United States ex rel. Piacentile v. Amgen, et al.
Second Circuit Oral Argument
United States ex rel. Piacentile v. Amgen, et al.
Second Circuit Oral Argument
Lena Hughes successfully argued for affirmance of dismissal of a False Claims Act action. Lena's argument starts at 16:38.
Unofficial transcript for users of mofo.com
Speaker 1 (00:00):
We’ll hear argument next in number 22-18. Piacentile v. U.S. Oncology.
Speaker 2 (00:23):
Speaker 1 (00:00):
Mr. Mullets, wait a minute for people to get settled.
Speaker 2 (00:23):
Just let me know if you’re good.
Speaker 1 (00:28):
Okay, Mr. Singh, whenever you’re ready.
Tejinder Singh (00:32):
May it please the court. I am Tejinder Singh for the appellants. We ask this court to reverse the District Court’s judgment dismissing this complaint at the pleading stage. My clients were the first ones to identify U.S. Oncology’s systematic solicitation of kickbacks from pharmaceutical manufacturer Amgen. They provided a complaint that includes substantial details about that ongoing misconduct describing who at U.S. Oncology was involved, what sorts of kickbacks were solicited, and how U.S. Oncology effectively, over a period of years, took its physicians’ prescribing decisions and offered them up as allure to Amgen for discounts on important drugs to boost its bottom line. Those allegations don’t appear in any of the prior public complaints. And so I’ll lead, unless you’d like me to skip it, with the public disclosure issue, which is one of the two major issues in the case. As we’ve explained in our briefing, the rule is the defendant—in order for a public disclosure to occur, that is, in order for a relator’s complaint to be based upon the allegations or transactions that are in a public disclosure, the public disclosure has to either identify the defendant by name or come so close that the defendant is directly identifiable.
Tejinder Singh (01:48):
There is nothing in the public disclosures that have been discussed in this case that would allow a reasonable person to identify U.S. Oncology. The public disclosures involve—
Speaker 1 (01:58):
Why is that? So the public disclosure does talk about the scheme at Amgen to offer—the alleged scheme at Amgen to offer kickbacks or incentives and rebates and so on. And it says that it’s doing that with its clients. It even mentions some of the drugs in the complaints, like Epigen and so on. And these are the drugs that U.S. Oncology would have used because they’re cancer drugs, right?
Tejinder Singh (02:18):
Speaker 1 (02:20):
So wouldn’t somebody reasonably reading this, say—or reading that complaint, say, “Okay, Amgen is offering kickbacks to its clients for cancer drugs. U.S. Oncology buys a lot of cancer drugs from Amgen. And so I think that’s what’s going on.”
Tejinder Singh (02:36):
That is something that someone could possibly imagine, but that’s not what a public—what the public triggers the public disclosure bar. In order for the public disclosure bar to be triggered, and just think about this court’s cases—Kreindler, which is the case that they cite the most, is the one that says this part of the statute is there to stop people who come to seek a return, even though they contributed nothing to the exposure of a fraud. And what I would say is, if all you did was look at the public disclosures, which we all agree never mentioned U.S. Oncology, the closest they come is to say some customers were getting kickbacks. What those disclosures wouldn’t tell you is that U.S. Oncology itself engaged in this culpable misconduct of soliciting the kickbacks.
Speaker 1 (03:13):
But why would that matter? So the False Claims Act is not about the scheme, it’s about the false claim for payment, right? If Amgen’s offering kickbacks for U.S. Oncology soliciting kickbacks, the problem is whether there’s a false claim for payment of a drug that shouldn’t have been prescribed or wasn’t eligible for payment or something like that, right?
Tejinder Singh (03:35):
Well, to be clear, that’s not disclosed either, I mean—
Speaker 1 (03:38):
Does it matter? Like, does it change whether something is—does it put you on the trail of additional false claims to know that U.S. Oncology in fact was soliciting kickbacks as opposed to being offered them?
Tejinder Singh (03:51):
Yeah, I think it speaks directly to U.S. Oncology’s culpability in the matter because they have to knowingly present false claims in order to be liable under the FCA. The fact that they’re not just some passive recipient of kickbacks, but are themselves negotiating for these and really pressing for them, we think it does actually—it is a big deal. It is the reason why they are culpable as opposed to just Amgen being culpable. And so we do think it’s quite, quite important. But just to be clear about this, on the core point on which I think all the precedents around the country are pretty much unified, there is a need for the defendant to be directly identifiable, and what you’re talking about when you talk about the class of customers implicated by the public complaints is every major pharmaceutical customer, every hospital, every physician’s practice, and other entities, as well—group purchasing organizations of which there are hundreds, you name it.
Speaker 1 (04:44):
So even the public disclosure on its own, the complaint against Amgen, the theory would be that Amgen is providing kickbacks, and so it’s leading to prescriptions that wouldn’t otherwise be made. Right? And then that’s what makes them a false claim because they’re being induced to make claims for payment that wouldn’t otherwise be made but for the kickback, right? Because that’s the theory.
