Health Choice Group, LLC v. Bayer Corporation et al

RESPONSE in Opposition re MOTION to Dismiss Relator's Second Amended Complaint

E.D. Tex.January 22, 2019

4833-9846-4390 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TEXARKANA DIVISION HEALTH CHOICE GROUP, LLC and JAIME GREEN, on behalf of the UNITED STATES OF AMERICA; STATE OF ARKANSAS; STATE OF CALIFORNIA; STATE OF COLORADO; STATE OF CONNECTICUT; STATE OF DELAWARE; DISTRICT OF COLUMBIA; STATE OF FLORIDA; STATE OF GEORGIA; STATE OF HAWAII; STATE OF ILLINOIS; STATE OF INDIANA; STATE OF IOWA; STATE OF LOUISIANA; STATE OF MARYLAND; COMMONWEALTH OF MASSACHUSETTS; STATE OF MICHIGAN; STATE OF MINNESOTA; STATE OF MONTANA; STATE OF NEVADA; STATE OF NEW HAMPSHIRE; STATE OF NEW JERSEY; STATE OF NEW MEXICO; STATE OF NEW YORK; STATE OF NORTH CAROLINA; STATE OF OKLAHOMA; STATE OF RHODE ISLAND; STATE OF TENNESSEE; STATE OF TEXAS; STATE OF VERMONT; COMMONWEALTH OF VIRGINIA; and STATE OF WASHINGTON, Plaintiffs/Relators, v. BAYER CORPORATION; AMGEN INC.; ONYX PHARMACEUTICALS, INC.; AMERISOURCEBERGEN CORPORATION; and LASH GROUP, Defendants. Civil Action No.: 5:17-CV-126-RWS-CMC RELATOR’S RESPONSE TO THE UNITED STATES’ MOTION TO DISMISS THE SECOND AMENDED COMPLAINT Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 1 of 48 PageID #: 2485 ii 4833-9846-4390 TABLE OF CONTENTS I. INTRODUCTION ...............................................................................................................1 II. RELEVANT FACTS ...........................................................................................................6 A. Relator and Its Parent Organization, the NHCA Group ..........................................6 B. Relator’s Allegations .............................................................................................13 1. The Free Nurse Program. ...........................................................................13 2. The White Coat Marketing Scheme ...........................................................16 3. The Support Services Scheme ...................................................................18 C. Relator’s Pre-Suit Interactions with the Government and the Government’s Declination Decision ................................................................23 D. Defendants’ Unsuccessful Efforts to Dismiss the Case .........................................25 E. The Government’s 48-Hour Ultimatum and Relator’s Efforts to Understand the Government’s Concerns ...............................................27 F. The Government’s Motion to Dismiss ...................................................................32 III. ARGUMENT .....................................................................................................................35 A. The Government’s Attacks on Relator and Its Investigation Are Meritless ..........................................................................................................35 B. The Government Has Failed to Show that Dismissal Is Appropriate ............................................................................................................38 1. The Government Does Not Have an Absolute, Unreviewable Right to Dismiss Meritorious FCA Complaints .................................................................................................38 2. The Government’s Conclusory Attacks on the Merits of Relator’s Claims Do Not Withstand Scrutiny ......................................................................................................40 IV. CONCLUSION ..................................................................................................................42 Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 2 of 48 PageID #: 2486 iii 4833-9846-4390 TABLE OF AUTHORITIES Page(s) CASES HTC Corp. v. Telefonaktiebolaget LM Ericcson, 2018 U.S. Dist. LEXIS 190415 (E.D. Tex. Nov. 7, 2018) ..................................................4, 41 Leysock v. Forest Labs., 2017 U.S. Dist. LEXIS 65048 (D. Mass. Apr. 28, 2017) ........................................................36 Marbury v. Madison, 5 U.S. 137 (1803) .................................................................................................................2, 40 Minnesota Ass’n of Nurse Anesthetists v. Allina Health Sys. Corp., 276 F.3d 1032 (8th Cir. 2002) .................................................................................................37 Payton v. Entergy Corp., 2013 U.S. Dist. LEXIS 150824 (E.D. La. Oct. 21, 2013) ...................................................3, 35 Swift v. United States, 318 F.3d 250 (D.C. Cir. 2003) ...........................................................................................38, 39 United States ex rel. Branch Consultants, L.L.C. v. Allstate Ins. Co., 668 F. Supp. 2d 780 (E.D. La. 2009) .......................................................................................37 United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F3d 1139 (9th Cir. 1998) ........................................................................................2, 40, 41 United States v. Cowan, 524 F.2d 504 (5th Cir. 1975) .....................................................................................................5 Zivotofsky v. Kerry, 135 S. Ct. 2076 (2015) .........................................................................................................2, 39 Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 3 of 48 PageID #: 2487 iv 4833-9846-4390 TABLE OF ABBREVIATIONS Abbreviation Term AC First Amended Complaint AKS Anti-Kickback Statute Amerisource AmerisourceBergen Corporation and Lash Group Ashfield Ashfield Healthcare, LLC Covered Products Betaseron, Nexavar, Stivarga, and Adempas EDTX USAO United States Attorney’s Office for the Eastern District of Texas FCA False Claims Act Health Choice or Relator Health Choice Group LLC HHS Department of Health and Human Services Lelutiu Decl. Declaration of Radu A. Lelutiu McCabe Decl. Declaration of Brian J. McCabe Mininno Decl. Declaration of John Mininno MS Multiple Sclerosis MTD The United States’ Motion to Dismiss NHCA NHCA Group OIG Office of the Inspector General Plaintiff States The States identified in the caption of this matter Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 4 of 48 PageID #: 2488 v 4833-9846-4390 Abbreviation Term Prescriber Any physician or Advance Practice Provider authorized to write prescriptions, as well as their employees R&R June 29, 2018 Report and Recommendation of the United States Magistrate Judge (D.I. 91) SAC Second Amended Complaint Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 5 of 48 PageID #: 2489 1 4833-9846-4390 I. INTRODUCTION Not a day goes by without headlines that pharmaceutical companies are placing profits ahead of patients and driving up the costs of healthcare. Yet, in the 18 months that have passed since this litigation began, two of the longstanding tools Congress created to allow taxpayers to combat fraud and keep government contractors honest—the FCA and AKS—have come under attack. See, e.g., Robert Pear, Trump Administration Invites Health Care Industry to Help Rewrite Ban on Kickbacks, available at https://www.nytimes.com/2018/11/24/us/politics/trump- health-care-kickbacks-medicare-medicaid.html. Regrettably, the governmental agency entrusted with safeguarding these important statutes has now joined the efforts to undermine them, and, just 10 months before a jury will be seated to hear the merits of Relator’s claims, it has moved to dismiss this action. The motion arrives 14 months after the government declined intervention—without providing a substantive explanation; 10 months after Defendants’ lengthy motions to dismiss were briefed—with no participation from the government; eight months after Judge Craven held a day-long hearing concerning the merits of Relator’s allegations—which the government declined to attend; six months after Judge Craven concluded, in a 100+ page R&R, that each theory of liability articulated by Relator stated an AKS violation that cleared the plausibility standard of Rule 12(b)(6); and four months after the District Court—having received no objection from either Defendants or the government—adopted the R&R. The government gives no indication as to why, after playing no role whatsoever in this litigation for the past 14 months, it now wishes to dismiss it. The government also fails to acknowledge that the motion is unprecedented. That is, in the 150 years that have passed since the enactment of the “Lincoln Law,” the government does not appear ever to have sought to dismiss a FCA complaint that a District Court previously found to have substantive merit. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 6 of 48 PageID #: 2490 2 4833-9846-4390 The fundamental premise of the government’s motion is the assertion that the government has an unfettered right to dismiss Relator’s meritorious complaint, and that its decision to do so here is not subject to any judicial scrutiny. MTD at 11 (quoting Swift v. United States, 318 F.3d 250, 252 (D.C. Cir. 2003)). This misstates the law and the boundaries of the Executive Branch’s power. There is nothing in the FCA that confers upon the government an absolute and unreviewable right to dismiss meritorious lawsuits, and none of the cases cited by the government endorse this extreme proposition. For good reason. The FCA does not—and cannot—authorize the Executive Branch to (i) rewrite the AKS so as to legalize certain kickbacks; or (ii) gut the statute by making pronouncements as to what it means. Writing and rewriting statutes is the job of the Legislative Branch. Zivotofsky v. Kerry, 135 S. Ct. 2076, 2090 (2015) (“it is still the Legislative Branch, not the Executive Branch, that makes the law”). And “[i]t is emphatically the province and duty of the judicial department to say what the law is.” Marbury v. Madison, 5 U.S. 137, 177 (1803). Put simply, the scope and reach of federal statutes—including the AKS— are not subject to the whims of the Executive Branch. And considered under any standard of review, including that set forth in United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F3d 1139 (9th Cir. 1998), the government’s motion fails. The government raises two issues in support of its motion: (i) personal attacks on Relator; and (ii) purported concerns—which are telegraphed in conclusory language and find no support in the McCabe Declaration—about the merits of the SAC. Neither withstands scrutiny. First, putting aside that they are inaccurate and wholly gratuitous, the government’s demeaning attacks on Relator are legally irrelevant. The government asserts that Relator’s investigation was based on “false pretenses” because Relator’s representatives did not reveal that Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 7 of 48 PageID #: 2491 3 4833-9846-4390 they might use the information in support of a qui tam action. MTD at 6. Yet, it is standard practice to “blind” respondents during a fact-finding exercise for the very purpose of avoiding bias and ensuring that respondents provide information that is accurate and reliable.1 Here, the accuracy of the record Relator developed pre-suit is not genuinely disputed, and the government’s agreement or disagreement with Relator’s research methodology (or business model) is immaterial. Suffice it to say that, over the last few years, the government has intervened and recovered millions for tax payers in multiple qui tam lawsuits involving healthcare fraud that was uncovered—by NHCA affiliates—through the same standard research methodology. Mininno Decl. ¶¶ 31-32. And while the government appears to be suggesting that it only recently, i.e., on September 27, 2018, learned about NHCA’s investigative techniques and “corporate structure” (see McCabe Decl. ¶ 3), that is inaccurate. For years, NHCA has worked transparently, openly, and ethically with numerous government attorneys throughout the country. Further, in May 2017 (18 months ago), Relator provided to the government its research findings and transcripts of numerous interviews it conducted pre-suit. Lelutiu Decl. ¶ 3. And, during an interview of Mr. Mininno the government conducted in Plano in September 2017 (14 months ago), Mr. McCabe inquired at length about NHCA’s corporate structure. Id. ¶ 4. Second, the government’s attempts to evade the merits of Relator’s claims are similarly unavailing. In cursory fashion, the government represents that (i) before its declination decision 14 months ago, the government conducted an “extensive investigation” into Relator’s allegations 1 See Shari S. Diamond, Reference Guide on Survey Research, in Reference Manual on Scientific Evidence 359, 410-11 (3d. ed. 2011); Payton v. Entergy Corp., 2013 U.S. Dist. LEXIS 150824, at *18-19 (E.D. La. Oct. 21, 2013) (“The function of [the ‘blinding’] procedure is to prevent bias from impacting the survey. In other words, it is to prevent respondents from giving the answer that they think the interviewer wants to hear.”). Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 8 of 48 PageID #: 2492 4 4833-9846-4390 and found them to lack merit (MTD at 14); (ii) the government believes that allowing this litigation to proceed would result in “significant costs and burdens” to the government (id. at 16); and (iii) Relator’s allegations supposedly conflict with public policy (id.). This is merely boilerplate—unsupported and insufficient. As an initial matter, the government’s position that Relator’s claims lack “legal support” (MTD at 14) is foreclosed by the law of the case doctrine, which “posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.” HTC Corp. v. Telefonaktiebolaget LM Ericcson, 2018 U.S. Dist. LEXIS 190415, at *15 (E.D. Tex. Nov. 7, 2018). In the now-adopted R&R, Judge Craven expressly found that Relator’s allegations concerning the Free Nurse and Support Services programs “adequately pleaded [that] Defendants set up a system whereby physicians received something of independent value if they prescribed the Covered Products” and, “[a]t a minimum, the[se] allegations raise a question as to whether the free nurse and reimbursement support provided by Defendants eliminated an expense Prescribers would otherwise have had to incur.” R&R at 45. Similarly, with respect to the White Coat Marketing program, Judge Craven expressly found that Relator’s allegations, “including those regarding the sales training of nurse educators, are sufficient at this stage to support an inference that the nurses recommended products as opposed to merely providing education services.” Id. at 52. These findings are binding on the litigants, and the government cannot wish them away. The government’s bare assertion that Relator’s allegations lack “factual support” (MTD at 14) also falls short. Merely saying something does not make it true. Indeed, despite touting an “extensive investigation” involving “tens of thousands of documents” received from “the defendants” (id.), the motion does not dispute any of the operative facts set forth in the SAC. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 9 of 48 PageID #: 2493 5 4833-9846-4390 Instead, the government attacks strawmen by misstating the SAC’s allegations and equating the challenged practices with “the provision of educational materials or informational programs to patients.” MTD at 16. Here, after extensive briefing in which the government chose not to participate, the Court concluded that Relator’s claims do indeed have “legal merit.” Cf. MTD at 14. Whether the government likes it or not, this is a meritorious action. And before it may dismiss it, the government was required to make at least some showing—evidentiary or otherwise—that amounts to more than boilerplate and unsupported attorney say-so. The government, however, chose not to do so. Most glaringly, there is no evidentiary support in the McCabe Declaration for any of the propositions that underpin the government’s motion—including the extent of the government’s alleged “investigation” into Relator’s claims.2 Far from absolute, the power of the Executive Branch to dismiss meritorious FCA lawsuits is subject to the system of checks and balances spelled out in the Constitution.3 Relator respectfully requests that the Court carefully scrutinize the government’s representations to ensure that the motion does not reflect an overreach by the Executive Branch—or the biases or 2 During conversations that began in October 2018, Relator requested that the government share whatever evidence it has that allegedly undermines Relator’s allegations. The government has declined to share this information (Lelutiu Decl. ¶¶ 33-34)—despite now making various representations to the Court as to the scope and nature of its “investigation.” 3 United States v. Cowan, 524 F.2d 504 (5th Cir. 1975) (quoting United States v. Nixon, 418 U.S. 683, 704 (1974) (“Deciding whether . . . the action of [another branch of government] exceeds whatever authority has been committed[] is itself a delicate exercise in constitutional interpretation, and is a responsibility of this Court as ultimate interpreter of the Constitution.”)). Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 10 of 48 PageID #: 2494 6 4833-9846-4390 inertia of government officials4 or government lawyers. To ensure that the government’s motion receives appropriate scrutiny, Relator also respectfully requests a hearing, as the FCA mandates. II. RELEVANT FACTS The government’s motion is predicated on a number of significant misstatements and omissions. In its rush to create a narrative supportive of dismissal, the government has lost track of the essential facts and, along the way, created an alternate universe where good is bad; the innocent are guilty; and the perpetrators of fraud—including recidivists like Bayer (see SAC ¶ 304)—are the victims. It is important to set the record straight. A. Relator and Its Parent Organization, the NHCA Group5 NHCA was founded in 2011 by Mr. Mininno. Mininno Decl. ¶ 3. At its inception, NHCA was intended to provide consulting services to companies that wished to invest in healthcare, such as investigative work of target healthcare entities to ensure that they were not engaged in fraud or other illegal activities. Id. While further developing its business plan, NHCA discovered that fraud was widespread in the healthcare industry and existing methods of detecting it were ineffective. Id. ¶¶ 5-6. NHCA thus sought to develop new tools to combat fraud and abuse. Id. Like many small businesses, NHCA faced challenges in acquiring capital to fund its operations. Id. ¶ 8. Two of NHCA’s “angel investors” formerly worked at Wall Street firms. Id. ¶ 9. These individuals, and another angel investor, are themselves senior citizens, and 4 Relator notes that the current Secretary of HHS is a former senior executive of a subsidiary of Eli Lilly & Company, a defendant in the co-pending Lilly matter. https://www.hhs.gov/about/leadership/secretary/alex-m-azar/index.html. 5 Due to space constraints, we summarize herein only certain aspects of NHCA’s history and work. For additional information, we respectfully refer the Court to the Mr. Mininno’s declaration. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 11 of 48 PageID #: 2495 7 4833-9846-4390 invested in NHCA in their individual capacity. Id. Based on Mr. Mininno’s interactions with these individuals, he believes that their investment was driven by a desire to achieve societal change, not just personal profit. Id. To conduct some of its business, NHCA has used subsidiaries, i.e., LLCs (id. ¶ 10), which the government derogatorily calls “shell companies.” There were legitimate business reasons for NHCA’s use of LLCs. Id. ¶ 11. In 2013, after securing initial start-up financial resources, NHCA began conducting an in- depth research study intended to enable it to understand the healthcare industry and its vulnerability to fraud. Id. ¶ 12. In connection with this project, NHCA built an extensive database of healthcare data and sought to develop a set of statistical tools that could interpret raw data and create signposts that NHCA’s experts could then use to identify potentially fraudulent activity. Id. ¶ 13. NHCA spent several years working with numerous individuals with relevant expertise, including former healthcare fraud prosecutors at the federal and state level; employees of insurance companies that are tasked with identifying fraud; former federal agents; former OIG investigators; healthcare data scientists; informatics statisticians with expertise in fraud detection; pharmacists; healthcare providers; and patients. Id. ¶ 14. NHCA’s work has uncovered numerous fraudulent schemes, including frauds involving: • Corrupt billing personnel with expertise in “up coding” who would auction their services to the highest bidder; • Itinerant individuals who repeatedly set up bogus home healthcare companies, billing the government hundreds of thousands of dollars, discontinuing operations, and then starting the process again; Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 12 of 48 PageID #: 2496 8 4833-9846-4390 • Shady ambulance drivers who would lurk outside dialysis centers and offer cash to able-bodied patients to take a costly ambulance to and from treatment, at the expense of the government; • Organized crime figures with a ruthless grip on the home-health and nursing home industries; • A director of admission at a mental health facility who used cigarettes to bribe patients from group homes to “self-admit” to inpatient facilities to increase census, fill beds, and bill Medicare; • Patient recruiters who conducted rehearsals where “patients” would learn to recite “symptoms” and obtain prescriptions or unnecessary services and drugs; • Traffickers in Medicaid-insurance cards issued to the homeless, which can be turned into ATM cards and used to bill government programs for non-existent services; • No-show home health aides, including one who was getting paid a full time wage by Medicaid to “care” for his elderly parents—all healthy individuals—while he maintained a full time job elsewhere; • A “caregiver” of severely mentally-disabled men and women who, while supposedly driving patients to lunch, would run his web design business; • Home-care marketers who paid cash to doctors for unnecessary referral of seniors for Medicare and Medicaid reimbursed home-care; • Dishonest drug representatives who used football tickets and other forms of remuneration to increase the number of prescriptions of expensive drugs; Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 13 of 48 PageID #: 2497 9 4833-9846-4390 • Hospital providers whose policies prohibited observational status for patients with chest pain (at a cost of $720.00), but instead required in-patient treatment (at a cost of $7,600.00); • Nursing homes that routinely and systematically discarded and refilled medications to increase Medicare reimbursements; • An unscrupulous OB/GYN doctor who was purchasing black-market counterfeit