United States v. Eli Lilly & Co.

4 F.4th 255

UNITED STATES of America, ex rel., Health Choice Alliance, L.L.C., on behalf of United States of America and 31 States (AR; CA; CO; CT; DE; DC; FL; GA; HI; IL; IN; IA; LA; MD; MA; MI; MN; MT; NV; NH; NJ; NM; NY; NC; OK; RI; TN; TX; VT; VA; WA), Plaintiffs—Appellants,

v.ELI LILLY AND COMPANY, INCORPORATED; VMS Biomarketing ; Covance, Incorporated; United Biosource Corporation; Healthstar Clinical Education Solutions, L.L.C.; Covance Market Access Services, Incorporated, Defendants—Appellees,United States of America, Appellee,United States of America, ex rel., Health Choice Group, L.L.C., On Behalf of United States of America and 31 States (AR; CA; CO; CT; DE; DC; FL; GA; HI; IL; IN; IA; LA; MD; MA; MI; MN; MT; NV; NH; NJ; NM; NY; NC; OK; RI; TN; TX; VT; VA; WA), Plaintiff—Appellant,

v.Bayer Corporation; Amgen, Incorporated; Onyx Pharmaceuticals, Incorporated; AmerisourceBergen Corporation; Lash Group, Defendants—Appellees,United States of America, Appellee.

No. 19-40906

United States Court of Appeals, Fifth Circuit.

July 7, 2021

Kenneth Winston Starr, Caroline Allen, Harvey Grannis Brown, Jr., W. Mark Lanier, Esq., Kevin Philip Parker, for Plaintiff-Appellant.

Christopher John Schwegmann, Attorney, Lynn Pinker Hurst & Schwegmann, L.L.P., Dallas, TX, Debra E. Schreck, Arnold & Porter Kaye Scholer, L.L.P., New York, NY, for Defendant-Appellee Eli Lilly and Company, Incorporated.

Daniel M. Purdom, Hinshaw & Culbertson, Chicago, IL for Defendant-Appellee VMS Biomarketing

Margaret Isabel Lyle, Jones Day, Dallas, TX, B. Kurt Copper, Jones Day, Columbus, OH, Heather M. O'Shea, Jones Day, Chicago, IL, Clyde Moody Siebman, Siebman, Burg, Phillips & Smith, L.L.P., Sherman, TX, Stephen G. Sozio, Jones Day, Cleveland, OH, for Defendant-Appellee Covance, Incorporated.

Ryan P. McCarthy, Esq., Eric W. Sitarchuk, Morgan, Lewis & Bockius, L.L.P., Philadelphia, PA, Elizabeth Mooar Chiaviello, Morgan, Lewis & Bockius, L.L.P., Houston, TX, for Defendant-Appellee United Biosource Corporation.

Margaret Isabel Lyle, Jones Day, Dallas, TX, Clyde Moody Siebman, Siebman, Burg, Phillips & Smith, L.L.P., Sherman, TX, for Defendant-Appellee Covance Market Access Services, Incorporated.

Charles Wylie Scarborough, U.S. Department of Justice, Civil Division, Appellate Section, Washington, DC, James Garland Gillingham, U.S. Attorney's Office, Eastern District of Texas, Tyler, TX, Michael S. Raab, U.S. Department of Justice, Civil Division, Appellate Section, Washington, DC, Bradley Elliot Visosky, Assistant U.S. Attorney, U.S. Attorney's Office, Eastern District of Texas, for Appellee United States of America.

Matthew J. O'Connor, Benjamin J. Razi, Attorney, Covington & Burling, L.L.P., Washington, DC, Andrea Leigh Fair, Ward, Smith & Hill, P.L.L.C., Longview, TX, for Defendant-Appellee Bayer Corporation.

Lance Lee, Young, Pickett & Lee, Texarkana, TX, Charles Michael Moore, Dentons US, L.L.P., Dallas, TX, for Defendant-Appellee Amgen, Incorporated, Onyx Pharmaceuticals, Incorporated.

W. Scott Hastings, Esq., C. Scott Jones, Locke Lord, L.L.P., Dallas, TX, William David Carter, Sr., Esq., Mercy Carter, L.L.P., Texarkana, TX, for Defendant-Appellee AmerisourceBergen Corporation

William David Carter, Sr., Esq., Mercy Carter, L.L.P., Texarkana, TX, for Defendant-Appellee Lash Group.

