United States of America ex rel. Steven M. Camburn v. Novartis Pharmaceuticals…

Background

The relator brought a private lawsuit on behalf of the United States, listed states, the District of Columbia, and the Cities of Chicago and New York. He alleged that Novartis Pharmaceuticals Corporation operated an unlawful kickback scheme involving speaker events for Gilenya, a drug approved to treat multiple sclerosis. According to the amended complaint, Novartis paid healthcare professionals honoraria of $1,500 to $3,500 and paid for meals at events that allegedly lacked a legitimate educational purpose. The alleged claims arose under the False Claims Act, the Anti-Kickback Statute, and analogous state and municipal laws.

The relator worked for Novartis as an Executive Sales Specialist in the Philadelphia area from August 2010 through July 2013. He alleged that speakers presented repetitive or uninformative materials to unsuitable audiences, that some events had no meaningful audience, that some events exceeded Novartis’s $125-per-attendee spending limit, and that sales personnel altered internal records to conceal excess spending. He also alleged that Novartis paid honoraria for canceled events, supplied doctors with marketing DVDs, scheduled excessive numbers of events, tracked speakers’ prescribing activity, and made statements suggesting that the events were intended to reward or retain high-prescribing doctors.

The United States and the listed states and municipalities investigated the claims and declined to join the case. Novartis moved to dismiss the amended complaint.

Legal standard

Federal Rule of Civil Procedure 12(b)(6) permits dismissal when a complaint does not state a legally sufficient claim. Because the claims alleged fraud, Rule 9(b) also required the relator to describe the circumstances of the alleged fraud with particularity—meaning enough specific facts to give Novartis fair notice of the conduct at issue. The court explained that a plaintiff alleging a broad, lengthy scheme may rely on representative examples rather than describe every alleged incident, but the examples must contain enough detail to show how the scheme operated.

Court’s analysis

The court held that the amended complaint did not plead the existence of the alleged kickback scheme with the particularity required by Rule 9(b). The complaint identified five speaker events, but for four of them it provided little more than the speaker, the headcount, the Novartis personnel involved, and the fact that the event exceeded the internal spending limit. The court found that these allegations did not explain why the records were falsified, who directed the falsification, whom it was intended to deceive, or how it furthered the alleged kickback scheme.

The complaint provided somewhat more information about one event, but the court found that it did not allege that the event was representative of the broader scheme. It did not say that the attendees had attended earlier Gilenya events, that they were otherwise improper attendees, or that the presentation lacked educational value. More generally, the complaint did not tie allegations about repeat attendees, absent audiences, incomplete presentations, canceled events, prescribing activity, or return-on-investment analysis to sufficiently specific events and participants.

The court also found that the allegations about approximately $500,000 paid for more than 250 canceled events lacked the details needed to evaluate whether the cancellations were improper. The allegations about marketing DVDs, the number of speaker events, and statements by Novartis personnel likewise did not, without more particular facts, establish the alleged kickback scheme. The court compared the pleading unfavorably with earlier cases in which plaintiffs identified specific doctors, events, dates, presentations, payments, prescribing activity, and other facts showing how sham speaker programs allegedly worked.

Because the court found the kickback-scheme allegations insufficient, it did not decide Novartis’s arguments that the relator failed to plead false claims with particularity or failed to plead Novartis’s required state of mind. It also did not address the United States’ position concerning the legal standard for that state-of-mind requirement.

Disposition

The court granted Novartis’s motion to dismiss under Rule 9(b) and dismissed the amended complaint, without prejudice to the relator filing a second amended complaint. The court granted leave to amend by May 8, 2020. The order did not resolve whether Novartis actually engaged in a kickback scheme or whether the alleged scheme resulted in false claims.