IUDs and placing them in unsuspecting Medicaid patients; • Durable Medical Equipment providers who falsified patients’ pulse oximetry testing to enroll them in sleep studies, costing Medicare programs millions of dollars; • Hospice providers who paid thousands of dollars to physicians to routinely admit and recertify patients for hospice care even though the patients did not have a terminal diagnosis. Id. ¶ 16. Based on its extensive experience investigating fraud in various segments of healthcare, NHCA also learned that taxpayer-funded federal and state agencies are largely ineffective in combating the full extent of fraud, oftentimes because the frauds at issue are too small (and thus allegedly unworthy of the government’s attention) or too large (and thus too complex for cash- starved government agencies to tackle). Id. ¶ 17. In its motion, the government trivializes NHCA’s work. Among other things, the government suggests that NHCA’s sole business objectives are filing qui tam lawsuits. The government is mistaken. Id. ¶ 18. It is true that one way in which NHCA has sought to curb fraud is by bringing it to the attention of the federal and state authorities pursuant to procedures Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 14 of 48 PageID #: 2498 10 4833-9846-4390 set forth in various whistleblower statutes. Id. ¶ 20. But NHCA also has sought to prevent fraud by, among other things, minimizing or eliminating opportunities for abuse. Id. ¶ 21. For example, NHCA has also (i) performed research work, such as analyses concerning hospice fraud, for private companies; (ii) worked with a private data analytics group contracted to do audits of large Medicare and Medicaid providers in the Southeastern United States, resulting in the routine exposure of fraudulent billing practices; (iii) partnered with a medical informatics scientist to use textual analysis of publications to identify thousands of potential “grant overlaps”—academic research for which government agencies such as the National Institute of Health were paying twice; and (iv) worked with an academic heath-informatics researcher to develop a way to use statistical analysis and machine-learning to identify healthcare providers who inappropriately overprescribe opioid pills. Id. ¶ 22. To investigate fraud, NHCA designed interview and research methodologies that are consistent with well-accepted qualitative research rules and norms. Id. ¶ 24. Among other things, to ensure that the information provided by respondents was not tainted by conscious or unconscious bias, NHCA’s practice was to inform respondents that it was an unbiased organization without any particular agenda. Id. Importantly, in most instances, NHCA’s representatives did not know ex ante whether or how NHCA would use information gathered during the interview, such that any disclosure as to how the data may ultimately have been used would oftentimes have been speculative. Id. The vast majority of the research and information gathered during the course of NHCA’s five years of operation has never been used in any litigation. Id. ¶ 25. To be sure, it was always NHCA’s intention to create an environment where interviewees would provide “open and honest” information. Id. To that end, NHCA’s interview protocols were designed expressly to Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 15 of 48 PageID #: 2499 11 4833-9846-4390 avoid bias and collect truthful, reliable information. Id. Most importantly here, the government does not, nor can it, challenge the veracity of the information learned by NHCA through its research. NHCA has achieved significant success in its mission to combat healthcare fraud. And for all of the government’s efforts to disparage it, NHCA has routinely partnered with the government to bring the perpetrators of fraud to justice. Id. ¶ 31. To date, NHCA’s efforts have resulted in the return of tens of millions of dollars of ill-gotten government funds. NHCA successes that can be publicly disclosed at this time include the following: • In a 2012 FCA action against Home Bound Health Care, the president of the defendant entity pleaded guilty to claims that he paid kickbacks to medical directors in exchange for referrals of elderly patients on Medicare. He and his business agreed to repay the U.S. government approximately $6.8 million. Shmushkovich et al. v. Home Bound Healthcare, Inc. et al., 1:12-cv-02924 (N.D. Ill.). • In 2017, Galena Biopharma Inc. agreed to pay more than $7.55 million to settle FCA claims accusing it of paying kickbacks to doctors to induce them to prescribe Galena’s opioid-based pain medication to patients. A discussion of this action was presented by senior DOJ attorney Stephen Cox at the Federal Bar Association’s February 2018 Qui Tam Conference.6 • In a 2016 FCA action, Novo Nordisk paid approximately $60 million to resolve claims brought by whistleblowers that, among other improper activities, Novo Nordisk was paying kickbacks to induce healthcare providers to prescribe its 6 https://www.law360.com/articles/1020218/doj-leaning-more-on-fca-in-fight-against- opioid-abuse. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 16 of 48 PageID #: 2500 12 4833-9846-4390 products to patients. One method of carrying out this fraud was disguising sales reps as medical educators as part of a “white coat marketing” scheme and paying them kickbacks to persuade doctors to prescribe its products.7 Novo Nordisk’s white coat marketing scheme was uncovered by whistleblowers including two aided by NHCA, who brought a qui tam action that included years of the Group’s research work into various marketing practices conducted by the drug industry. • In April 2018, the government intervened in five lawsuits, including suits brought by NHCA, claiming that Insys Therapeutics Inc. paid kickbacks in the form of speaker program payments, jobs for prescribers’ relatives and friends, and lavish meals and entertainment in order to induce physicians and nurses to prescribe its products. Although a settlement is not yet finalized, it has been reported that Insys will pay $150 million.8 The United States’ complaint in intervention explicitly acknowledges Mr. Mininno and an NHCA LLC that was “formed for the purpose of bringing th[e] qui tam action.” Complaint in Intervention of The United States, U.S. ex rel. John Doe and ABC, LL C v. Insys Theraperutics, Inc. et al,, No. 14-cv-3488 (C.D. Cal. Apr. 13, 2018), ECF No. 64 ¶ 13, available at https://www.justice.gov/opa/press-release/file/1063051/download. • This past fall, the government also intervened in an another qui tam case that NHCA helped develop against a pharmaceutical/durable medical products 7 https://www.justice.gov/opa/pr/novo-nordisk-agrees-pay-58-million-failure-comply- fda-mandated-risk-program 8 https://www.reuters.com/article/us-insys-opioids/insys-to-pay-150-million-to-settle-u-s- opioid-kickback-probe-idUSKBN1KT1G5 Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 17 of 48 PageID #: 2501 13 4833-9846-4390 company. That company is expected to repay $17 million to the taxpayers to rectify the FCA violations alleged by the whistleblower. Mininno Decl. ¶ 31. In each of the matters listed above, NHCA used the same or similar research techniques the government has now disparaged in its motion to dismiss. Id. ¶ 32. B. Relator’s Allegations Like the government’s attacks on Relator’s character, the government’s cursory recitation of the SAC’s allegations is inaccurate. We summarize the salient aspects of the SAC below. 1. The Free Nurse Program. The Free Nurse scheme involves the provision of “free” nurses—paid for by Bayer and supplied by Lash—to Prescribers to induce them to prescribe Bayer’s MS and cancer products, Betaseron, Nexavar, and Stivarga. SAC ¶ 98. MS and cancer are chronic diseases and medical care for such diseases does not stop after a diagnosis is made and a treatment regimen is selected. Id. ¶ 99. Thus, whenever a Prescriber is treating a patient affected by MS or cancer, the Prescriber has a continuing duty to monitor the patient throughout the duration of treatment. Id. This requires the Prescriber and/or his or her staff to monitor the patient’s response to medication, treatment, and vitality—a task that typically involves multiple telephone calls, office visits, and constant communication with the patient. Id. The duty to monitor chronically-ill patients is a critical component of patient care and serves several purposes. Id. ¶ 100. Chronic diseases such as MS and cancer are unpredictable and often disabling diseases, and their progression, severity, and symptoms can vary significantly from patient to patient. Id. Case management can also be complex due to relapses and patients who fluctuate between good days and bad days. Id. Furthermore, MS and cancer medications—including Betaseron, Nexavar, and Stivarga—are oftentimes associated with Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 18 of 48 PageID #: 2502 14 4833-9846-4390 significant side effects that may themselves require treatment or management. Id. For instance, common side effects associated with Betaseron, Nexavar, and Stivarga include hypertension, nausea, low white blood cell count, vomiting, bleeding, diarrhea, constipation, pain, anemia, hypotension, gastroesophageal reflux, and palpitations. Id. To manage these side effects, Prescribers need to constantly monitor the patients’ progress and well-being, adjust the treatment dosage, prescribe medications that may lessen the patients’ side effects, and, at times, discontinue treatment in favor of other options. Id. While the treatment of cancer and MS requires Prescribers’ continuous involvement post- diagnosis and the constant monitoring of the patients’ reaction to and tolerance for treatment, following-up and monitoring patients are not profitable endeavors for Prescribers. Id. ¶ 101. Much of the required follow-up and monitoring work requires telephonic interactions. Id. ¶ 102. But Prescribers are not allowed to bill patients’ insurance—including Medicare and other government-sponsored plans—for phone interactions with the patients. Id. As a result, “doctors’ offices are struggling to man the phones: handling everything from appointment and prescription refill requests, to concerns from sick patients, to billing issues—and lately, more patients’ questions about how the health reform law will affect them. But insurance carriers don’t pay doctors for any of those phone calls, which doctors estimate cost $15 to $20 each. . . . Now, more offices and hospitals are looking for ways to take fewer patients’ calls.” Id. (quoting J. Wieczner, The Doctor Won’t Take Your Call: Physicians Hate Phone Calls, and Not Just Because They Can’t Bill You, MarketWatch, July 16, 2013, available at www.marketwatch.com/story/the-doctor-wont-take-your-call-2013-07-16; see also Coding for Telephone Consultations, Tex. Med. Ass’n, Mar. 23, 2010, available at https://www.texmed.org/template.aspx?id=5422 (noting that “Medicare does not reimburse” for, Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 19 of 48 PageID #: 2503 15 4833-9846-4390 among other things, “telephone evaluation and management (E&M) service provided by a physician to an established patient, parent, or guardian not originating from a related E&M service or procedure within the next 24 hours or soonest available appointment”). And even in instances when the patients are able to travel to the Prescribers’ offices for in-person follow-up, Medicare and other government-sponsored plans