoppel should apply, contending that they could not have discovered the existence of their claims before the 2012 guilty plea because 4 Nos. 14-2282 & 14-2909 Abbott had taken steps to conceal its marketing scheme. They also noted that it is unusual to dismiss a case as untimely at the pleadings stage because the statute of limitations is an affirmative defense that typically depends on factual determinations. The funds argued that nothing in the complaint could serve as an admission that the limitations period had expired and “[t]here are thus unresolved factual determinations that make it inappropriate for the Court to grant Defendants’ motion to dismiss on statute of limitations grounds.” The district court granted Abbott’s motion and dismissed the funds’ claims with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6). In doing so, the court concluded that the statute of limitations for the RICO claim began to run in 1998, when the funds initially reimbursed a prescription for off-label use of Depakote. The court acknowledged that “[o]ff-label prescription of drugs is not illegal and is a routine practice among physicians.” But the court decided that, given that third-party purchasers are sophisticated entities in the business of monitoring prescription reimbursements, a reasonable benefit fund would have discovered its injuries from Abbott’s actions when it began paying for off-label prescriptions for Depakote. The court applied similar reasoning to bar the state-law claims. The district court further rejected the funds’ equitable arguments. The court refused to toll the limitations period until the time of the guilty plea in 2012 because, it reasoned, tolling is appropriate only for “relatively brief” delays and should not shift the start of the limitations period from the time of the initial injury to when a plaintiff becomes aware Nos. 14-2282 & 14-2909 5 of possible racketeering. The court additionally concluded that equitable estoppel did not apply because, in its view, Abbott’s efforts to conceal its off-label promotion of Depakote were not designed to hinder potential lawsuits.