Tejinder Singh (05:03):
No, your Honor, that’s not the theory.
Speaker 1 (05:06):
So what is the theory?
Tejinder Singh (05:07):
So we cite a case in our opening brief in the statement of the case sections, the Greenfield decision, which explains that, “but-for” causation actually isn’t required to have an FCA violation. When you submit a claim for a payment for a drug or under Medicare Part B, for example, you have to say—you have to certify your compliance with the anti-kickback statute. That certification becomes false if you’ve been knowingly violating the anti-kickback statute, and so that’s what makes the claims false. It’s not a “but-for” causation. And this is actually an important point when we get to the Rule 9B question because what the other side likes to tell you, again and again, is you have to identify the claims. You have to identify the claims. You must tell us about the specific claims for payment. In certain types of cases, I would agree with them. But a kickback case is special because the kickbacks taint the claims per se. You don’t have to do that sort of claim-by-claim evaluation, which is, and I’m getting ahead of myself to talk about Rule 9(b), but I do want to make it clear what the theory of liabilities.
Speaker 1 (06:01):
Does that mean that if in fact you had a complaint against Amgen just based on the kickback scheme, you couldn’t actually establish a False Claims Act claim because they wouldn’t have submitted the certifications? Cause they weren’t submitting payment requests to Medicare, and they wouldn’t have certified compliance with the anti-kickback statute, right?
Tejinder Singh (06:17):
Well, under the way the False Claims Act is worded, it also imposes liability on anyone who causes another to present a false claim for payment. And so in that situation, the allegation against Amgen would be the cause.
Speaker 1 (06:28):
That’s sort of where I was going. So then the theory of the claim against Amgen to begin with is that the way it’s effectuating false claims is it’s doing it through its clients, right?
Tejinder Singh (06:37):
Speaker 1 (06:38):
So the initial public disclosures just requiring the inference that there are clients of Amgen who are submitting false claims?
Tejinder Singh (06:46):
Speaker 1 (06:48):
Because of the original Amgine complaints would’ve involved a decision that clients actually were acting on the basis of the incentives that they were providing.
Tejinder Singh (06:54):
No, your Honor, because none of the disclosures are False Claims Act cases. One was an antitrust case, one was a Ricoh case. I mean, these are not cases based on the submission of false claims.
Speaker 1 (07:04):
Yeah, no, I understand. So then my question is, you’re saying, but typically given the allegations that were in those complaints, you could not have made out of False Claims Act case against Amgen. Is that correct?
Tejinder Singh (07:14):
I’m saying it’d be quite hard. Yeah, to do—especially to do so with particularity. I mean, those complaints, I want to be clear, we’re talking about those complaints as if they’re complaints against Amgen. They’re really not. They’re claims against dozens of pharmaceutical manufacturers with almost no detail. And so the idea that—
Speaker 1 (07:31):
There are pretty specific allegations against Amgen, right?
Tejinder Singh (07:34):
Speaker 1 (07:37):
It talks about the spread, it talks about Amgen in particular.
Tejinder Singh (07:36):
Yeah. Look, in one of the complaints, out of 397 paragraphs, there are eight that talk about Amgen. Five are about price reporting. Only three are about any kind of remuneration paid. One of them is just a conclusory “they did it.” The only specific thing is a reference to an Inspector General report from 1993 saying that in a dialysis center they had offered certain kinds of incentive. I mean, it’s so far removed from the conduct that we are describing in our complaint that I don’t think there is any way with the straight face to say that U.S. Oncology’s involvement or the specific misconduct that we’re accusing U.S. Oncology of. And to be clear, we have quite a few specifics about this. We have explanations of the ways that they arrange for rebates that they passed onto their practices. They morphed that practice into a prebate practice in 2004. They arranged for sham data fees that Amgen executives admitted to us in reported conversations were bogus and wrong but were paid anyway at U.S. Oncology’s behest. We have added so much to what was in the public domain. I don’t—and to be clear, if you picked up those public complaints, refiled them, and said U.S. Oncology presented false claims—
Speaker 4 (08:46):
May I get you to spend a moment more on your 9(b) argument? I understand your theory that every invoice submitted represents that there’s no kickback in connection with it, but I’m still not sure I understand why without an assertion of a single invoice, a single claimant, a single date, and specifics as to the falsity that you survive 9(B) requirements. Help me out.
Tejinder Singh (09:23):
That’s a fair question. The case that I would point you to that’s the most on point in the kickback context is the Bookwalter case from the Third Circuit. We discuss it pretty extensively in our briefs.
Speaker 4 (09:41):
Tejinder Singh (09:42):
It explains this idea that when the theory of falsity is one that implicates sort of a broad swath of claims because they’re tainted upstream by this prior misconduct, that’s a cognizable theory and when you plead the scheme, the kickback scheme with particularity, and there’s no dispute that we have, that gets you to reliable indicia that false claims were submitted under decisions like this court’s decision of choice.