usually pay a reduced rate for care administered by the Prescribers’ staff. Id. ¶ 102. Full rates are paid for staff- administered services only if the Prescribers are “present in the office suite and immediately available to provide assistance and direction throughout the time the aide is performing services.” Id. (citations omitted). Seeking to capitalize on the fact that follow-up and patient monitoring work is unprofitable for Prescribers, Bayer, through Lash, devised the Free Nurse program. Id. ¶ 103. Through the Free Nurse program, Bayer sales reps offered Prescribers the time, expertise and resources of multiple “nurse educators” to provide follow-up care and relieve the Prescribers of their duty to monitor patients—all completely free of charge to the Prescribers. Id. For these services, Bayer paid Lash millions of dollars. Id. Given that the Lash nurses were performing medical services that the Prescribers or their staff would otherwise have been required to discharge their duty to attend to and monitor their patients, the significant amount of compensation Bayer paid to Lash (and related entities) is a reasonable, and likely conservative, estimate of the amount of money the Free Nurse program saved Prescribers. Id. In its motion, the government mischaracterizes the SAC’s allegations concerning the Free Nurse program. The government suggests that the conduct at issue comprises (i) “provid[ing] instructions on how to properly administer their newly-prescribed medications” (MTD at 3); (ii) “access to a toll-free patient-assistance line” (id. at 16); or (iii) “instructions on how to properly Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 20 of 48 PageID #: 2504 16 4833-9846-4390 inject or store their medication” (id. at 16). But Relator’s allegations are not focused on these innocuous practices—particularly since three of the medications at issue (Nexavar, Stivarga, and Adempas) are not even injectable medications. Relator’s focus is on the fact that Bayer- compensated nurses provide actual medical care, e.g., counseling or responding to inquiries about adverse events, the disease process, side effects, etc.—tasks that are an integral part of the medical treatment of a chronic disease patient and, as such, are the responsibility of Prescribers. SAC ¶¶ 107-109. 2. The White Coat Marketing Scheme Through the White Coat Marketing scheme, with assistance from Lash and Ashfield, Bayer capitalized on the status of the skilled registered nurses to obtain access to Prescribers, promote the Covered Products, and induce Prescribers to prescribe them. SAC ¶ 153. Prescribers often restrict or deny access to drug reps, but are naturally inclined to meet with and listen to healthcare professionals. Id. ¶ 154. Accordingly, with support from Lash and Ashfield, Bayer created a scheme where registered nurses purported to provide independent medical advice to Prescribers and patients, while, in reality, the nurses were paid to promote and recommend the Covered Products to Prescribers and patients. Id. Bayer’s relationship with Amerisource, Lash, and Ashfield plainly involves the payment of cash consideration—kickbacks—in return for services that led to prescriptions being filled and paid for with government money. Id. ¶ 155. By paying and accepting remuneration to recommend products that were subsequently reimbursed by government programs, Bayer, Amerisource, Lash, and Ashfield violated the AKS. Defendants’ actions are precisely the type of conduct the False Claims Act and AKS was enacted to curb. Id. ¶ 156. By paying healthcare professionals to influence their peers, Defendants improperly influenced the Prescribers’ behavior and caused them to write Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 21 of 48 PageID #: 2505 17 4833-9846-4390 prescriptions that were reimbursed by government insurance programs. Id. The OIG, which coined the term “white coat marketing,” has expressly warned against it.9 To circumvent the prohibitions of the AKS, Bayer contrived a disease awareness program, seemingly distinguishing the nurses from drug reps and enabling the Bayer- compensated nurses to maintain the appearance of independence. Id. ¶ 159. Bayer, Lash, and Ashfield designated the nurses as “educators” who, instead of being paid to recommend drugs, were purportedly tasked to promote educational services to Prescribers and patients about the diseases the Covered Products were approved to treat. Id. Although the Lash and Ashfield nurses were hired as independent contractors and “educators,” Relator’s investigation demonstrates that the Lash and Ashfield nurses were expected to and did recommend the Covered Products to Prescribers. Id. ¶ 160. Among other things, the Lash and Ashfield nurses (1) received sales training on how to effectively gain access to Prescribers; (2) were taught how to pivot from providing clinical information to actually promoting the Covered Products; (3) were expected to build a rapport with Prescribers and their staff and thereafter promote the Covered Products; (4) were expected to target high-volume Prescribers; and (5) interacted one-on-one with the patients, allowing them to push Bayer’s marketing message. Id. ¶¶ 166-193. In its motion, the government asserts that it “has consulted with subject-matter experts at HHS-OIG about the relators’ allegations and the applicability of regulatory safe harbors and government-issued industry guidance.” MTD at 14-15. But the Court has already rejected Defendants’ arguments that the “personal services” safe harbor applies. See R&R at 46-48. And 9 See, e.g., OIG Advisory Op. 11-08, at 6 (Jun. 14, 2011), available at https://oig.hhs.gov/fraud/docs/advisoryopinions/2011/AdvOpn11-08.pdf. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 22 of 48 PageID #: 2506 18 4833-9846-4390 the SAC explains at length why Defendants’ contrary contention is incorrect. See SAC ¶¶ 312- 318. The government makes no effort to engage the merits of Relator’s assertions. 3. The Support Services Scheme In the third scheme, to induce recommendations of Betaseron, Nexavar, and Stivarga, over competing products, Bayer, with the assistance of Lash, offered free reimbursement support services for Prescribers who wrote prescriptions for these drugs. SAC ¶ 200. Like the Free Nurse scheme, the Support Service scheme involves the provision of tangible, in-kind remuneration that greatly reduced, and in some instances eliminated, Prescribers’ administrative costs related to prescribing Betaseron, Nexavar, and Stivarga. Id. When a Prescriber writes a prescription for Betaseron, Nexavar, and/or Stivarga, a number of additional steps must be completed before the patient is able to “fill” the prescription at the pharmacy. Id. ¶ 201. These steps (collectively “Support Services”) customarily include: • Determining whether and to what extent the patient has prescription drug insurance benefits; • Determining if the drug is on the formulary lists and, if so, the applicable tiers; • Seeking a coverage determination for the drug from the patient’s carrier; • Determining the patient’s co-pays and deductibles; • Determining whether a patient may qualify for “co-pay” assistance or coupons; • Appealing any denial of coverage or prior-authorization; • Determining the in-network pharmacy where the patient can have the drug filled; • Communicating this information to the patient; and, • Managing the resultant paper trail. Id. Critically, it is the Prescriber’s responsibility to complete the numerous steps between the Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 23 of 48 PageID #: 2507 19 4833-9846-4390 writing of a prescription and the patient’s receipt of the drug. Id. ¶ 202. These steps are time- consuming, averaging roughly 20 hours per week for a Prescriber’s office. Id. (citations omitted). Because completing these tasks requires the attention of the Prescriber and his or her staff, each task bears discrete economic costs to the Prescriber. For certain prescription drugs that are particularly expensive, like Betaseron, Nexavar, or Stivarga, a Prescriber’s staff must also work with the patient’s insurance carrier to obtain what is known as a “prior authorization.” Id. ¶ 203. A prior authorization is the requirement that a Prescriber obtain approval from the patient’s health insurance before the drug can be dispensed by a pharmacy—or the patient may be required to pay for the medicine “out of pocket.” Id. Because it entails advocacy on behalf of the patient, obtaining prior authorization is also a responsibility that falls within the Prescriber’s duty of care. Id. ¶ 204. Importantly, numerous states have enacted legislation that requires Prescribers to obtain prior authorizations on behalf of the patients. Id.10 Further, large Managed Care Organizations, which administer the Medicaid programs in several states and Medicare Advantage plans throughout the country, also specifically require the 10 See, e.g., Ala. Medicaid Preferred Drug and Prior Authorization Program, Prior Authorization Criteria Instructions; Cal. Health and Safety Code, § 1367.241; 10 CCR 2505-10, § 8.017E; Delaware Health and Social Services General Policy, § 1.17; Florida Medicaid, Authorization Requirements Policy, §2-2.4.4 (June 2016); Georgia Dept. of Comm. Health Medicaid Fee-for-Service Pharmacy Prior Authorization Request Process Guide; Louisiana Medicaid Program Provider Manual, Chapter 37, § 37.5.5; Mass. Health Provider Manual, § 450.303; Mich. Dept. of Health and Human Servs., § 7.5; Minn. Statutes, § 62J.497, subd. 5; NY State Medicaid Program, Physician Prior Approval Guidelines; N.C. Dept. of Health and Human Servs., Prior Approval and Due Process; NJAC 10:51-1.14; Oregon Health Authority, Instructions for Submitting Prior Authorization Requests for Oregon Medicaid Providers (Aug. 2015); Pennsylvania Pharmacy Prior Authorization General Requirements; S.C. DHHS, Pharmacy Services Medicaid Provider Manual, § 2; Tenn. Medicaid Pharmacy Claims Submission Manual, § 7.6; Texas Admin. Code. Title 28, § 19.1820; Texas Admin. Code. Title 1 § 531.073; WV Health and Human Resources Bureau Manual, § 518.2. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 24 of 48 PageID #: 2508 20 4833-9846-4390 Prescribers to perform prior authorization services for the drugs they prescribe. Id. ¶ 205.11 Medicare, Medicaid, and TRICARE carriers use the prior authorization process to contain costs associated with expensive medications. Id. ¶ 206. This is particularly true for products like the Covered Products, which are expensive and come with myriad potential side- effects that may require other medications to manage, resulting in additional charges to the patient’s insurance. Id. For such products, carriers routinely require Prescribers to “make a case” of medical necessity and explain why a less expensive product is not an acceptable alternative. Id.12 As a coalition of healthcare organizations led by the American Medical Association has recognized, coverage determinations, prior authorization, and appeals often entail “very manual, time-consuming processes . . . [that can] divert valuable and scarce resources away from direct patient care.” Id. ¶ 207 (citations omitted). Further, industry research demonstrates that these 11 See, e.g., Molina Medicaid New Mexico 2014 Provider Manual, § 6; see also Anthem BlueCross BlueShield, Preauthorization requirements, available at https://www.anthem.com/ wps/portal/ahpfooter?content_path=shared/noapplication/f2/s3/t0/pw_006531.htm&state=co&la bel=Preauthorization (“The physician who . . . orders the procedure or service is responsible for obtaining preauthorization”); Michael Bilhari, M.D., Insurance Companies Use Prior Authorization to Keep Health Care Costs in Check (Jan. 21, 2017), available at https://www.verywell.com/prior-authorization-1738770 (“Prior authorization is a requirement that your physician obtains approval from your health care provider before prescribing a specific medication for you or to performing a particular operation. Without this prior approval, your health insurance provider may not provide coverage, or pay for, your medication or operation, leaving you to cover some, or all, of the costs out of pocket.”). 