Opinion ID: 787607
Heading Depth: 2
Heading Rank: 2

Heading: The Successive Claim for a Recycled Medication

Text: 32 In Quinn's second allegation, he contends that, when a returned medication is resold, Pompton is making a claim for an amount that has, at least in part, already been paid. The MC-6 form requires Pompton to certify that no part of the net amount payable under this claim has been paid. Quinn asserts that Pompton submits a false claim to Medicaid when Pompton sells a medication to a Medicaid patient for the second time. Quinn alleges that by only partially crediting Medicaid for a returned medication and then submitting a new claim for the full cost of the same medication, Pompton violates §§ 3739(a)(1) and (2) of the FCA because Pompton has claimed more than the actual cost of the medication and has falsely represented on the second claim form that there has been no previous payment for the medication. 33 The District Court rejected this argument. The court refused to find FCA liability under Quinn's theory that Pompton must have resold returned medications to Medicaid by virtue of the large volume of Medicaid business it conducts. Quinn, slip op. at 12. The court, relying on Clausen, 290 F.3d 1301, to support the theory that the actual submission of a false claim must be proved, noted that Quinn did not point to a single instance when the same medication was in fact the subject of two claims. 10 The District Court held that, without evidence of the actual submission of a false claim, there was no genuine issue of material fact. 34 Quinn argues that there is a material question of fact whether Pompton submitted duplicate Medicaid claims for the same medication, given that Pompton recycles returned medications and approximately 60% of Pompton's sales are to Medicaid. Pompton responds that, at the summary judgment stage, Quinn has the burden to establish, in at least one instance, that a given pharmaceutical had been paid for by Medicaid, returned to the pharmacy, and then redispensed and rebilled to Medicaid. We agree and conclude that Quinn has not met this burden. 35 In Clausen, the court held that a False Claims Act plaintiff cannot merely ... describe a private scheme in detail but then ... allege simply and without any stated reason for his belief that claims requesting illegal payments must have submitted, were likely submitted or should have been submitted to the Government. 290 F.3d at 1311. Clausen alleged that the defendant medical testing company was overbilling the government by performing unauthorized, unnecessary, and excessive testing. The court affirmed the dismissal of Clausen's claim because he never provided a single false claim was actually submitted. Id. at 1312. 36 Similarly, in United States ex rel. Alfatooni v. Kitsap Physicians Service, the Ninth Circuit Court of Appeals held that the plaintiff's failure to present an actual false claim submitted to the government was fatal to the action. 314 F.3d 995 (9th Cir.2002). Alfatooni, relying on the volume of bills submitted to the Government each year, made the same argument Quinn makes here — that false claims must have been submitted. The court held that an FCA plaintiff must come to court with a claim in hand and generalized, speculative suppositions will not suffice. Id. at 1002-03. The court contrasted United States v. Krizek, 192 F.3d 1024 (D.C.Cir. 1999), in which the court presumed that the defendants would be liable under the False Claims Act for submitting psychiatric bills that totaled more than twenty four hours for a given day. Alfatooni, 314 F.3d at 1003 (citing Krizek, 192 F.3d at 1026-27). The court in Alfatooni noted that in Krizek, [t]he government had the Medicare/Medicaid claims in hand,  id. (citing Krizek, 192 F.3d at 1027-28), even though it could not prove exactly which of the claims in hand actually was fraudulent. 37 The same reasoning applies here. Pompton admits that approximately 60 percent of its business is Medicaid and that it accepts returned medications for recycling. However, as Alfatooni failed to do, Quinn also did not come forward with a single claim that Pompton actually submitted to Medicaid which covered a medication for which Pompton had previously submitted a claim. Discovery was complete at the time Pompton moved for summary judgment, and Quinn did not ask the District Court for extended discovery pursuant to Federal Rule of Civil Procedure 56(f). Quinn failed to link Pompton's recycling and crediting practices to the actual submission of a false claim. Without proof of an actual claim, there is no issue of material fact to be decided by a jury. Quinn's theory that the claims must have been submitted cannot survive a motion for summary judgment. 38 Furthermore, we agree with the District Court that, even assuming that Pompton is submitting successive claims for the same medications, there can be no FCA liability because New Jersey regulations entitle Pompton to recycle and redispense returned medications. Section 13:39-9.15(a)(2) of the New Jersey Administrative Code, entitled Disposal of unused medications, allows unused unit dose packaged medication, that has been stored in a medication room or secure area in the institution ... [with the] seal and control number ... intact to be recycled and redispensed. The regulation does not, however, require pharmacies to credit Medicaid for the recycled and redispensed medications. Because Pompton can legally recycle returned medications, the initial sale and the subsequent sale of a returned medication are properly viewed as separate transactions. As the District Court held, these transactions are not duplicative in any sense that would make them inconsistent with the full-payment representation on the MC-6. Quinn, slip op. at 13. Under this separate transaction theory, Pompton does not make a false representation on the second claim form even though it does not state that Medicaid has already paid, at least in part, for a redispensed medication. 39 In so concluding, we recognize that the second claim would be submitted to Medicaid for payment for the same medication. When Pompton submits the second claim, it knows that the medication, which is the subject of that claim, was already dispensed once and returned. Pompton also knows that Medicaid has already paid 50% of the cost of the medication. However, because New Jersey regulations allow Pompton to recycle returned medications and because no regulation requires Pompton and other Medicaid pharmacies to credit Medicaid for the returns, we conclude that we cannot impose FCA liability based on the submission of the second claim.