United States of America, State of Illinois, State of California, State of Florida, State of Tennessee, State of Texas, State of Massachusetts, State of Delaware, State of Nevada, State of Louisiana, State of Hawaii, District of Columbia, State of Virginia, State of Georgia, State of Indiana, State of Michigan, State of Montana, State of New Hampshire, State of New Jersey, State of New Mexico, State of New York, State of Oklahoma, State of Rhode Island, State of Wisconsin, ex rel, JOHN KING; TAMMY DRUMMOND, Plaintiffs - Appellants
SOLVAY PHARMACEUTICALS, INCORPORATED, Defendant-Appellee
from the United States District Court for the Southern
District of Texas
HIGGINBOTHAM, SMITH, and HAYNES, Circuit Judges.
King and Tammy Drummond (collectively, "Relators")
appeal the district court's grant of summary judgment to
Solvay Pharmaceuticals, Inc., on their False Claims Act
("FCA") claims and a subsequent ruling that partly
granted court costs to Solvay. For the reasons explained
below, we AFFIRM.
are both former Solvay sales and marketing employees. They
brought this FCA suit against Solvay claiming that Solvay
induced false Medicaid claims through a nationwide off-label
marketing and kickback scheme to promote three drugs: Luvox,
Aceon, and AndroGel. See 31 U.S.C. §
3729(a)(1)(A)-(B). They allege that this scheme proximately
caused physicians to prescribe these drugs for off-label uses
to Medicaid patients, the cost of which was reimbursed by the
federal government. Relators also claim they were retaliated
against for their internal complaints about Solvay's
off-label marketing. The district court granted summary
judgment to Solvay on all of Relators' claims.
final judgment, Solvay sought an award of $961, 380.51 in
taxable costs against Relators under 28 U.S.C. § 1920.
Relators objected to almost all of those costs, claiming that
Solvay was entitled to just $5, 808.17. The district court
awarded Solvay $232, 809.92. Relators appealed both the final
order granting summary judgment on all of Relators'
claims and the order granting taxable costs to Solvay.
Standard of Review
review an order granting summary judgment de novo,
applying the same standards as the district court."
Cooley v. Hous. Auth. of City of Slidell, 747 F.3d
295, 297 (5th Cir. 2014). Summary judgment is appropriate
when "there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of
law." Fed.R.Civ.P. 56(a). A disputed fact is material if
it has the potential to "affect the outcome of the suit
under the governing law." Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). "[W]e may affirm
the district court's decision on any grounds supported by
the record." Phillips ex rel. Phillips v. Monroe
Cty., 311 F.3d 369, 376 (5th Cir. 2002).
"The district court has broad discretion in taxing
costs, and we will reverse only upon a clear showing of abuse
of discretion." Brazos Valley Coal. for Life, Inc.
v. City of Bryan, 421 F.3d 314, 327 (5th Cir. 2005)
(quoting Migis v. Pearle Vision, 135 F.3d 1041, 1049
(5th Cir. 1998)).
imposes civil liability and treble damages on any person who,
inter alia, "knowingly presents, or causes to be
presented, a false or fraudulent claim for payment or
approval" to the United States government; or
"knowingly makes, uses, or causes to be made or used a
false record or statement material to a false or fraudulent
claim." 31 U.S.C. § 3729(a)(1)(A)-(B); see also
United States ex rel. Steury v. Cardinal Health, Inc.,
625 F.3d 262, 267 (5th Cir. 2010). An FCA claim consists of
four elements: "(1) whether there was a false statement
or fraudulent course of conduct; (2) made or carried out with
the requisite scienter; (3) that was material; and (4) that
caused the government to pay out money or to forfeit moneys
due (i.e., that involved a claim)." United States ex
rel. Longhi v. United States, 575 F.3d 458, 467 (5th
Cir. 2009) (citation omitted).
have developed several theories of FCA liability with varying
degrees of connectivity between Solvay's off-label
marketing of Luvox, Aceon, and AndroGel and the actual filing
of false claims. Those theories are that (1) Solvay marketed
the three relevant drugs for off-label uses causing
physicians to prescribe them to Medicaid patients for those
uses; (2) Solvay lobbied members of state pharmaceutical and
therapeutic committees ("P&T committees") to
list these three drugs on their preferred drug lists; (3)
Solvay used misleading scientific literature to lobby the
publisher of drug compendium DRUGDEX Information System
("DrugDex") to include the off-label uses of these
drugs in the compendium; and (4) Solvay paid doctors
kickbacks to prescribe these drugs to Medicaid patients in
violation of the anti-kickback statute ("AKS"), 42
U.S.C. § 1320a-7b(b)(2)(A). Relators also brought an FCA
retaliation claim challenging their terminations.
district court disposed of all of Relators' claims
through a series of partial summary judgment orders.