Speaker 4 (09:57):
Well, I—of course, we would consider the reasoning of the third circuit, but we’re not bound by it. That does not tell us whether we’re dealing with one claim, 10 claims, 10,000 claims. I mean, we have nothing here, and my particular concern is you had insiders providing information. So to that extent, I’m not sure why we should accept this kind of generalized assumption that there had to have been fraudulent claims submitted.
Tejinder Singh (10:32):
Sure. So I think it would—
Speaker 4 (10:41):
Again, tell me why I shouldn’t think that way.
Tejinder Singh (10:44):
Yeah. And I think the question that you want to ask, and I’ll spotlight that there is a bit of a circuit split about this piece of it. In the first circuit, a case that the other side cites, Kelly, they say you need factual or statistical evidence at the pleading stage. It has to be more clear. Contrast that with the fifth circuit’s decision in the [inaudible] case where they say, “No, we accept allegations as true at the pleading stage, and we draw favorable inferences in the plaintiff’s favor, even when it’s Rule 9(b).” And so in [inaudible], the court says when you have an underlying scheme, and you have the scheme targeting hospitals, this was the use of stents, they’re going to bill Medicare overwhelmingly when those stents are used on people over the age of 65.
Tejinder Singh (11:16):
That makes the inference that claims were submitted permissible. The ninth Circuit has similar precedent, the Selingo case we cited, and then we go to this court’s precedent in Chorches. Now, in that case, the court says our precedent—our rule here is consistent with the rules of the third, fifth, seventh, ninth, tenth, and D.C. circuits. And those are the circuits whose precedents we’re citing. And it says when you have a strong inference that claims are submitted, you’re okay. Now here, what do we allege? We allege that they were billing approximately 60 million dollars to the government under Medicare Part B for these three specific identified drugs. Remember, all of these courts are applying Rule 9(b), and what I’ve described is a purpose of manner that is, as long as we give notice to them of the allegations against them and enable them to prepare–
Speaker 4 (12:07):
It’s an on information and belief pleading on.
Tejinder Singh (12:09):
The 60 million. That’s correct.
Speaker 4 (12:10):
Yeah, and I’m not sure that that’ll get you enough on 9(b), but what else? I just wanted to confirm that was an on information and belief pleading.
Tejinder Singh (12:20):
That’s quite correct. Now, what we have alleged is that there are certain aspects of the scheme as well that only make sense if what you’re doing is submitting claims to the government. The net cost calculator document, for example, that was an important document that they used to figure out exactly what they should be negotiating for in kickbacks, it compared the price that they would be paying to the price they could get from the government. And look, I’ll admit that part of what we’re basing our claim on, but this is in conjunction with the other things I’ve just mentioned, is the fact that we just know that when you’re doing this much volume, lots of it’s going to the government for chemo drugs to Medicare and to Medicaid. That’s how this business works. And I think that you can look at that and you can say, “Well, we’re not going to draw an inference in your favor that any of those claims were tainted by these kickbacks.”
Tejinder Singh (13:04):
But I don’t see on what basis you would refuse to do so under the ordinary rules of the pleading stage as explained by this court in Chorches. That is to say, if you have services that are routinely charged to the government, and here we’re talking about a large practice—39 states, dozens and dozens of practices, at least, hundreds of physicians—the idea that—and the kickbacks are being implemented at the root level of this tree. That is by U.S. Oncology, corporate, the head organization that then passes on those savings to all of those practices. And so when the root has the kickbacks in it, the idea that none of the branches touches the government, I think is a very implausible inference. Now, if you think Rule 9(b) demands more, I do think we have a bit more. We have allegations about the ways that the government was paying for these—was paying for cancer drugs. Now we don’t have—we don’t have a specific date or an invoice or something like you said, but they didn’t have that in Chorches either, and I think that wasn’t necessary there. And I would say Chorches is also one of those cases, like the ones—
Speaker 1 (14:12):
Chorches did have a sort of one-to-one relationship,. Cause there was falsification of records that could only—the only reason to falsify those particular records is to file a claim, right? You don’t have.
Tejinder Singh (14:22):
Absolutely, and this is the contrast that I was drawing earlier between different types of cases. In Chorches, the question was you’re doing these ambulance runs. Are they medically necessary? To figure that out, you really do have to look at the patients one by one. You have to say like, “Okay, for this guy, it’s necessary. This guy is not necessary, right?” And on a given day, an ambulance could do 10 runs, and six of them could be medically necessary and four not. Right? But, and so it does make sense to say you really want claim-specific information in a case like that, or transaction-specific information in a case like that. When you have this presumptive taint that comes from kickbacks, and it’s coming in at the root of the organization, it’s a different story. And that’s Bookwalter. That’s why I’m pointing you to that Third Circuit case that’s [inaudible].
