United States v. Gilead Sciences, Inc.

Background

Jeff and Sherilyn Campie, former employees of Gilead Sciences, Inc., brought a qui tam action under the federal False Claims Act. A qui tam action allows a private person, called a relator, to sue on behalf of the United States for alleged fraud against the government. The Campies alleged that Gilead sought payment from government programs, including Medicare and Medicaid, for drugs containing FTC obtained from facilities that were not approved or registered as represented to the Food and Drug Administration.

The Campies also alleged that Gilead used false or concealed information when seeking FDA approval for the FTC source. The court had previously dismissed their claims, but the Ninth Circuit reversed and sent the case back. The United States had declined to intervene, meaning it did not formally join the litigation, but it remained a real party in interest and filed the motion at issue.

Government’s Motion to Dismiss

The United States moved under 31 U.S.C. § 3730(c)(2)(A), which permits the government to dismiss a False Claims Act action over the relator’s objections after notifying the relator and providing an opportunity for a hearing. The Ninth Circuit’s test requires the government to identify a valid governmental purpose and show a rational relationship between dismissal and achieving that purpose. If the government meets that test, the relator must show that the dismissal is fraudulent, arbitrary, capricious, or illegal.

The United States identified two purposes: preventing the Campies’ lawsuit from undermining decisions by the FDA and the Centers for Medicare and Medicaid Services about the alleged conduct, and avoiding additional government resources being spent on litigation that the government had investigated and decided not to pursue.

Court’s Analysis

The court found a factual basis for the government’s purposes. It noted that the United States had investigated the allegations for more than two years, including reviewing pleadings and documents, interviewing the Campies and witnesses, consulting experts, meeting with Gilead, collecting more than 600,000 pages of documents, and reviewing manufacturing lots. The FDA also conducted inspections and other oversight involving Gilead and the FTC source.

The court concluded that dismissal was rationally related to both avoiding interference with agency decisions and conserving government resources. It rejected the Campies’ argument that the government had to provide a mathematical cost-benefit analysis. The court also considered the likely discovery burden, including investigation into what the government knew and when, because materiality—the requirement that an alleged misrepresentation be important to the government’s payment decision—would be a central issue.

The court further held that the Campies did not show that the government’s decision was fraudulent, arbitrary, capricious, or illegal. It relied on the government’s multi-year investigation, its participation in the Ninth Circuit appeal, its prior arguments favorable to the Campies, and its stated consideration of the merits and potential recovery.

Disposition

Judge Edward M. Chen granted the United States’ motion to dismiss. The order dismissed the main False Claims Act claim. It stated that the Campies could still proceed with their remaining claims, including retaliation claims, absent further order of the court. The order disposed of Docket No. 183.