Relators' AndroGel claims were dismissed on summary
judgment for lack of jurisdiction under the FCA's public
disclosure bar. For the remaining two drugs, Luvox and Aceon,
the off-label marketing claims failed to survive summary
judgment because Relators' evidence of Medicaid claims
was inadmissible and, even if it were admissible, did not
sufficiently demonstrate causation. Both the lobbying
theories of liability relating to state P&T committees
and DrugDex and the retaliation claims also failed to survive
summary judgment due to insufficient causation evidence.
Finally, the AKS claims did not survive summary judgment
because there was insufficient evidence that Solvay intended
the kickbacks to induce payments from Medicaid. The summary
judgment orders in the district court involved additional
issues, but Relators do not challenge the district
court's judgment on those issues so we do not consider
we conclude that Relators failed to produce sufficient
evidence to survive summary judgment on any of their briefed
claims, we affirm the district court's grant of summary
judgment to Solvay.
Public Disclosure Bar
district court first determined that it lacked jurisdiction
to consider any of Relators' AndroGel claims because they
were subject to the FCA's public disclosure bar. The
applicable version of the FCA's public disclosure bar,
which has since changed, provides that "[n]o court shall
have jurisdiction over an action under this section based
upon the public disclosure of allegations or transactions . .
. from the news media, unless the action is brought by the
Attorney General or the person bringing the action is an
original source of the information." 31 U.S.C.
§ 3730(e)(4)(A) (2006) (emphasis added). The statute
defines original source as "an individual who  has
direct and independent knowledge of the information on which
the allegations are based and  has voluntarily provided
the information to the Government before filing an action
under this section which is based on the information."
Id. § 3730(e)(4)(B).
district court determined that Relators' AndroGel claims
were based on publicly disclosed allegations from a magazine
article and that Relators' pre-suit disclosure made the
day before filing suit could not satisfy the voluntary
disclosure requirement of the original source exception.
Specifically, the district court concluded that because
Relators' pre-suit disclosure satisfied the
mandatory disclosure requirement under §
3730(b)(2), it could not simultaneously satisfy the
voluntary disclosure requirement under §
3730(e)(4). Relators appeal only the district court's
determination that they are not original sources.
well established that the party invoking federal jurisdiction
carries the burden of establishing that jurisdiction is
proper. United States ex rel. Jamison v. McKesson
Corp., 649 F.3d 322, 327 (5th Cir. 2011). Thus, it was
Relators' burden to show that they qualified under the
original source exception; otherwise, the public disclosure
bar "strips" the court of subject matter
jurisdiction. See United States ex rel. Fried v. W.
Indep. Sch. Dist., 527 F.3d 439, 441-42 (5th Cir. 2008);
see also § 3730(e)(4)(A) (stating that
"[n]o court shall have jurisdiction" if the public
disclosure bar applies). However, because "[a] challenge
under the FCA jurisdictional bar is necessarily intertwined
with the merits, " we treat it as a motion for summary
judgment. Jamison, 649 F.3d at 326 (quoting
United States ex rel. Reagan v. E. Tex. Med. Ctr.
Reg'l Healthcare Sys., 384 F.3d 168, 173 (5th Cir.
without deciding that a single pre-suit disclosure can
satisfy both the pre-suit mandatory and voluntary disclosure
requirements, Relators still failed to create a genuine issue
of material fact as to whether their pre-suit disclosure to
the government disclosed "the information on which the
allegations are based." 31 U.S.C. § 3730(e)(4)(B).
The Supreme Court has interpreted the phrase
"information on which the allegations are based" as
referring to the "information underlying the allegations
of the relator's action." Rockwell Int'l
Corp. v. United States, 549 U.S. 457, 470-72 (2007)
(abrogating United States ex rel. Laird v. Lockheed
Martin Eng'g & Sci. Servs. Co., 336 F.3d 346,
354-55 (5th Cir. 2003) (holding that a relator must have
direct and independent knowledge of information on which the
allegations in the public disclosure are based)).
