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

Background

Steven M. Camburn brought this qui tam action on behalf of the United States, several states, the District of Columbia, and the Cities of Chicago and New York. A qui tam action allows a private person, called a relator, to assert certain fraud claims on the government’s behalf. The governments declined to intervene, meaning they did not take over the case.

Camburn alleged that Novartis operated a nationwide kickback scheme to induce physicians to prescribe Gilenya, a drug used to treat multiple sclerosis. He claimed that Novartis used speaker programs as a pretext to pay high-prescribing physicians and also provided promotional materials, furnished medical offices for required patient observation, helped physicians with billing codes, and paid for meals and other relationship-building activities.

The court had previously dismissed an earlier amended complaint for failing to plead the alleged kickback scheme with enough detail, but allowed Camburn to amend. After Camburn filed the Third Amended Complaint, Novartis moved to dismiss under Federal Rules of Civil Procedure 9(b) and 12(b)(6).

Rule 9(b) and the alleged kickback scheme

Rule 9(b) requires fraud allegations to be pleaded with particularity. In general, a complaint must identify the fraudulent statements or conduct, who was involved, where and when it occurred, and why it was fraudulent. The court explained that claims under the False Claims Act based on violations of the Anti-Kickback Statute must plead both the alleged kickback scheme and the resulting false claims with the required level of detail.

The court held that Camburn had not cured the deficiencies identified in the earlier complaint. Regarding the speaker programs, the court found insufficient detail about whether the presentations served an educational purpose, why the number of programs showed that they were shams, who attended particular events, and what content was presented. Allegations about repeat attendees were also too generalized and inconsistent to serve as representative examples of a broader fraudulent scheme.

The court also found that the allegations about payments for cancelled events did not identify the circumstances or timing of the cancellations well enough to support an inference that the payments were kickbacks. Allegations that Novartis selected or removed speakers based on their prescribing habits likewise did not provide enough specific facts connecting speaker status or payments to prescription volume.

Other alleged conduct

The court separately considered the allegations concerning promotional materials, medical-office “entertainment rooms” for patients undergoing first-dose observation, billing assistance, and meals or dinners with physicians. It found that the complaint did not sufficiently connect these activities to changes in physician prescribing behavior or otherwise explain why they constituted improper inducements.

For the billing allegations, the court noted that Camburn did not allege that physicians’ billing for first-dose-observation time was improper. The complaint also did not show that Novartis’s assistance eliminated an expense physicians otherwise would have incurred. The allegations about meals, relationship-building, and interactions with medical-office staff did not provide a coherent, particularized explanation of how those activities induced prescriptions.

False Claims Act allegations

The court did not separately address whether Camburn adequately pleaded false claims under the False Claims Act. It stated that the alleged false claims were based on the alleged Anti-Kickback Statute violations, and Camburn had not adequately pleaded the underlying kickback scheme.

Disposition

The court declined to allow another amendment. It noted that Camburn had four opportunities to plead his claims and had not cured the deficiencies despite receiving specific guidance in the earlier ruling. The court therefore granted Novartis’s motion to dismiss under Rules 12(b)(6) and 9(b), dismissed the Third Amended Complaint with prejudice, directed the Clerk to close the motion and the case, and entered the order signed by Judge Kimba M. Wood.