Tejinder Singh (15:04):
So it’s just a different fact pattern, but if you apply the same legal rule to this distinct fact pattern, we think the results should be the same. And to be clear, Chorches itself says we apply Rule 9(b) in a purpose of way and we apply it on a case-by-case basis. And when you think about the purpose, do they know which drugs we’re accusing them of taking kickbacks on? They sure do. We’ve identified three of them. Do they know who was involved? Yeah, we’ve identified U.S. Oncology employees by name. We’ve talked about the contracts they negotiated to get these kickbacks, and so I think there’s more than enough to provide them with notice and to assure everybody, including this court, that these allegations are not the sort of speculative allegations that you want to throw out at under Rule 9(b) at the pleading stage.
Tejinder Singh (15:49):
Now, it may be the case that they’ll say, and they’ll show that they didn’t present any false claims to the government. They just didn’t present claims to the government for those things. If that’s so, first, I’ll eat my turban, but second, other than that, they’ll win. They’ll win quickly. And this case will be over. But that’s a question for discovery and for further development of the case. For purposes of the allegations, I think it’s clear we have enough. I see I’ve gone well over time, and so I apologize for that if there are no other questions.
Speaker 1 (16:21):
Okay. Thank you very much, Mr. Singh. Hear back from you on rebuttal, but let’s turn to the Appellee. Ms. Hughes.
Lena Hughes (16:36):
May it please the court, Lena Hughes on behalf of Appellee U.S.—
Speaker 6 (16:40):
Ms. Hughes, pull those mics in. The sound is just horrendous in this place.
Lena Hughes (16:44):
There we go. All right.
Speaker 6 (16:46):
Lena Hughes (16:47):
The District court. Thank you. Thank you. That’s perfect.
Speaker 6 (16:56):
Lena Hughes (16:57):
The district court correctly dismissed this False Claims Act suit on two independent grounds. The first is that prior to relater Piacentile even bringing this action, there were three prior complaints accusing Amgen of conspiring with its customers to obtain inflated reimbursements from the government. And relater suit, which is based on that same conspiracy, is barred by the public disclosure bar because relaters are not original sources. And second, despite accusing U.S. Oncology of submitting false claims to the government across the course of an entire decade, there are virtually no facts in the complaint referring to U.S. Oncology’s submission of claims to the government. So they have failed to plead fraud with the particularity that Rule 9(b) requires. I’d like to start with the public disclosure bar. Under that bar, this court has said the purpose is to reject suits that the government was capable of pursuing itself. And this is one of those cases because as I mentioned before relator Piacentile filed suit, there were three public complaints expressly alleging that Amgen conspired with its customers to obtain inflated reimbursements from the government on Amgen drugs. And this is the same scheme that is alleged in the relator’s complaint.
Speaker 6 (18:12):
Does it matter if the way they schemed or the mechanism by which they schemed was different?
Lena Hughes (18:20):
That would not matter if the scheme was previously disclosed and it was the same essential scheme, but here, the mechanism was the same as previously disclosed. What the prior disclosures explained was that the way that Amgen and its customers created the price inflation was by paying and accepting kickbacks that reduce the effective price of the drugs to customers.
Speaker 4 (18:41):
U.S. Oncology is not named in any of these three earlier lawsuits as a confederate in the scheme, right?
Lena Hughes (18:49):
That’s correct. U.S. Oncology is not named.
Speaker 4 (18:51):
Under the Public Disclosure Bar, is that a problem for you?
Lena Hughes (18:58):
It is not. The language of the Public Disclosure Bar asked whether the action is based upon the prior disclosures. And as this court has said in the past, it only has to be based in part on the prior disclosures. Even if the relator is contributing additional information, then perhaps he’ll be able to bring the suit if he’s an original source.
Speaker 4 (19:17):
Well, the lawsuit here is against U.S. Oncology. It’s not against Amgen, right?
Lena Hughes (19:24):
It was originally against Amgen.
Speaker 4 (19:26):
I know, but yes, as it stands now, it’s not. And to that extent, what in the earlier lawsuits would put someone on notice that U.S. Oncology when approached or itself agreed to this scheme? I mean are you saying that these three lawsuits serve notice on everyone who for an action against anyone who ever purchased from Amgen?
Lena Hughes (19:55):
What I think it provided notice of was that there was widespread complicity among Amgen’s customers. That was expressly alleged at the citizen’s complaint, paragraph 98, widespread interstate cooperation of healthcare providers was a necessary component of defendant’s fraudulent scheme. And there are other allegations in the Westchester complaint as well, making clear that the customers were complicit and that it was pervasive. I do think it put the government on notice that Amgen’s customers were—
Speaker 1 (20:28):
If that allegation were there, it wouldn’t—this wouldn’t be barred—if that allegation were not there. It didn’t say anything about the customers being complicit with this allegation. Would this case be barred by the Public Disclosure Bar?
Lena Hughes (20:37):
Or it would be a more difficult case, but I don’t think the answer would ultimately be different. And I would point the court to the sixth—
Speaker 1 (20:44):
I thought your point was that you can’t explain the claims here without talking about the Amgen scheme, and so then it’s at least based in part on what’s revealed in the other complaints, right?
