Koshy v. Regeneron Pharmaceuticals, Inc.

Background

Stanley Koshy sued Regeneron Pharmaceuticals, Inc., claiming retaliation under the False Claims Act (FCA), 31 U.S.C. § 3730(h), and New York Labor Law § 740 (NYLL). Koshy worked for Regeneron from May 2, 2016, until Regeneron terminated him on October 11, 2016. He was a manager responsible for relationships with contract manufacturing organizations and duties including monitoring manufacturing compliance, supporting investigations, and helping with corrective actions. He was proceeding without a lawyer when the opinion was issued, although the court noted that he had previously been represented during parts of discovery.

Koshy said he raised concerns involving several matters: revised testing for bacteria and fungi in drug manufacturing; a contract manufacturer’s use of two drug-substance lots in one batch; gaps in Regeneron’s approved-supplier and contract-manufacturer oversight; shipment of a rejected product lot for engineering study; change controls for a Zika-virus project; and general compliance concerns. He also relied on alleged quality-control problems, audit reports, later reports of inflammation associated with EYLEA, and alleged government reimbursement claims.

Regeneron moved for summary judgment, which asks whether the evidence shows that no genuine dispute about an important fact requires a trial and that the moving party is entitled to judgment under the law. The court had federal-question and related-state-law jurisdiction.

False Claims Act retaliation claim

The court explained that the FCA addresses fraudulent requests for money or property from the United States. Its anti-retaliation provision protects employees who take lawful steps to advance an FCA case or otherwise try to stop an FCA violation. The court stated that a retaliation plaintiff generally must show protected activity, employer awareness of that activity, and adverse action because of it.

The court held that Koshy had not produced evidence of protected activity. In the court’s view, the record showed concerns about possible regulatory or quality-control problems, not efforts to expose or stop fraud against the government. Koshy testified that he did not tell his supervisor that Regeneron was violating the law, doing something wrong, defrauding the government, or endangering patients concerning the pre-filtration testing issue. He remained silent about the disputed batch decision, sent an article about supply-chain management without evidence of a complaint, forwarded the rejected-lot correspondence while saying no action was needed, and lacked evidence supporting his claim that he raised Zika-project change-control concerns. His email to the chief executive referring to “major compliance issues” did not explain what the issues were.

The court also found that Koshy could not identify false claims submitted to the government or explain how Regeneron caused any false claim to be submitted. The court rejected as conclusory and speculative his assertions about Regeneron’s certifications, the audit reports, and later inflammation reports. It therefore granted summary judgment on the FCA retaliation claim because Koshy had not shown protected activity.

The court gave an independent additional reason for ruling against Koshy on that claim: even if he had engaged in protected activity, he had not shown that Regeneron knew he was doing so. Koshy testified that he never told anyone at Regeneron that the government had been fraudulently billed or that Regeneron had defrauded the government. The court also determined that the concerns he raised generally fell within his ordinary job responsibilities, and he had not overcome the presumption that he was merely performing those duties.

New York Labor Law claim

NYLL § 740 protects an employee from retaliation for disclosing or threatening to disclose an employer’s activity, policy, or practice that violates a law, rule, or regulation and creates a substantial and specific danger to public health or safety. The court stated that a plaintiff must identify an actual legal violation, not merely rely on a good-faith belief that a violation occurred.

The court held that Koshy did not identify the specific laws, rules, or regulations Regeneron actually violated. Although he cited broad portions of federal and European regulations concerning laboratory, clinical, and manufacturing practices, he did not identify the specific provisions violated or explain how Regeneron violated them. He also did not show how the alleged violations created a substantial and specific danger to the public. As to regulations concerning written change controls, laboratory controls, and contamination, the court found that Koshy had not supplied evidence of a violation; he testified that the issues concerned did not result in adulterated products.

Disposition

Judge Vincent L. Briccetti granted Regeneron’s motion for summary judgment. The court directed the clerk to terminate the motion and close the case. It also certified under 28 U.S.C. § 1915(a)(3) that an appeal would not be taken in good faith and denied permission to appeal without paying filing fees.