12 See, e.g., Exceptions and Appeals for Drug Therapies: A Guide for Healthcare Providers, available at https://www.janssencarepath.com/sites/www.janssencarepath.com/files/ exceptions-and-appeals-for-drug-therapies.pdf (“Prior authorization (PA) processes require healthcare providers to contact and receive approval from a patient’s payer before that payer will cover a certain prescription drug. In these situations the prescriber must substantiate-verbally or in writing-why a particular therapy is medically necessary.”). See also Prior Authorizations: A Payer’s Perspective, Medical Economics (July 8, 2014), available at http://www.medicaleconomics.com/modern-medicine-feature-articles/prior-authorizations- payers-perspective. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 25 of 48 PageID #: 2509 21 4833-9846-4390 tasks are time-consuming and costly for Prescribers. Id. For instance, a study of 12 primary care practices published in 2013 in The Journal of the American Board of Family Medicine concluded that “preauthorization is a measurable burden on physician and staff time.” Id. According to another study published in 2009 in Health Affairs, primary care Prescribers spent a mean of 1.1 hours per week on authorization-related work, primary care nursing staff spent 13.1 hours, and primary care clerical staff spent 5.6 hours. Id. ¶ 208. The same study estimated that the overall cost to the healthcare system of all practice interactions with health plans, including authorizations, was between $23 billion and $31 billion annually. Id. To be sure, if a Prescriber does not wish to pay its own staff to carry out these administrative tasks, the Prescriber can outsource them to third-party commercial vendors. Id. ¶ 209. Numerous vendors provide such outsourcing services—but they charge significant fees. Id. As a study conducted by Deloitte on behalf of a large pharmaceutical company demonstrates, medical practices pay up to $98 per initial insurance verification, up to $75 for insurance re- verification, up to $111.82 for prior authorizations, and other à la carte fees. Id. Thus, whether outsourced or performed in-house, the tasks that must be completed before prescriptions are filled result in significant, tangible administrative costs to Prescribers. Id. ¶ 210. These are direct costs that Prescribers would have to incur to perform or outsource the burdensome administrative tasks associated with Support Services. Id. Despite the significant associated costs, Prescribers are not allowed to charge the patient or their insurance provider for providing Support Services. Id. ¶ 211. For example, in Texas, “[p]roviders must certify that no charges beyond reimbursement paid under Texas Medicaid for covered services have been, or will be, billed to an eligible client.” The Texas Medicaid Provider Procedures Manual makes clear to providers that “Federal regulations prohibit Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 26 of 48 PageID #: 2510 22 4833-9846-4390 providers from charging clients a fee for completing or filing Medicaid claim forms” and notes that the “cost of claims filing is part of the usual and customary rate for doing business.” Further, providers cannot charge “Texas Medicaid clients, their family, or the nursing facility for telephone calls, telephone consultations, or signing forms.” Texas Medicaid Provider Procedures Manual § 1.6.9 (Dec. 2017), available at www.tmhp.com/Pages/Medicaid/Medicaid_ Publications_Provider_manual.aspx. Thus, when an office-based Prescriber receives payment for an office consultation, the payment is intended to compensate the Prescriber for medical care given and administrative tasks associated with that patient’s care. SAC ¶ 211. These tasks include Support Services. Id. Given that the administrative tasks associated with the provision of Support Services are time-consuming, Prescribers are less likely to prescribe a drug that imposes an undue burden on support staff because doing so decreases profitability. Id. ¶ 212. Conversely, a Prescriber is much more likely to prescribe a drug if it can be prescribed with little or no administrative burden. Id. These factors were not lost on Bayer. Id. ¶ 213. Indeed, Bayer readily assumed the expense the Prescribers would otherwise have had to incur, knowing that the availability of Support Services would be a powerful tool in the hands of Bayer drug reps and induce Prescribers to prescribe Betaseron, Nexavar, and Stivarga over a competitor’s products. Id. While pitching Prescribers, Bayer sales reps emphasized that, if the Prescribers prescribed Betaseron, Nexavar, or Stivarga, Bayer would provide—free of charge—the services and resources of a full reimbursement support team to manage the administrative tasks associated with prescribing the drug. Id. ¶ 214. Bayer sales reps further emphasized that the cost and expenses normally associated with Support Services and managing a patient’s prescription would Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 27 of 48 PageID #: 2511 23 4833-9846-4390 be shifted to Bayer, thereby increasing the Prescriber’s bottom line. Id. In its motion, the government asserts that the challenged Support Services activities amount to nothing more than “helping physicians complete insurance documents, such as benefit verifications and prior authorization forms.” MTD at 3. Here too, the government has oversimplified and mischaracterized the SAC’s allegations. What Relator alleges is that, to induce the writing of prescriptions, Bayer offered Prescribers a whole host of Support Services that go well beyond the mere provision of information. Rather, Bayer underwrote numerous time-consuming and unprofitable tasks Prescribers and their staff are duty-bound to complete to obtain insurance coverage for the Bayer Covered Products. For every patient that was prescribed a Bayer product instead of a competitor’s, a Prescriber saved tens and perhaps hundreds of dollars. That is tangible compensation that Bayer paid to induce the writing of prescriptions— and thus amounts to an AKS violation. C. Relator’s Pre-Suit Interactions with the Government and the Government’s Declination Decision On or about May, 5, 2017, several weeks before filing the Sealed Complaint, Relator, through counsel, provided an extensive pre-filing disclosure memorandum to the EDTX USAO. Lelutiu Decl. ¶ 2. Together with the pre-filing disclosure statement, Relator provided the government with anonymized transcripts of interviews with numerous individuals with firsthand knowledge of the schemes. Id. On May 26, 2017, Relator’s counsel traveled to Plano to meet with Joshua Russ, an Assistant U.S. Attorney in the EDTX USAO. Id. ¶ 3. Relator’s counsel provided an overview of Relator’s allegations for Mr. Russ, and a conversation followed. Id. At the end of the meeting, Mr. Russ indicated that he found Relator’s allegations “fascinating” and that he was looking forward to working with Relator and its counsel. Id. At no point during the meeting did Mr. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 28 of 48 PageID #: 2512 24 4833-9846-4390 Russ express any reservations concerning Relator’s theories of liability or investigative techniques. Id. On September 13, 2017, Mr. Mininno and Relator’s counsel traveled to Plano to meet with the government. Id. ¶ 4. The meeting took place at the government’s request, so that government lawyers could get a better understanding about the allegations at issue in this lawsuit, the Lilly action, and the then-pending Gilead action. Id. Mr. McCabe, among others, participated in the meeting via teleconference. Id. Rather than inquire into the substance of the allegations, Mr. McCabe focused almost exclusively on NHCA’s corporate structure. Id. Nevertheless, at the end of the meeting, Mr. McCabe told Mr. Mininno and counsel that the government would investigate Relator’s allegations. Id. Notwithstanding Mr. McCabe’s statements during the September 13, 2017 meeting, which are repeated in the government’s motion, Relator does not believe that the government investigated Relator’s allegations. For instance, none of Defendants’ regulatory filings that were submitted before Relator’s complaint became unsealed in October 2017 reference civil investigative demands the government would have had to serve to investigate Relator’s claims. Given that Defendants are publicly-traded companies, it is inconceivable that they would not have disclosed to the investing public the existence of a significant government investigation. It also seems inconceivable that, in a matter of weeks, the government marshalled the resources to conduct an “extensive investigation” that involved the collection and review of “tens of thousands of documents” from Defendants and numerous interviews. See MTD at 14. On October 27, 2017, approximately six weeks after interviewing Mr. Mininno, the government, through Mr. McCabe, informed Relator’s counsel that the United States would decline intervention. Lelutiu Decl. ¶ 5. Despite counsel’s request, Mr. McCabe declined to Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 29 of 48 PageID #: 2513 25 4833-9846-4390 provide a substantive explanation for the government’s decision. Id. Mr. McCabe also did not indicate that the government had concluded that Relator’s claims were without “factual or legal support.” See MTD at 14. On October 30, 2017, the government filed a Notice of Election to Decline Intervention. In its declination notice, the government made no mention of any concerns concerning Relator’s claims, let alone its current contention that Relator’s “allegations lack sufficient factual and legal support.” See MTD at 14. Nor did the declination notice mention any concerns the government had with respect to the burden of monitoring this case. To the contrary, the declination notice indicates that the United States was authorizing Relator to proceed: Although the United States declines to intervene, we respectfully refer the Court to 31 U.S.C. § 3730(b)(1), which allows the Relator to maintain the action in the name of the United States; provided, however, that “the action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.” Id. Therefore, the United States requests that, should either the Relator or Defendants propose that this action be dismissed, settled, or otherwise discontinued, this Court solicit the written consent of the United States before ruling or granting its approval. D. Defendants’ Unsuccessful Efforts to Dismiss the Case Following the government’s declination decision, Relator’s complaint became unsealed. In January 2018, with no assistance from the government, Relator amended the complaint. Defendants then filed voluminous motions to dismiss and stay discovery. Numerous similar motions were also filed in the parallel Lilly case and the then-pending Gilead