Lena Hughes (20:54):
That is true. The prior complaints were alleging that Medicare and Medicaid was defrauded. That was only true if Amgen’s customers were complicit and submitting complaints. And it’s essentially—that’s why they’re alleging the same scheme here. We are just one of the customers not expressly named in the prior complaints. And I would point this court to the Sixth Circuit’s decision in Poteet v. Medtronic. I think that’s a very analogous case where the prior disclosures alleged that Medtronic was paying kickbacks to other physician customers. It didn’t say it’s paying to all their physician customers. And yet, the Sixth Circuit had no trouble concluding that the relator’s later suit against other Medtronic customers was still barred by the Public Disclosure Bar.
Speaker 4 (21:43):
The Public Disclosure Bar is meant to avoid people profiting by bringing these lawsuits when they haven’t really discovered the misconduct, right?
Lena Hughes (21:58):
Speaker 4 (21:59):
My concern here is that finding the Public Disclosure Bar applicable here would suggest that these three lawsuits basically establish that every Amgen customer is involved in this scheme, when in fact, it would require further digging to know that, right?
Lena Hughes (22:20):
I don’t think you need to conclude that the prior disclosures said that every Amgen customer was complicit or was involved. And that’s because the question is not whether the government needs to do any additional investigation. It almost always does because the Public Disclosure Bar doesn’t just require the prior disclosure to have been an FCA action that was suggested by opposing counsel all of the time. It is not even a fraud claim that was previously disclosed. It’s just facts that were disclosed in which the government may be able to infer that fraudulent claims were submitted. They almost always have to do additional investigation, and in the other circuit’s cases that were cited by the other side, it was clear the government would’ve had to do an additional investigation, take the gear case from the Seventh Circuit. There were general allegations of widespread fraud across the teaching hospitals in the United States.
Lena Hughes (23:23):
It didn’t say every single teaching hospital is committing this fraud. And the government clearly could not have taken the public disclosures, put them in a complaint, and then rested its case. It needed to do additional investigations. And the point is here, the prior disclosures revealed what was in essence a hub-and-spoke conspiracy between Amgen and its customers. And the government knew the most important fact, the hub, who is Amgen. So it didn’t need to go through each of Amgen’s customers, customer by customer to determine who the wrongdoer is. All it had to do was investigate Amgen and determine who Amgen was paying kickbacks to.
Speaker 1 (24:05):
You’re saying the public disclosure could have put the government on notice to do the kind of investigation relater apparently did here, which is interview Amgen executives and their clients and find out what’s going on, and that would be sufficient for the bar to apply?
Lena Hughes (24:18):
Speaker 1 (24:19):
Does it matter what opposing counsel said, which is that they actually uncovered that U.S. Oncology was soliciting the kickbacks, and so that’s a different kind of scheme, and it goes to their willfulness in submitting the claims for payment?
Lena Hughes (24:32):
That’s legally irrelevant based on their theory of the case, which is that we falsely certified compliance with the anti-kickback statute, which prohibits receipt and solicitation of kickbacks. And I want to point out—
Speaker 1 (24:45):
It could have been that you didn’t realize it was a kickback. You just thought it was a permissible rebate or something, but the fact that you were soliciting it maybe makes it—makes you more culpable. Is that not possible?
Lena Hughes (24:54):
I don’t think it is relevant to the legal theory that they’re pleading on their False Claims Act. And I want to emphasize the prior disclosures did not say these were—the customers were passive recipients of kickbacks. It alleged that they were complicit and they were agreeing with Amgen and the other drug manufacturers to keep these things secret from the government, because if they didn’t keep it secret, then the price inflation scheme wouldn’t have worked.
Speaker 6 (25:21):
But this case is—the prior cases are certainly different than a situation where it was just an individual allegation against Amgen and one customer. This was a series of disclosures not only as to Amgen, but as to a number of pharmaceutical country—companies throughout the country that this was a practice that was per—you used the word pervasive.
Lena Hughes (25:46):
Speaker 6 (25:47):
I’ll take the time to go back and look and make sure that that’s a fair characterization. But so I take it your point then is, is that because they—because the prior lawsuits cast a picture that Amgen was generally doing this, than anyone who was doing business with Amgen was kind of—the government was kind of on notice that maybe they ought to look as to U.S. Oncology, right?
Lena Hughes (26:17):
Yes. And U.S. Oncology, as admitted, is one of Amgen’s major customers, a group purchasing organization, one of the largest cancer treatment networks in the nation. U.S. Oncology would’ve been very high on the government’s list. I just want to point out the consequences of the contrary rule would be an absolute proliferation of qui tam suits because anytime there is a disclosure of a fraudulent scheme between a company and its customers, then under relater’s rules, you could have dozens or hundreds of follow-on qui tam suits that are really just copying the prior disclosures and adding the name of one more customer. And then under relater’s reasoning, none of those would be based on the prior disclosures. All of those relators would be entitled to take a portion of the government’s own recovery, and we don’t think that that can be right at all. I see my time is up, so we would ask—
Speaker 1 (27:11):
Address the Section 9(b) thing. A little went over with the other side.
