United States v. Allergan, Inc.

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UNITED STATES OF AMERICA, et al., ex rel. MATTHEW A. FITZER, M.D., Plaintiffs, v. ALLERGAN, INC., et al. Defendants.

CIVIL No. 1:17-cv-00668-SAG

United States District Court, D. Maryland

May 30, 2024

UNDER SEAL

MEMORANDUM OPINION

Stephanie A. Gallagher United States District Judge

In this False Claims Act (“FCA”) case, Defendant Allergan, Inc. (“Allergan”) filed a motion for sanctions, alleging that Relator Matthew A. Fitzer, M.D. and certain of his trial counsel, Rebekah L. Bailey, Esq. Matthew H. Morgan, Esq., Chloe Raimey, Esq., and Anthony C Munter, Esq., should be sanctioned as a result of misrepresentations made to the Court in Relator's Fourth Amended Complaint (“FAC”), ECF 127, and opposition to the motion to dismiss the FAC, ECF 136. The record relating to this issue is extensive, consisting of the parties' original briefing, ECF 214, 252, a motions hearing on February 14, 2024, ECF 281, a telephone status conference, ECF 296, a series of affidavits filed by Relator's trial counsel, ECF 302, 303, 304, 308, briefing by attorneys retained to represent Relator and his counsel (“sanctions attorneys”), ECF 305-1, 307-1, 313-1 an omnibus response filed by Allergan, ECF 322, and replies filed by the sanctions attorneys, ECF 329, 330, 331. This Court has reviewed the entirety of the record with great care in light of the importance of this issue. For the reasons stated below, while an exceptionally close call, Allergan's motion for sanctions will be DENIED.^[1]

I. PROCEDURAL AND FACTUAL BACKGROUND

This qui tam case, originally filed in 2013 and transferred to the District of Maryland in 2017, remained under seal for many years awaiting the government's decision regarding whether or not to intervene. Ultimately, on February 5, 2021, the government notified this Court and Relator that it did not intend to intervene and pursue this case. ECF 48. Shortly thereafter, Relator retained Nichols Kaster, PLLP to join his original attorney, Mr. Munter of Price Benowitz, LLP, as trial counsel. Ms. Bailey and Mr. Morgan of Nichols Kaster, along with Mr. Munter, filed Relator's Second Amended Complaint (“SAC”) on May 21, 2021. ECF 77.

The essence of Relator's claim is that Allergan submitted false Medicare claims because it employed its online surgeon locator (“Locator”) as a “kickback” to induce surgeons to use its LAPBAND adjustable gastric band. One of the many difficulties relating to the required proof in this case is the fact that Medicare uses a single provider reimbursement code, 43770, for all adjustable gastric-banding procedures. During the relevant time periods, there were at least two adjustable gastric bands on the market: Allergan's LAP-BAND and Ethicon's REALIZE band. In order, then, to plead a viable FCA claim against Allergan, Relator had to allege, with particularity, “presentment” of at least one false claim, specifically, that a surgeon had implanted a LAP-BAND (not a REALIZE band) and submitted a false claim to Medicare for reimbursement. To this end, Relator's SAC incorporated two tables intended to identify specific false claims presented to the government related to payment for LAP-BAND (not REALIZE band) surgeries.^[2] The paragraph introducing the tables in the SAC (and later in the Third Amended Complaint (“TAC”)) simply states: “The physicians below exclusively performed LAP-BAND surgeries and appeared on Defendants' physician locator tool in 2013.” ECF 77 ¶ 214; ECF 100 ¶ 319.

After Relator filed his SAC, the case proceeded through a series of successful efforts by Allergan (and its then co-Defendant Apollo Endosurgery, Inc.) to dismiss the action. This Court wrote no fewer than five memorandum opinions, over the span of eleven months, on the adequacy of the various versions of the Complaint, concluding, in relevant part, that Relator's SAC and TAC had to be dismissed.^[3]ECF 91, 98, 118, 125, 140. With respect to the TAC, this Court dismissed it in part because Relator had not adequately alleged presentment. See, e.g., ECF 118 at 13 (March 22, 2022, opinion dismissing the TAC stating, “Although Relator asserts that the surgeons included in the tables were not qualified to perform REALIZE band surgeries, neither the TAC nor any of Relator's briefing has explained or provided any factual basis for that conclusion.... In the absence of any fact-based allegations to support that claim, this Court cannot assume the truth of Relator's conclusory assertion that the tables represent claims related to LAP-BAND surgeries rather than REALIZE band surgeries.”). In connection with Relator's motion for reconsideration of this Court's dismissal of the TAC, this Court stated:

On this point, the FAC [Fourth Amended Complaint, which had already been drafted for filing despite the pending motion for reconsideration] again displays the irony of this motion for reconsideration. Over and over again, Relator has alleged and argued that the surgeons listed in the tables in the TAC were not qualified to perform REALIZE band surgeries. As it turns out, though, the FAC alleges that Relator removed one of the surgeons from the tables after doing more research and discovering that the surgeon may have been REALIZE band certified after all. Surprisingly, notwithstanding that admission in the FAC, Relator continues to argue in this motion that the surgeons listed in the tables in the TAC were “not Realize certified.” .... But to survive a motion to dismiss, he must allege facts that, taken as true, support his theory. He may not simply espouse that theory, relying on facts that do not support it, and ask this Court to credit its truth.

ECF 125 at 8 n.4 (emphasis in original) (internal citations omitted). Despite these concerns, this Court did not deem it appropriate to dismiss Relator's action with prejudice, instead allowing him to file the FAC to exercise “one final opportunity to plead a viable claim.” ECF 118 at 21.

With Court permission, then, Relator filed his FAC on May 18, 2022. ECF 127. For the first time, the FAC changed the operative language regarding Relator's explanation of his 2013 Table to state, “Dr. Fitzer has personal knowledge from his investigations (explained further below) that the physicians below exclusively performed LAP-BAND® gastric-band surgeries and had listings on Defendants' physician locator tool in 2013.” Id. ¶ 371. The FAC went on to describe Relator's “investigations” as follows, in relevant part:

373. Dr. Fitzer identified the providers in the two tables above were not Realize® band qualified (and therefore could not have implanted a Realize® band) through a process of elimination. Specifically, in or about March of 2013 and again in November of 2014, Dr. Fitzer compiled a list of all self-reported gastric-band surgeons from the American Society of Metabolic and Bariatric Surgeons (“ASMBS”).

374. Next, he determined which of those surgeons had listings on www.lapband.com by searching the LAP-BAND® locator for each name.

375. From this list of surgeons, he proceeded to eliminate those who were Realize® band certified. He did this by first confirming whether the surgeons appeared on the Realize® locator.

376. By studying whether the many bariatric surgeons of his acquaintances had Realize® locator listings, Dr. Fitzer learned that when a surgeon lacked a Realize® locator listing, it very reliably indicated that they did not have Realize® certification.

377. Dr. Fitzer thus eliminated about half his list.

378. If Dr. Fitzer did not find the LAP-BAND® Specialist on www.realize.com he subsequently located the provider's professional website, online profiles, and listings on obesityhelp.com and bariatricpal.com. On these sites, it was common practice for bariatric surgeons to provide their accreditation status, including whether they had a Realize® band certification. Dr. Fitzer removed any surgeon for whom he could find evidence of Realize® band certification.

ECF 127 ¶¶ 373-78 (footnotes omitted).

Allergan filed a motion to dismiss the FAC. ECF 131. In its motion, Allergan spent multiple pages discussing, at least in part, the adequacy of Relator's 2013 Table and accompanying investigation. See ECF 131-1 at 6-7, 11-13, 19-24. Relator filed an opposition to the motion in which he represented:

Relator took great care when compiling these two tables so to only include claims data for surgeons who (a) were not Realize band qualified based on his extensive contemporaneous research and personal knowledge, and (b) were listed on Defendants' locator during the time the services were rendered. The FAC details the steps Relator took early on to gather the evidence in question, demonstrating a reliable basis of support for the allegations in question. These steps included compiling ASMBS data on gastric band surgeons, narrowing the list to surgeons listed on the LAP-BAND locator, and then eliminating those who were listed on the Realize locator or marketed themselves as Realize certified.

ECF 136 at 18 (emphases added) (internal citations omitted). In its opinion denying Allergan's motion to dismiss the FAC, this Court specifically warned Relator (and, by extension, those representing him) as follows:

It is also worth noting more generally that Relator has been concerningly inconsistent about his level of certainty that the claims referenced in the data tables of each iteration of his complaint in fact correspond to LAP-BAND surgeries. First, he was sure that all the claims referenced in the tables only corresponded to LAPBAND surgeries because the listed surgeons were not Realize band certified and, therefore, they exclusively performed LAP-BAND surgeries. ECF 77 ¶¶ 214-15. Then, he realized that at least one surgeon was Realize band certified after all, and it appears as though Allergan may

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