case. Via ECF, government lawyers received copies of relevant motion papers. The government, however, did not file a single brief. On May 14, 2018, Judge Craven held a consolidated hearing on the Bayer, Lilly, and Gilead Defendants’ motions to dismiss. Lelutiu Decl. ¶ 8. The hearing was attended by dozens Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 30 of 48 PageID #: 2514 26 4833-9846-4390 of defense lawyers. Id. Not a single government lawyer was in attendance. Id. On June 29, 2018, Judge Craven issued the R&R. After an extensive analysis, spanning over 100 pages, Judge Craven concluded that each theory of AKS liability articulated by Relator cleared the plausibility standard of Rule 12(b)(6). With respect to the Free Nurse and Support Services schemes, the Court found that Relator “adequately pleaded [that] Defendants set up a system whereby physicians received something of independent value if they prescribed the Covered Products” and, “[a]t a minimum, the[se] allegations raise a question as to whether the free nurse and reimbursement support provided by Defendants eliminated an expense Prescribers would otherwise have had to incur.” R&R at 45. Similarly, with respect to the White Coat Marketing scheme, Judge Craven found that Relator’s allegations, “including those regarding the sales training of nurse educators, are sufficient at this stage to support an inference that the nurses recommended products as opposed to merely providing education services.” Id. at 52. Judge Craven nevertheless found that the AC fell short of the heightened pleading standard of Rule 9(b). Id. at 82, 86, 89, 92, 100-101. Neither Relator nor Defendants filed objections to the R&R. Nor did the government. On July 31, 2018, the District Court adopted the R&R. D.I. 98. Following the issuance of the R&R, Defendants renewed their motion to stay discovery. D.I. 92. Relator opposed Defendants’ motion, noting that it was diligently working to amend the AC. On August 8, 2018, Judge Craven denied Defendants’ renewed motion to stay discovery, finding that “[t]he Court is not persuaded there is an immediate and clear possibility Relator’s anticipated amended complaint will fail to resolve the pleading deficiencies.” D.I. 99 at 3. In mid-August, Relator amended the AC and addressed head-on each of the deficiencies Judge Craven identified in her analysis by, among other things, adding hundreds of pages of Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 31 of 48 PageID #: 2515 27 4833-9846-4390 additional factual details to support Relator’s claims. See D.I. 102-12 (redline showing changes Relator made to the AC). Preparing the amendments required hundreds of hours of attorney time for Relator’s legal team. Lelutiu Decl. ¶ 9. On October 3, 2018, Defendants moved to dismiss the SAC. That motion is now fully briefed. E. The Government’s 48-Hour Ultimatum and Relator’s Efforts to Understand the Government’s Concerns On September 29, 2018, Mr. McCabe interviewed Mr. Mininno about three unrelated sealed complaints filed by NHCA affiliates. Lelutiu Decl. ¶ 10. This interview, like the one Mr. McCabe had conducted approximately 12 months prior, failed to focus on any substantive issues raised in the complaints. See id.; see also McCabe Decl. ¶ 3. A few days after this interview, Relator’s counsel received a cryptic note from Mr. McCabe: “Wanted to see if you were available tomorrow for a brief telephone call regarding the status of the Bayer and Eli Lilly cases in the Eastern District of Texas.” Lelutiu Decl. ¶ 11. On October 3, 2018, Relator’s counsel held a telephone conference with Mr. McCabe and one of his colleagues. Id. ¶ 12. Mr. McCabe informed Relator’s counsel that, within 48 hours, the government would be moving to dismiss the Bayer and Lilly actions. Id. He indicated, in cursory fashion, that the government was concerned about three issues: (i) the government’s resources; (ii) the merits of Relator’s claims; and (iii) the methodology Relator had used to conduct its investigation. Id. Relator’s counsel asked Mr. McCabe to explain the government’s concerns regarding the SAC’s merits. Id. ¶ 13. Mr. McCabe declined. Id. Relator’s counsel also expressed dismay with respect to the government’s alleged concerns regarding Relator’s investigative techniques, Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 32 of 48 PageID #: 2516 28 4833-9846-4390 explaining that the government had known about this matter since at least May 2017. Id. Mr. McCabe offered no explanation for the government’s change in position. Id. Relator’s counsel then asked whether it was the government’s position that Relator’s investigation was “tainted” or that the evidentiary record Relator had set out in the SAC was inaccurate. Id. ¶ 14. Mr. McCabe denied that the government was taking that position. Id. Given the unprecedented and unexpected change in the government’s position, on October 4, 2018, Relator’s counsel sent a letter to Mr. McCabe’s supervisor, Mr. Michael Granston. Id. ¶ 15. Relator requested that the government “defer filing its motion until [Relator had] a chance to meet with [the government] to better understand the Government’s concerns and discuss steps [Relator] believe[d it was] able to take to address them.” Id. Following a number of additional communications involving an attorney representing Venari Partners, NHCA’s parent organization, the government agreed to hold an in-person meeting with Relator’s counsel. Id. ¶ 16. The meeting, which lasted approximately 90 minutes, took place on October 18, 2018, in Washington D.C. Id. Mr. Granston and his colleagues Michael Raab and Colin Huntley attended on behalf of the government. Id. In large part, the conversation focused on the Free Nurse and White Coat Marketing programs. Id. It was evident during this meeting that the government lacked a basic understanding of the allegations set out in the SAC. Id. ¶ 17. For instance, one of the government’s lawyers asked Relator’s counsel to explain how information patients received from Bayer-compensated nurses differed from information patients might receive by calling the “800” number listed on an FDA-approved label. Id. In light of the SAC’s allegations, which make clear that Bayer- compensated nurses were heavily involved in the provision of actual medical care, this question made little sense. Id. This is because FDA-approved labels (including Bayer’s) consistently Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 33 of 48 PageID #: 2517 29 4833-9846-4390 make clear that judgment-intensive medical advice must be dispensed only by independent healthcare providers, not the makers of pharmaceutical products or their agents. The same lawyer also indicated that, because the government believed that Bayer’s competitors were engaged in similar-type conduct, the government was skeptical that the challenged conduct drove prescriptions for Bayer products. Id. ¶ 18. This assertion also suggested that the government had not taken the time to study Relator’s allegations. For instance, the SAC alleges that the programs at issue were a “pillar” of Bayer’s marketing strategy, and that Bayer consistently targeted high-volume prescribers. SAC ¶ 112. And, indeed, in the R&R, Judge Craven had already concluded that the AC sufficiently spelled out Defendants’ intent to violate the AKS. During this meeting, Relator’s counsel explained the basis for Relator’s view that its investigative techniques comported with accepted scientific methods. Id. ¶ 19. Beyond noting that Mr. Mininno was an attorney and suggesting that he and his team had deceived the individuals Relator had interviewed, the government provided no rebuttal. Id. Relator’s counsel also asked whether the government had interviewed any of the individuals with whom Relator had spoken and, if so, whether any of them had “recanted” their story. Id. The government’s lawyers did not respond. Id. Mr. Mininno also invited the government to share any information that may have been inconsistent with Relator’s factual allegations. Id. ¶ 21. The government’s lawyers did not identify any inaccuracies in the SAC’s allegations. Id. Towards the end of the meeting, Relator’s counsel sought to address the concerns the government had communicated with respect to the administrative burdens associated with the government’s need to monitor the case going forward. Id. ¶ 22. Relator explained that NHCA Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 34 of 48 PageID #: 2518 30 4833-9846-4390 was open to staying all NHCA pending cases (which involve different facts, but are based on similar theories) in favor of the Bayer and Lilly cases, which were relatively advanced and scheduled for trial in October 2019. Id. The government provided no feedback on this suggestion. Id. Mr. Granston indicated that the government was concerned about the amount of time that may be required for the government to collect the data relevant to Relator’s allegations. Id. ¶ 23. He also indicated that he was concerned that HHS representatives may have to be deposed with respect to guidance HHS has published over the years to the industry. Id. Relator’s counsel responded that they believed that, particularly in light of the pre-trial schedule, the Court would not allow Defendants to engage in a fishing expedition, much less harass the government with overly broad or unreasonable discovery requests. Id. Relator’s counsel also reminded the government’s lawyers that, in addition to the federal claims at issue in the SAC, Relator was pursuing significant claims on behalf of numerous states. Id. ¶ 24. Relator respectfully urged the government to exercise restraint. Id. At the end of the session, Mr. Granston thanked Relator’s counsel and noted that the session had “given us a lot of food for thought.” Id. ¶ 25. He also emphasized that, to the extent that areas of disagreement remained between Relator and the government, they all concerned matters on which “reasonable minds could disagree.” Id. There certainly was no suggestion that the government believed that Relator was pursuing claims that were meritless or factually unsupported. Id. Following this in-person meeting, Relator’s counsel sent additional correspondence to the government’s lawyers following up on a number of the issues. Id. ¶ 26. In addition, Relator’s counsel participated in a telephonic conference with a number of government lawyers, including Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 35 of 48 PageID #: 2519 31 4833-9846-4390 the Assistant Attorney General for the Civil Division, the Honorable Joseph Hunt. Id. During this teleconference, the government’s lawyers made additional comments that appeared to Relator’s counsel to reflect continued misunderstanding on the part of the government. Id. For instance, one of the government’s lawyers suggested that, while the government had spent billions of dollars on the products at issue, the kickbacks Bayer had offered to Prescribers were only in the tens of millions of dollars. Id. This, of course, was an apples-to-oranges comparison, and one that underscored Relator’s point: Defendants were using kickbacks to market staggeringly expensive pharmaceutical products. At the government’s request, Relator’s counsel also provided a number of documents Relator had received during discovery. Id. ¶ 27. For instance, in response to a request that Relator identify “documents that show that Bayer specifically targeted certain high prescribers when offering free support services,” Relator’s counsel sent