Lena Hughes (27:14):
Yes. Under Rule 9(b), we also think the district court was correct to conclude this action needs to be dismissed. It’s clear the ordinary rule under 9(b) is you have to plead the who, what, where, when of the false statements. Here, those are the claims to the government. And they don’t argue that they have pleaded that they’re asking for an exception in the context of kickback schemes. But no court has recognized an exception to Rule 9(b) based on a kickback scheme, based on a theory of underlying fraud. And the Bookwalter case, which was not a kickback scheme, but a Stark Act violation—in that case, the presentment of claims to Medicare was conceded. So it was not—
Speaker 4 (27:57):
I’m sorry, I didn’t hear you. What—
Lena Hughes (27:59):
The presentment of claims to Medicare was conceded—
Speaker 4 (28:01):
Lena Hughes (28:02):
In that case.
Speaker 1 (28:02):
But come on. I mean, obviously U.S. Oncology presented some claims to Medicare, right?
Lena Hughes (28:06):
And that’s not the question under Rule 9(b).
Speaker 1 (28:09):
And they did it for these drugs, right? I mean that’s like a very obvious inference.
Lena Hughes (28:13):
That’s not the question under Rule 9(b). It’s their pleading obligation. But I also want to point out—
Speaker 1 (28:19):
I guess I’m asking what purpose it serves. If I’m pretty confident that they would have filed claims to Medicare to pay for Epogen or other cancer drugs, which seems like a reasonable thing that happens all the time. And it seems that it was not revealed that they were doing kickbacks. But don’t we have a pretty high degree of confidence that at least under their theory, false claims were filed with the government?
Lena Hughes (28:46):
Well, they have alleged a scheme that goes across an entire decade from 2001 to 2011. We allegedly submitted false claims. I think the purpose is to identify somewhere in that decade for us when and where were these false claims allegedly submitted? You can’t just say because you distribute such a large volume of drugs, you must have submitted a false claim at some point. And now their answer to that is that somehow all of the claims were tainted. That’s not legally or factually supported by their complaint. Again—
Speaker 1 (29:21):
But isn’t that like a merits question? If in fact you’re receiving kickbacks and you didn’t disclose—and you said you complied with the anti-kickback statute and got reimbursements, maybe those weren’t false claims because they weren’t actual kickbacks. Maybe it was permissible or so on. But isn’t that a merits question? I mean, if now we’re just trying to decide whether they have plausibly alleged that there were in fact claims for payment presented to the government that said we’ve complied with the anti-kickback statute, don’t we have a pretty high degree of confidence that happened?
Lena Hughes (29:50):
So no, it is not a merits question. We’re not challenging whether they’ve adequately alleged an anti‑kickback statute violation. We’re saying even if they did, that doesn’t mean that all claims subsequently submitted by the defendant were tainted. They don’t have allegations in the complaint to support that. Again, they’re saying we—
Speaker 1 (30:08):
Why is that?
Lena Hughes (30:10):
Okay, so because they allege that we submitted claims between 2001 and 2011, they say all of those claims were false. But the only allegations in the complaint say that we negotiated volume discounts and rebates between 2002 and 2004. And it—there’s no law suggesting that if a defendant has once received a kickback, then all of their claims on drugs in perpetuity are false. They don’t have any law that suggests that.
Speaker 1 (30:38):
They have to show some kind of close connection between the receipt of a kickback and the specific claim for payment?
Lena Hughes (30:43):
Yes. They essentially acknowledge that at page 52 of their brief where they say there needs to be a link between the kickback and the drug or the item that you’re seeking reimbursement for. In other words, we don’t even have that information with respect to the 2002 to 2004 time period because we don’t know which physicians allegedly received these discounts and rebates, whether those physicians then prescribed drugs to Medicare and Medicaid patients, and whether those doctors then sought reimbursement for those patients from the program.
Speaker 4 (31:19):
Alright, so your position, and I may ask Mr. Singh about this, so I want to know how you view this, is that even if they can plausibly plead that some claims unspecified are fraudulent, because they can’t demonstrate the causal link for all the claims, they have a 9(b) obligation to tell us which claims on which date are fraudulent.
Lena Hughes (31:48):
Yes, at a minimum.
Speaker 4 (31:49):
How can they do that? How, how can a per—how can a plaintiff reasonably be expected to do that?
Lena Hughes (31:55):
Well, there would certainly be types of relators who would have the claim detail information, such as relators that worked at the insiders practices. Insiders. There would be plenty of types of relators that would have that information. But even if they didn’t have the claim detail information, there’s a way they could get a lot closer. Tell us the physician who received the volume discounts or the rebates, tell us the date they prescribed it to a patient, tell us that patient was a Medicare- or Medicaid-eligible patient, and tell us that this physician practice routinely requests reimbursement from Medicare and Medicaid. And that’s a point that was made actually in the Kelly v. Novartis case, which was a kickback scheme and did apply Rule 9(b). And what the court there said is you cannot just tell us that the physician is signed up for a federal government reimbursement program, received incentives, and then prescribed the drug. That’s not enough to plead under Rule 9(b). And we don’t even have that level of detail here. We think the district court was clearly correct to hold that the allegations of the complaint do not satisfy Rule 9(b).
