Court enforces False Claims Act’s first-to-file rule to bar complaint alleging details of off-label promotion scheme about which another relator had previously complained

Court enforces False Claims Act’s first-to-file rule to bar complaint alleging details of off-label promotion scheme about which another relator had previously complained

June 3, 2014

The U.S. Court of Appeals for the First Circuit upheld the dismissal of a False Claims Act (“FCA”) complaint brought against pharmaceutical giant Bristol-Myers Squibb, Inc. (“BMS”), ruling that the complaint alleged the same “essential facts” as an earlier complaint.

The relator, or whistleblower, in the case, Michael A. Wilson, was a former BMS sales representative.  Mr. Wilson filed a complaint in October 2006 alleging that BMS violated the federal Anti-Kickback Statute and FCA by promoting several drugs for off-label uses.  While physicians are permitted to prescribe medications for uses other than those approved by the Food and Drug Administration, Medicaid does not generally reimburse patients for “off-label” uses, and companies are prohibited from marketing their medications for off-label uses.  In September 2007, BMS settled Wilson’s claims unrelated to the alleged off-label promotion and agreed to pay the United States more than $317 million.  The government declined to intervene in what remained of the case.

Not satisfied, Wilson then filed a second amended complaint in April 2009, expanding on his allegations of off-label promotion, and adding Sanofi-Aventis U.S., LLC (“Sanofi”) as a defendant.  BMS and Sanofi moved to dismiss the FCA claims on the ground that they violated the FCA’s “first-to-file” rule.  The first-to-file rule, which is contained in the FCA, provides that once an FCA claim has been filed, non-governmental parties are barred from “bringing a related action based on the facts underlying the pending action.”  The companies cited as support for their motion a complaint which had been filed in May 2006, five months before Wilson filed his original complaint.  The May 2006 complaint alleged that BMS engaged in a nationwide scheme to promote off-label uses of its drugs.  That complaint focused on the same drugs identified by Wilson and accused BMS of using the same mechanisms to promote those drugs, but it identified different off-label uses from Wilson’s complaint.  

In February 2013, the U.S. District Court for the District of Massachusetts granted BMS and Sanofi’s motion to dismiss.  The court reasoned that because “Wilson’s complaint d[id] not alert the government to a new type of fraudulent scheme or even new aspects of an existing scheme allegedly being perpetrated by the defendants,” Wilson’s claims were barred by the first-to-file rule.

On appeal, the First Circuit upheld the dismissal of Wilson’s FCA claims.  The court noted that the first-to-file rule is part of the larger balancing act of the FCA’s qui tam, or whistleblower, provision, which attempts to reconcile the conflicting goals of encouraging citizens to act as whistleblowers while preventing opportunistic suits.  The court applied the “essential facts” or “material elements” test, under which a later FCA suit is barred if it alleges “all the essential facts of a previously filed claim or the same elements of a fraud described in an earlier suit.”  The rule’s application is not limited to situations where the complaints list “identical facts,” the court reasoned, because an earlier suit that alleges the essential facts of a scheme has already served the purpose of putting the government on notice of the scheme and providing an opportunity to investigate it.  

Comparing Wilson’s complaint to the one filed five months prior, the court found the overlap to be “considerable,” including “the same defendants, the same drugs, the assertion of nationwide schemes, and the allegations of specific mechanisms of promotion common to both and leading to common patterns of submission of false claims under the federal Medicaid program.”  In light of these similarities, the different details alleged by Wilson concerning specific off-label uses for which the drugs were promoted were insufficient to prevent his claims from being “related” within the language of the FCA, and therefore barred by the first-to-file rule.  The court also recognized that the lack of government investigations resulting from the earlier complaint did not affect its analysis.

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