the government a number of documents that supported Relator’s allegations. Id. Shortly before the Thanksgiving holiday, the government requested that Relator share with the government “evidence” supporting four points: (i) “instances where defendants have quantified for a physician the financial gain he or she could realize from the product support services”; (ii) “instances in which prescribing physicians have eliminated staff or reduced salaries on account of receiving product support services”; (iii) “instances where product support was withdrawn or denied due to declining or insufficient volume of prescribing”; and (iv) “instances where the offer of product support skewed clinical judgment or resulted in overutilization.” Id. ¶ 28. While noting that discovery was ongoing and that Relator did not believe that precedent required any of the evidence at issue, Relator nonetheless provided a 12- Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 36 of 48 PageID #: 2520 32 4833-9846-4390 page written submission accompanied by numerous exhibits that provided the evidence the government had requested. Id. Despite repeated requests, at no point during these discussions did the government share any actual evidence that undermined Relator’s allegations or substantiated the government’s alleged concerns. Id. ¶ 29. For instance, while the government’s motion to dismiss indicates that, before its declination decision, the government had reviewed “tens of thousands of documents” produced by “the defendants” (MTD at 14), the government declined to share a single document with Relator. Lelutiu Decl. ¶ 29. Nor did the government share, despite numerous requests, any case law or OIG guidance that the government believes is inconsistent with Relator’s position. Id. Nor did the government ever take issue with the documentary evidence Relator provided to support its allegations. Id. Throughout its dialogue with the government, Relator consistently indicated that it was willing to discuss ways to streamline the litigation and lessen the administrative burdens associated with the government’s need to monitor case developments. Id. ¶ 30. For instance, Relator offered to voluntarily dismiss its claims against Bayer’s co-defendants. Id. The government provided no feedback on Relator’s proposals. Id. F. The Government’s Motion to Dismiss On December 17, 2018, Relator’s counsel received a letter from Mr. Granston. Lelutiu Decl. ¶ 31. Mr. Granston indicated that “[b]ased on the extensive investigations and analyses we have conducted over the past two years, including our review of the information you have provided, we have concluded that the allegations in these cases lack adequate legal and factual support. Moreover, further litigation of the allegations will impose significant costs and burdens on the government and conflict with the policy and enforcement prerogatives of the affected federal healthcare programs.” Id. Within hours, the government filed its motion to dismiss. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 37 of 48 PageID #: 2521 33 4833-9846-4390 The government’s motion makes a number of factual representations that purport to support the reasons offered for dismissal. Among other things, the government represents that it conducted an “extensive investigation” that involved the review of “tens of thousands of documents from the defendants and third parties” and “interviews of numerous witnesses, including prescribing physicians.” See MTD at 14. The government further asserts that, based on this “extensive investigation,” it “concluded that that the relators’ allegations lack sufficient factual and legal support.” Id. None of the government’s representations finds support in the McCabe Declaration. On January 3, 2019, to ensure that the Court would be in a position fairly to evaluate the government’s factual representations, Relator requested that the government produce a number of documents: • Documents evidencing the government’s “extensive investigation” that allegedly resulted in the government “conclud[ing] that the relators’ allegations [in the Health Choice cases] lack sufficient factual and legal support.” See MTD at 14. • Documents evidencing that, before “the United States notified the Court on October 30, 2017 that it was declining to intervene,” the government “conclud[ed] that relator[s’] allegations . . . lacked sufficient factual and legal support.” See MTD at 7. • The “tens of thousands of documents from the defendants and third parties” the government allegedly received during its “extensive investigation” of the Health Choice cases. See MTD at 14. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 38 of 48 PageID #: 2522 34 4833-9846-4390 • Documents evidencing the “interviews of numerous witnesses, including prescribing physicians” the government allegedly conducted during its “extensive investigation” of the Health Choice cases. See MTD at 14. • Documents evidencing the government’s consultation with “subject-matter experts at HHS-OIG about the [Health Choice] relators’ allegations and the applicability of regulatory safe harbors and government-issued industry guidance.” See MTD at 14-15. • Documents evidencing the “substantial costs” and “substantial litigation burdens” the government allegedly anticipates expending in connection with Relators’ prosecution of the Health Choice cases. See MTD at 15. • Documents evidencing that “Department attorneys in the Civil Division’s Fraud Section have collectively spent more than 1,500 hours on the eleven NHCA Group matters.” See MTD at 15 n.5. • Documents evidencing the resources the government spent investigating the Health Choice cases. • Documents evidencing the government’s “conclus[ion] that the specific allegations in this case conflict with important policy and enforcement prerogatives of the federal government’s healthcare programs.” See MTD at 16. • Documents evidencing that the practices challenged in the Health Choice cases are “appropriate and beneficial to federal healthcare programs and their beneficiaries.” See MTD at 16. Lelutiu Decl. ¶ 33. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 39 of 48 PageID #: 2523 35 4833-9846-4390 Although each of these requests concerns—and even quotes—factual representations the government has made to the Court, the government has twice rejected Relator’s discovery requests. Lelutiu Decl. ¶ 34. The government has indicated that it believes that Relator’s discovery requests call for privileged information that is not necessary for Relator to respond to—or the Court to evaluate—the government’s stated reasons for dismissal. Id. III. ARGUMENT The government’s motion turns on two assertions: (i) Relator is a profiteer who has filed a meritless complaint based on “fictitious” research; and (ii) because the government has thoroughly investigated Relator’s claims and has found them to have no legal or factual “merit,” the SAC should be dismissed to prevent a waste of the government’s resources. Both assertions fail. A. The Government’s Attacks on Relator and Its Investigation Are Meritless The government dedicates nearly half of its motion to ad hominem attacks on Relator’s investigation. These attacks are a sideshow. First, the fact that interviewees were not told that the information conveyed during interviews may eventually be used in litigation did not taint Relator’s fact-finding. The government acknowledged as much to Relator (Lelutiu Decl. ¶ 14), and the government does not contest that, particularly in the context of litigation, it is imperative that respondents be “blinded” to the purpose behind a fact-finding exercise. See Shari S. Diamond, Reference Guide on Survey Research, Reference Manual on Scientific Evidence 359, 410-11 (3d. ed. 2011); Payton, 2013 U.S. Dist. LEXIS 150824, at *18-19 (“The function of [the ‘blinding’] procedure is to prevent bias from impacting the survey. In other words, it is to prevent respondents from giving the answer that they think the interviewer wants to hear. This is a significant concern in opinion- Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 40 of 48 PageID #: 2524 36 4833-9846-4390 based surveys.”). The government’s own cited case recognizes that the ethical rules permit the “mere concealment of identity and purpose to obtain evidence” and that “civil attorneys” may use “investigators in certain circumstances to obtain information that would normally be available to any member of the public.” Leysock v. Forest Labs., 2017 U.S. Dist. LEXIS 65048, at *22, *16 (D. Mass. Apr. 28, 2017) (emphasis added). Indeed, even “some degree of deception by attorneys, at least under some circumstances”—and there was none here—“is permissible in order to gather evidence for use in litigation.” Id. at *17 (noting, for instance, that “attorneys may use ‘testers’—individuals who pose as renters or purchasers with no intent to actually rent or purchase a home—in order to gather evidence of housing discrimination”). The investigation at issue in Leysock stands in stark contrast to NHCA’s day-to-day activities to obtain expertise for the prevention of fraud, waste, and abuse in healthcare. Unlike here, Leysock involved an investigation orchestrated by litigation counsel. During the course of the investigation, which was conducted by a doctor, treating physicians were assured that their “privacy” would be respected, and “[the investigator] explicitly told several of the physicians that the information they provided would be kept strictly confidential.” Id. at *10, *13. Certain physicians were also asked to turn over confidential, HIPAA-protected patient charts. Id. at *12. At the end of the investigation, in violation of numerous direct representations made during the investigation, “eight patients [we]re identified in [the relator’s] complaint, although not by name, with information (such as dates and amounts of prescriptions) that [was] clearly taken from their medical charts.” Id. at *14. Here, the information Relator obtained through the interviews—that Defendants have been defrauding the government—is not protected from disclosure by any Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 41 of 48 PageID #: 2525 37 4833-9846-4390 federal or state law. Indeed, it is the very type of information federal and state law encourages whistleblowers to provide to the government. Second, while the government appears to suggest that Relator’s corporate structure is relevant to the analysis, it plainly is not. Numerous courts have held that corporations can qualify as relators and the original source of information. See, e.g., Minnesota Ass’n of Nurse Anesthetists v. Allina Health Sys. Corp., 276 F.3d 1032, 1049 (8th Cir. 2002) (noting “corporate plaintiffs have been held to have direct knowledge making them an original source”); United States ex rel. Branch Consultants, L.L.C. v. Allstate Ins. Co., 668 F. Supp. 2d 780, 801 (E.D. La. 2009) (rejecting argument that relator’s status as a corporation deprives it of the ability to have direct knowledge). The Eighth Circuit specifically rejected the argument that an original source must be a natural person, stating that “[t]here is no hint in the history of the 1986 Amendments Act that Congress intended to disqualify organizational relators.” Minnesota Ass’n of Nurse Anesthetists, 276 F.3d at 1049. The Eighth Circuit further noted, “[n]o courts have held that corporations responsible for the discovery of information cannot have “direct knowledge” because they have to act through agents.” Id.13 Third, the government’s attempt to disparage the NHCA’s work would perhaps be credible were it not completely situational. Just nine months ago, in April 2018, the government intervened in a qui tam action that was filed by a NHCA affiliate, PRAPOMA, LLC, against an opioid manufacturer. Mininno Decl. ¶ 31. In its complaint in intervention, the United States explicitly acknowledged that PRAPOMA, LLC was “formed for the purpose of bringing th[e] qui tam action” as a relator, and that “PRAPOMA’s managing member was the NHCA Group, LLC, whose principal was John Mininno.” Complaint in Intervention of the United States, 13 Ironically, one of the government’s principal cases, Sequoia Orange, involved a corporate relator. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 42 of 48 PageID #: 2526 38 4833-9846-4390 United States ex rel John Doe and ABC, LLC v. Insys Therapeutics, Inc., No. 14-cv-3488 (C.D. Cal. Apr. 13, 2018), D.I. 64 ¶ 13, available at https://www.justice.gov/opa/press- release/file/1063051/download. Insys is not the only case in which the government has embraced NHCA’s work—and its investigative techniques—to enforce the AKS and FCA. See Mininno Decl. ¶¶ 31-32. B. The Government Has Failed to Show that Dismissal Is Appropriate The government asserts that it has an unreviewable right to dismiss FCA complaints. As a fallback, the government also asserts that dismissal is appropriate because the government has concluded that the SAC lacks merit, and thus allowing this litigation to proceed will allegedly (i) result in a needless waste of resources; and (ii) undermine the healthcare marketplace. The government is mistaken on all fronts. 1. The Government Does Not Have an Absolute, Unreviewable Right to Dismiss Meritorious FCA Complaints The government invites the Court to “find that the United States has an unfettered right to dismiss a qui tam suit and defer to the United States’ decision to dismiss this action.” MTD at 10. The government asserts that its position is supported by Swift v. United States, 318 F.3d 250 (D.C. Cir. 2003). Not so. Swift did not involve a motion to dismiss a meritorious FCA complaint that, after 14 months of inaction by the government, the relator was seeking to prosecute on its own. Rather, Swift involved the government’s “decision not to prosecute,” over the relator’s objection, a FCA claim in the amount of $6,169.20. Id. at 250, 254. And, unlike here, the government’s dismissal motion in Swift was not predicated on the supposed lack of merit of the relator’s claim. Rather, the government asserted “the amount of money involved did not justify the expense of litigation Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 43 of 48 PageID #: 2527 39 4833-9846-4390 even if the allegations could be proven.” Id at 251. In contrast to Swift, this case alleges claims totaling hundreds of millions, if not billions, of dollars. More importantly, the District of Columbia Circuit did not hold that District Courts must always grant, without review, government-filed motions to dismiss FCA complaints. In fact, Swift notes that “[i]t may be that despite separation of powers, there could be judicial review of the government’s decision that an action brought in its name should be dismissed.” Id. at 252 (emphasis added) (citing Cowan, 524 F.2d at 513). And, in Swift, the United States itself had conceded that there may well be instances where judicial review would be warranted such as “fraud on the court.” Id. at 253. At most, therefore, Swift supports only the proposition that “decisions not to prosecute, which is what the government’s judgment in [that] case amounts to, are unreviewable.” Id. at 252. Because Relator is not attempting to force the United States to prosecute a trivial claim against its will, Swift is completely inapposite. The notion that the Executive Branch has unfettered discretion to end meritorious FCA actions and, in the process, reshape the AKS and judicial precedent interpreting it, is also sharply inconsistent with the system of checks and balances set out in the Constitution. At bottom, the government is asking the Court to rubber-stamp the government’s pro-forma motion and conclude, without any analysis, that Relator’s claims are not cognizable under the AKS. Here, after extensive briefing, the Court has already rejected fully fleshed-out defense-sponsored arguments that mirror the government’s bare assertions regarding the merits of Relator’s claims. Given that Relator’s claims were held to have merit, the government does not have the unilateral power to exculpate Defendants, let alone without making any evidentiary showing. Again, it is Congress’s job to write statutes, and the job of the Federal Courts to interpret them. Zivotofsky, 135 S. Ct. at 2090 (“it is still the Legislative Branch, not the Executive Branch, that makes the Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 44 of 48 PageID #: 2528 40 4833-9846-4390 law”); Marbury, 5 U.S. at 177 (“[i]t is emphatically the province and duty of the judicial department to say what the law is.”).14 2. The Government’s Conclusory Attacks on the Merits of Relator’s Claims Do Not Withstand Scrutiny The government also asserts that dismissal is appropriate under the standard set forth by the Ninth Circuit in Sequoia Orange. Here too, the government’s arguments fall short. As an initial matter, while Relator agrees that the test set forth in Sequoia Orange more aptly reflects the balance of power the United States Constitution strikes between the three Branches of Government, the differences between the facts of this case and those of Sequoia Orange are too significant to ignore. The centerpiece of the government’s motion here is the government’s representation that, after an “extensive investigation,” the government has concluded that Relator’s claims have no “legal or factual” support. See MTD at 3, 14. In contrast, in Sequoia Orange, the merits of the relator’s claims were not in dispute. Rather, the government sought to dismiss, over the relator’s objections, a number of actions the government itself was prosecuting, and the reasons cited for dismissal were not merits-related. See Sequoia Orange, 151 F.3d at 1142-43 (noting the six reasons for dismissal, which included the goal of “end[ing] divisiveness in the citrus industry”). Thus, while it may provide an appropriate framework to evaluate government-filed motions to dismiss based on considerations other than merit, Sequoia Orange provides no meaningful guidance here. Nevertheless, Relator agrees with the fundamental holding of Sequoia Orange—that, before dismissing a meritorious FCA complaint, the government must make “a proper showing.” 14 The government suggests that the Fifth Circuit and district courts within the Fifth Circuit have “indicated that the United States retains unilateral authority to seek dismissal in a declined qui tam action.” MTD at 9. This is a misstatement of the law. None of the government’s cases support the notion that a government-filed motion to dismiss a meritorious FCA complaint is unreviewable. Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 45 of 48 PageID #: 2529 41 4833-9846-4390 Sequoia Orange, 151 F.3d at 1144 (emphasis added). The government here has not come close to making any showing, and thus the motion to dismiss should be denied. First, the government asserts that Relator’s claims lack “legal support” (MTD at 14). Putting aside that it is wholly conclusory and thus cannot be credited, the government’s assertion is also foreclosed by the law of the case doctrine, which “posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.” HTC Corp., 2018 U.S. Dist. LEXIS 190415, at *15. Here, after extensive briefing in which the government could have participated but chose not to, all of Relator’s claims were held to clear the plausibility threshold of Rule 12(b)(6). The law of the case doctrine now forecloses all litigants—the government included—from re-litigating the matter. Second, the government’s assertion that Relator’s allegations lack “factual support” (MTD at 14) similarly falls short. The government offers nothing to support it. Surely, if the government had indeed conducted an “extensive investigation” involving “tens of thousands of documents” received from “the defendants” and numerous interviews (id.), the government could have provided some basis for its contention that Relator supposedly got its facts wrong. At a minimum, the government could have provided some specifics with respect to the “extensive investigation” it allegedly conducted. Because the government purposefully chose not to engage any of Relator’s allegations, its motion to dismiss fails. Third, the government’s pro-forma invocation of resource-related concerns and the supposed conflict between Relator’s allegations and “important policy and enforcement prerogatives of the federal government’s healthcare programs” (MTD at 15-16) likewise fail. As an initial matter, both concerns are expressly premised on the government’s assertion that Relator’s claims lack legal and factual merit. Additionally, the government never once raised Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 46 of 48 PageID #: 2530 42 4833-9846-4390 these concerns until September 2018, long after the cases were unsealed, long after discovery and scheduling orders were entered, and long after multiple motions to stay discovery (brought by Defendants and as to which the government never weighed in) were denied. Furthermore, the government offers no evidentiary support for its burden and policy concerns and, indeed, they are both unfounded. Defendants have yet to serve a single discovery request on the government, and, as explained above, Relator’s claims have nothing to do with the mere provision of information to patients and Prescribers. Indeed, the government’s failure to acknowledge the substance of Relator’s actual claims negates the government’s policy concerns and is sufficient justification for the Court to deny the motion. IV. CONCLUSION For the foregoing reasons, the government’s motion to dismiss should be denied. Dated: January 22, 2019 Respectfully submitted, /s/ Sam Baxter /s/ W. Mark Lanier Samuel F. Baxter (co-lead counsel) sbaxter@mckoolsmith.com Jennifer L. Truelove jtruelove@mckoolsmith.com MCKOOL SMITH P.C. 104 East Houston, Suite 300 Marshall, Texas 75670 (903) 923-9000 Fax: (903) 923-9099 Eric B. Halper ehalper@mckoolsmith.com Radu A. Lelutiu rlelutiu@mckoolsmith.com Dana E. Vallera dvallera@mckoolsmith.com One Bryant Park, 47th Floor New York, New York 10036 (212) 402-9400 Fax: (212) 402-9444 Mark Lanier (co-lead counsel) WML@LanierLawFirm.com Kenneth W. Starr (pro hac vice forthcoming) Ken.Starr@LanierLawFirm.com Christopher L. Gadoury Chris.Gadoury@LanierLawFirm.com Jonathan Wilkerson Jonathan.Wilkerson@LanierLawFirm.com THE LANIER FIRM 6810 FM 1960 West Houston, Texas 77069 (800) 723-3216 Fax: (713) 659-2204 ATTORNEYS FOR RELATOR Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 47 of 48 PageID #: 2531 43 4833-9846-4390 CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and correct copy of the above and foregoing document has been served on January 22, 2019 to counsel of record who are deemed to have consented to electronic services via the Court’s CM/ECF system. Any other counsel of record will be served by electronic mail, facsimile, U.S. Mail and/or overnight delivery. /s/ Radu A Lelutiu Radu Lelutiu Case 5:17-cv-00126-RWS-CMC Document 122 Filed 01/22/19 Page 48 of 48 PageID #: 2532