Speaker 1 (33:04):
Thank you very much.
Speaker 6 (33:06):
Speaker 1 (33:07):
We’ll turn back to Mr. Singh on rebuttal.
Tejinder Singh (33:16):
Beginning on the public disclosure question, they lead by telling you the question is could the government have pursued the case based on the public disclosures? I think even if you frame it that way, it’s fair to ask how. How do we take in the public disclosures or the government take in the public disclosures and say that U.S. Oncology is in here. It would’ve been plainly insufficient.
Speaker 1 (33:40):
Well, the government could have done exactly what the relator here did, which is talk to Amgen and investigate its customer.
Tejinder Singh (33:46):
Right. But that’s like saying that if you have a public disclosure that says kickbacks are rampant in the pharmaceutical industry, now every kickback case involving pharmaceuticals has been publicly disclosed because the government could go into—
Speaker 6 (33:59):
Well, if they had programs that was employing it pervasively across the medical community, then doesn’t that at least provide some portion of the claim?
Tejinder Singh (34:12):
Honestly, not really.
Speaker 6 (34:13):
It takes care of one of the conspirators, doesn’t it?
Tejinder Singh (34:17):
Speaker 6 (34:18):
They have a program in place, and they end up being held accountable for it with regard to co‑conspirators A through D. You happen to be co-conspirator F, and they just—and either you weren’t found, or you weren’t sued.
Tejinder Singh (34:29):
Sure. But it’s unnamed co-conspirator F, right. The point is that, look, there are cases that say when what you’re talking about is a relatively narrow class of potential defendants, you know, 1, 3, 9.
Speaker 6 (34:42):
But it’s a singular—it’s a conspiracy with multiple spokes to the wheel and with a hub, Amgen’s a hub, and the medical practices are the spokes.
Tejinder Singh (34:56):
Right. But that—
Speaker 6 (34:57):
So why isn’t it knowing the nature of the hub and that there are spokes out there at least a significant part or any part of your claim.
Tejinder Singh (35:09):
Sure. The short answer is that there are thousands of spokes.
Speaker 6 (35:13):
Well, of course. Well, and to say that there are thousands doesn’t mean then that they don’t have—they don’t share a common factual basis, that being the conspiratorial agreements that exist as a common policy of Amgen. Go out and encourage physicians to participate with us in falsifying the actual cost of the drugs that they’re prescribing.
Tejinder Singh (35:43):
I understand, your Honor. But here, our allegation is actually that U.S. Oncology had its own special deals.
Speaker 6 (35:49):
Okay? What makes it different? What makes U.S. Oncology?
Tejinder Singh (35:52):
Sure. So to be clear—
Speaker 6 (35:52):
And therefore, not somehow—not a no. The government and the public in general is not on notice from the other lawsuits.
Tejinder Singh (36:04):
Sure. So aside from the fact that U.S. Oncology is not named in those suits, there is the fact that we identified the specific mechanisms that U.S. Oncology negotiated for. I’ll give you just one example that’s nowhere in the public disclosures. They negotiated for data fees as a specific way to circumvent—to receive kickbacks without receiving them in the form of special rebates. And we’ve explained that Amgen knew that they were bogus but paid them because U.S. Oncology demanded them. That’s just one example. There are several of specific sorts of inducements that U.S. Oncology sought and about the way that they wielded their market power to engineer this scheme. We’re treating this hub and spoke idea is the idea that Amgen had this policy, Amgen did this thing, but what we are adding to it is really that U.S. Oncology was the bad guy. The principle mover and shaker in its own scheme. Take that—
Speaker 4 (36:54):
I’m not sure that would’ve worked for you. I mean, I’m not sure you would have that argument if the three earlier lawsuits had been specific, that Amgen and U.S. Oncology were the two. I mean, if it had been specific about that, who initiated it would not, I don’t think would have spared you the Public Disclosure Bar.
Tejinder Singh (37:17):
That’s possible, your Honor. I mean, it would depend on what they said about what those lawsuits said, because I do want to make clear we’re distinguishing on two axis. One is did you identify the defendant and the public’s disclosure? And number two is, did you identify the allegations or transactions? And I do think it’s quite salient here that the public disclosures are so vague about what kinds of inducements—
Speaker 4 (37:37):
They’re their biggest customer. I mean, your adversary pointed that out. You’re not someone—U.S. Oncology, when I say you—U.S. oncology is their biggest customer. It’s not a matter of having to dig for someone who made three purchases from—
Tejinder Singh (37:54):
But your honor, there is no reason to suspect inherently that a large customer is more likely to be complicit than a smaller one, Your Honor.
Speaker 4 (38:03):
Except that the three earlier lawsuits suggest this was Amgen’s just general method of operation. It would hardly have not involved its biggest customer.
