United States of America v. McKesson Corporation

Background

Adam Hart, a former McKesson Business Development Executive, brought this action on behalf of the United States and 28 States and the District of Columbia. He alleged that McKesson Corporation, McKesson Specialty Distribution LLC, and McKesson Specialty Care Distribution Corporation offered two free business-management tools—the Margin Analyzer and the Regimen Profiler—to oncology practices that joined programs requiring substantial purchases from McKesson.

The Margin Analyzer compared drug costs and insurer reimbursement rates and identified drugs that could produce higher profits for a practice. The Regimen Profiler calculated the profitability of complete cancer-treatment regimens, including certain non-drug costs. Hart alleged that McKesson used the tools and related consultations to attract and retain customers and to induce them to purchase drugs from McKesson.

Hart asserted that providing the tools as incentives violated the Anti-Kickback Statute, which prohibits knowingly and willfully offering something of value to induce purchases reimbursed by a federal health program. He further alleged that reimbursement claims connected to those purchases were false claims under the False Claims Act. His complaint included one federal False Claims Act count and claims under state-law versions of that statute.

Motion to Dismiss Standards

McKesson moved to dismiss under Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. Rule 12(b)(6) permits dismissal when a complaint does not plausibly state a claim for relief. Rule 9(b) requires fraud to be pleaded with particularity, although a person’s knowledge and intent may be alleged generally.

Because Hart’s False Claims Act claims were based on an alleged Anti-Kickback Statute violation, the court required him to plead both the alleged kickback conduct and the resulting false claims in accordance with Rule 9(b).

Remuneration

The court rejected McKesson’s argument that the tools could not qualify as “remuneration,” meaning something of value, because the underlying data was publicly available or because the tools offered only potential cost savings. The complaint alleged that McKesson combined pricing, reimbursement, and practice-specific purchasing data; updated the tools quarterly; and provided consultations about the results. Those services could have value apart from the drugs McKesson sold.

The court also found it plausible that the tools had value independent of McKesson’s products. The complaint alleged that practices used the tools to make financially advantageous purchasing decisions, that McKesson used them as a major sales and retention tool, and that at least one practice wanted to keep using the tools after ending its purchase commitment. The court therefore held that Hart plausibly alleged that the tools constituted remuneration under the Anti-Kickback Statute.

The court declined to take judicial notice of allegedly similar tools offered by other organizations and distributors. Comparing those tools with McKesson’s tools would require resolving a factual dispute, which was not appropriate on a motion to dismiss.

Knowledge and Unlawfulness

The court held that Hart had to allege facts supporting a plausible inference that McKesson knew its conduct was unlawful. Hart did not need to allege that McKesson specifically knew the Anti-Kickback Statute or intended to violate that particular statute. But general knowledge that the health-care laws prohibited unlawful inducements was not enough.

Hart alleged that McKesson’s policies, contracts, and regulatory filings showed general awareness of the Anti-Kickback Statute and the restrictions on inducements. The court found those allegations insufficient to show that McKesson knew that offering these particular tools to customers in the commitment programs was unlawful. The complaint also lacked allegations such as concealment, warnings from lawyers, cancellation of the program because of legal concerns, or facts suggesting that the tools had no legitimate value and were merely a pretext for payment.

False-Claim Allegations

The court separately found that Hart’s allegations supported an inference that the practices had submitted claims to federal health programs. The Margin Analyzer used Medicare reimbursement data, McKesson employees regularly updated it with government reimbursement schedules, and the tool compared drug costs with reimbursement rates from Medicare and other insurers. These allegations supported an inference that the identified practices submitted reimbursement claims.

The court did not decide whether Hart adequately pleaded a nationwide scheme because it was dismissing the action and allowing amendment, and Hart’s counsel represented that Hart had additional information about McKesson’s nationwide conduct.

Ruling

The court held that Hart plausibly alleged remuneration and an inference that claims were submitted to federal health programs, but failed to plausibly allege the required knowledge that McKesson’s conduct was unlawful. Judge Ronnie Abrams granted McKesson’s motion to dismiss. The court granted Hart leave to file a second amended complaint by June 7, 2022, if he had a good-faith basis to do so. The Clerk was directed to terminate the motion.