The Court further indicated that such information includes
knowledge of conduct suggesting that false claims were made
to the government. See id. at 475 (concluding that
relator's knowledge fell short because he was not
employed by the defendant during the relevant time period and
thus could not have known about the predicate conduct and
subsequent false statements to the government). Indeed,
without knowledge of conduct that-when placed in the context
of all of the other relevant information- suggests that false
claims were made to the government, Relators could not allege
an FCA claim. See United States ex rel. Spicer v.
Westbrook, 751 F.3d 354, 364-65 (5th Cir. 2014) (stating
that "the statute attaches liability, not to the
underlying fraudulent activity or to the government's
wrongful payment, but to the claim for payment" (quoting
Longhi, 575 F.3d at 467)); United States ex rel.
Grubbs v. Kanneganti, 565 F.3d 180, 188 (5th Cir. 2009)
(stating that proof of a false claim against the government
is the "sine qua non" of liability under
the FCA). Accordingly, the Fourth Circuit has affirmed a
finding that a relator was not entitled to original source
status where, inter alia, his pre-suit disclosure never
connected information about the alleged fraudulent conduct
with the filing of a claim for reimbursement from the
government. United States ex rel. Vuyyuru v. Jadhav,
555 F.3d 337, 353, 355 (4th Cir. 2009).
Relators failed to present any evidence indicating that their
pre-suit disclosure connected the knowledge of Solvay's
conduct to false claims made to the government. Relators cite
to a declaration of their attorney, Joel Androphy, and a
PowerPoint presentation to support the details of their
pre-suit disclosure. However, the declaration simply refers to
discussions Relators had with the Food and Drug
Administration ("FDA") about the off-label
marketing and kickbacks associated with AndroGel, as well as
Relators' terminations. But the declaration does not
indicate that Relators connected this information with any
false claims presented to the government. Moreover, the lack
of detail about which off-label uses Solvay marketed or how
it paid kickbacks to physicians is an additional defect that
makes the declaration insufficient to support the voluntary
disclosure necessary for the original source exception.
See Rockwell, 549 U.S. at 473 (indicating that a
relator must satisfy his original source status as to each
theory of fraud in the complaint as amended);
Jamison, 649 F.3d at 332 (holding that a relator was
not an original source of the allegations in his complaint
because the information on which the allegations were based
described the fraud only generally).
the PowerPoint presentation provides additional details about
the information disclosed to the FDA, the presentation does
not suggest that any false claims were submitted to the
government. It makes no mention of any FCA provisions, never
suggests that the off-label marketing or the remuneration
caused prescriptions to be reimbursed by the government, and
never suggests any false certifications of compliance with
the AKS. Instead, the information disclosed in the PowerPoint
presentation suggests only Food, Drug and Cosmetic Act
("FDCA") and AKS violations, not FCA violations.
For Relators to satisfy the FCA's voluntary pre-suit
disclosure requirement of disclosing information underlying
their FCA action, their disclosure must-at a
minimum-connect direct and independent knowledge of
information about Solvay's conduct to false claims
submitted to the government, i.e., suggest an FCA
violation. Even assuming all of the information in
the PowerPoint presentation regarding possible FDCA and AKS
violations came from Relators' direct and independent
knowledge, the presentation still fails to create a genuine
issue of material fact as to its disclosure of information on
which the FCA allegations are based because it is completely
devoid of any indication connecting such information with
false claims presented to the government.
because Relators' evidence of the information provided to
the government in their voluntary pre-suit disclosure does
not suggest any FCA violations, it is insufficient to support
a finding that Relators disclosed to the government the
information underlying their FCA allegations prior to filing
suit. Consequently, Relators have failed to meet their
summary judgment burden as to their status as original
sources under § 3730(e)(4) of the FCA. Because the FCA
public disclosure bar applies, the district court correctly
determined that it lacked jurisdiction to consider
Relators' AndroGel claims.
Alleged Off-Label Marketing to Physicians
FDCA prohibits a drug from being introduced in interstate
commerce unless the FDA approves the drug as safe and
effective for each of the uses suggested on its labeling. 21
U.S.C. § 355(a), (d); see also 21 C.F.R. §
310.303(a) ("[A] new drug may not be approved for
marketing unless it has been shown to be safe and effective
for its intended use(s)."). The Medicaid Act empowers
states to deny reimbursement for a drug if "the
prescribed use is not for a medically accepted
indication." 42 U.S.C. §
1396r-8(d)(1)(B)(i). A "medically accepted
indication" is "any use for a covered outpatient
drug which is approved under the [FDCA] or the use of which
is supported by one or more citations included or approved
for inclusion in any of the compendia described"
elsewhere in the statute. 42 U.S.C. § ...