United States of America v. McKesson Corporation

Background

Adam Hart, a former McKesson employee, brought this qui tam action on behalf of the United States and twenty-eight states. 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 reimbursement and acquisition data to identify potentially more profitable drugs for particular insurers. The Regimen Profiler calculated the profitability of entire cancer-treatment regimens, including non-drug costs. Hart alleged that McKesson used these tools to obtain or retain customers and that claims submitted for reimbursement by participating practices were false because they resulted from unlawful payments or benefits under the federal Anti-Kickback Statute (AKS). He also asserted claims under the federal False Claims Act (FCA) and similar laws of twenty-eight states and the District of Columbia.

The court had previously dismissed Hart’s first amended complaint because it did not adequately allege that McKesson acted with the required mental state under the AKS or describe the alleged fraud with the particularity required by Federal Rule of Civil Procedure 9(b). The court allowed Hart to amend, and he filed a second amended complaint.

Motion to Dismiss

The court applied Federal Rule of Civil Procedure 12(b)(6), which requires dismissal when a complaint does not state a legally sufficient claim. Because FCA claims are subject to Rule 9(b), the complaint also had to describe the alleged fraudulent conduct with particularity. McKesson argued that the second amended complaint still failed to plead both the required AKS mental state and the alleged fraudulent scheme with sufficient detail.

The court focused on the AKS mental-state requirement. Relying on Second Circuit precedent, it explained that Hart had to allege facts supporting a plausible inference that McKesson knew offering the tools to practices making purchase commitments was unlawful. The required mental state was not merely an intent to offer the tools or a general awareness that kickbacks are prohibited; it required an intentional violation of a known legal duty.

The court held that Hart’s new allegations did not meet that standard. Hart alleged that he raised concerns with a supervisor during compliance training, discussed the tools with other McKesson employees, and characterized the practices as inappropriate, unethical, or wrongful. The court found these allegations too general and insufficient to show that McKesson knew the specific conduct violated the law. It also found that an email stating, “You didn’t get this from me . . . ok?” did not plausibly relate to the tools or show knowledge that providing them free of charge was unlawful.

The court likewise found that allegations about McKesson’s general AKS policies and training did not establish knowledge that this particular business-tool program was illegal. The court stated that the alleged conduct was openly advertised and discussed, which undermined an inference that McKesson was intentionally violating a known legal duty. It also found that allegations of missing or destroyed documents did not plausibly show that McKesson destroyed them to conceal evidence of unlawful conduct.

Because the court found the AKS scienter allegations insufficient, it did not decide McKesson’s alternative argument that Hart failed to plead the alleged fraud with sufficient particularity under Rule 9(b). The court treated the federal and state claims together because Hart pleaded the state claims as violations based on the federal AKS.

Leave to Amend and Disposition

The court granted McKesson’s motion to dismiss without prejudice. It gave Hart leave to amend again because some state anti-kickback laws may not require the same willfulness standard as the federal AKS, and Hart might be able to plead claims under state False Claims Act analogues based on those laws. The court expressed skepticism that it would retain federal jurisdiction over a future complaint asserting only state-law claims, but it did not decide that issue.

The court also granted in part and denied in part McKesson’s motion to seal certain exhibits filed with its dismissal motion. It ordered McKesson to file proposed redacted versions by April 28, 2023, limiting the redactions to highly proprietary confidential business information. The Clerk was directed to terminate the motions pending at docket entries 171 and 174.