Tejinder Singh (38:14):
Well, maybe yes, maybe no, your Honor. But here’s the other way to think about it. I mean, and look, some of this conversation is sort of in the air, right? It’s not about the record in this case. But one could just as easily say, “Look, U.S. Oncology is a large, sophisticated practice. They’ve got lawyers, they’ve got compliance professionals. They probably wouldn’t do something like this. It’s the fly by nights you really have to worry about.” I mean, look, there’s no reason to pick them out of the lineup based on the public dispute.
Speaker 1 (38:39):
There’s no special, but you don’t dispute that somebody could read the complaints and say, “Okay, Amgen was doing this with its customers, so let’s go see if U.S. Oncology did it.” Right?
Tejinder Singh (38:49):
Yeah, I mean—
Tejinder Singh (38:50):
It turned out that U.S. Oncology did exactly what’s described in the complaints, that is it’s a passive recipient of kickbacks or it’s part of a scheme in which Amgen is the moving force. Maybe it would be covered by the Public Disclosure Bar. But you’re saying because it turned out that U.S. Oncology was more of a willing participant than a passive recipient, that actually, that makes it different.
Tejinder Singh (39:10):
That’s the second thing. Yeah.
Speaker 1 (39:11):
But if in fact the disclosure is able to put the government on the trail of the fraud through this investigation, why should that make a difference as to what they discover?
Tejinder Singh (39:20):
So I want to be really clear about this trail language because it has the potential to confuse. The language is drawn from the Eighth Circuit’s case in CSL Behring. And there, the court says you have to put the government quote squarely on the trail of a specific and identifiable defendant’s participation in the fraud. I really don’t think that that’s what you have here. There’s another case that talks about the trail language, which is quite good. It’s from the Eastern District of Pennsylvania; the case name is Sturgeon, I think, or Spurgeon, and it explains that this trail thing can easily be taken too far. The idea that there’s a breadcrumb over here, and so you get to every single customer who engaged in the fraud. I mean, the analogy we gave in our brief is the public disclosure in this case really are like pointing the government to a false—
Speaker 6 (40:04):
How many nautical practices were involved with Amgen’s conspiracy and the three lawsuits?
Tejinder Singh (40:09):
They don’t say. To be clear, the three lawsuits—I want to make this part really clear. The three lawsuits don’t identify any medical practices as defendants. They say John Doe defendants one through 100, and then they say we don’t know who those people are, but they include hospitals, physicians, medical practices, and so on around the country.
Speaker 6 (40:30):
You don’t think the fact that they had this program and those lawsuits identified Amgen’s general policy doesn’t put you on the trail of anybody who was buying drugs from Amgen?
Tejinder Singh (40:41):
I really don’t think so, your Honor. I mean that—so to be clear, no court has come even close.
Speaker 6 (40:46):
Put your client on the trail, didn’t it?
Tejinder Singh (40:48):
No, your Honor.
Speaker 6 (40:49):
Oh, it didn’t? Okay.
Tejinder Singh (40:49):
No, our investigation predated. These lawsuits were filed in 2003, for example.
Speaker 6 (40:57):
Tejinder Singh (40:58):
We have conversations with folks occurring prior.
Speaker 6 (40:59):
I’ll tell you, it would pique my interest, but—
Tejinder Singh (41:01):
Yeah. Well, so sure. But the question of who to talk to and about what is by no means answered or even illuminated.
Speaker 6 (41:09):
You’re the one that gave us the standard on the trail.
Tejinder Singh (41:12):
That’s—to be clear, that is not the standard we want the court to adopt. We’ve told the court the right standard is the Eleventh Circuit decision in Cooper, which says you have to name the defendant. But even if you go a step further and say they have to be identifiable in some other way, all the circuits that use that, including the trail circuits—
Speaker 6 (41:28):
Were the customers of Amgen identifiable?
Tejinder Singh (41:33):
Not in any obvious way, no. I mean—
Speaker 6 (41:35):
Not from their submissions for Medicare reimbursement?
Tejinder Singh (41:39):
I mean, I suppose you could figure out who’s reimbursing for drugs. Sure. But that’s, I think it’s quite a stretch to say you were therefore on notice that all of these customers probably got kickbacks.
Speaker 1 (41:50):
Okay. Do you want to say something briefly about the 9(b) question?
Tejinder Singh (41:53):
Yeah, the only thing that I would say about Rule 9(b) is that I take issue with the way the other side has described our position. They say we’re asking for an exception to the way Rule 9(b) ordinarily applies. That’s a misframing. Rule 9B has always been applied in a case-specific manner to serve its purposes. And we have explained, and they have not argued to the contrary, that the purposes of Rule 9(b) are satisfied in this case. We made a big deal about this in the opening brief. They say nothing about it in their answering brief. And I think that it’s important to recognize that what we’re asking for is not an exception, but instead, the ordinary application of Rule 9(b) under circumstances like this, where upstream misconduct takes a broad range of claims downstream.
Speaker 1 (42:34):
Okay. Thank you very much, Mr. Singh, the case is submitted.
Speaker 6 (42:38):
Nicely argued. Thank you very much.