James F. Segroves, Reed Smith, L.L.P., Washington, DC, for Amicus Curiae Chamber of Commerce of the United States of America.

Before Higginbotham, Elrod, and Haynes, Circuit Judges.

Jennifer Walker Elrod, Circuit Judge:^*

The appellants Health Choice Alliance and Health Choice Group brought qui tam actions under the False Claims Act on behalf of the United States alleging violations of the Anti-Kickback Statute by pharmaceutical companies. The United States moved to dismiss the actions, and the district court granted the motion. Because the actions were properly dismissed, we AFFIRM.

I.

Health Choice Alliance and Health Choice Group (collectively Health Choice) are both entities created by the National Health Care Analysis Group for the purpose of filing qui tam actions alleging instances of fraud in medicine and pharmaceuticals. Health Choice and affiliated entities brought eleven qui tam actions under the False Claims Act against a total of thirty-eight defendants alleging similar violations of the Anti-Kickback Statute. 31 U.S.C. § 3730(b) ; 42 U.S.C. § 1320a-7b(b). This appeal concerns two of those qui tam cases, against Eli Lilly and Company and Bayer Corporation.¹ The complaints in both the Eli Lilly and Bayer cases allege that the defendants illegally provided patient-education services to providers before a prescription had been written in violation of the Anti-Kickback Statute and certain state laws.

Health Choice filed two similar complaints against Eli Lilly and (initially) four other defendants and against Bayer and four other defendants in the United States District Court for the Eastern District of Texas.² Prior to filing these complaints, Health Choice submitted pre-filing notices to and met with attorneys from the United States Attorney's Office for the Eastern District of Texas. After filing the complaints, Health Choice met with officials at the Department of Justice Civil Division in Washington, D.C. The United States declined to intervene in either case.

Health Choice then amended each of its complaints. Shortly thereafter, Eli Lilly, Bayer, and the other defendants filed motions to dismiss for failure to state a claim. See Fed. R. Civ. P. 9(b), 12(b)(6). The magistrate judge held a consolidated hearing on the motions to dismiss in both cases. The magistrate judge recommended the motions be denied in part and granted in part, and the district court adopted these recommendations. Health Choice amended its complaints once more to address the pleading deficiencies identified by the district court.

In October of 2018, approximately a year after declining to intervene in the Eli Lilly and Bayer cases, the government sent notice to Health Choice that it intended to move to dismiss the complaints. See 31 U.S.C. § 3730(c)(2)(A). Over the next two-and-a-half months, Health Choice and the government conferred by meeting, letter, and teleconference to discuss the government's stated concerns about the case. During a teleconference with Health Choice, the government identified four specific concerns about the Eli Lilly and Bayer cases: "(1) whether there [was] sufficient factual and legal support to prove violations of the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b) (AKS) ; (2) the substantial costs and burdens for the United States if the qui tam actions were to continue; (3) certain policy interests of Medicare and other federal healthcare programs; and (4) the investigative methods employed by ‘National Healthcare Analysis Group,’ " Health Choice's parent organization.

On December 17, 2018, the government notified Health Choice that it intended to proceed with its motions to dismiss, and it filed those motions the same day. In its notice to Health Choice, the government cited to its own two-year investigation and the supplemental information provided by Health Choice—including documents purportedly supporting Health Choice's theory of the cases and letters from Health Choice concerning the merits and costs and benefits of the cases—as the basis of its decision to seek dismissal.

In response to the government's motions to dismiss, Health Choice first asserted that the government supported its motions primarily with "ad hominem attacks" against Health Choice. Health choice then argued that the district court should not afford the government unfettered discretion to dismiss and instead should hold that the government has not made the "proper showing" to warrant dismissal.

In reply, the government said it had "concluded that, not only do the allegations lack factual and legal support, but further litigation will impose burdens and costs on the government that are not justified and will undermine practices that benefit federal healthcare programs by providing patients with greater access to product education and support."

On May 14, 2018, the magistrate judge held a consolidated hearing on the government's motions to dismiss both cases. The magistrate judge recommended that the district court grant both motions. The district court adopted the recommendations and granted the government's motions to dismiss. Health Choice timely appealed.

II.

Before turning to the merits, we must determine whether we have jurisdiction to hear this case. The district court had federal question jurisdiction over Health Choice's federal claims and supplemental jurisdiction over its state law claims. See 28 U.S.C. §§ 1331, 1367(a). Both Health Choice and the United States contend that appellate jurisdiction exists because the orders below are "final decisions" of the district court. 12 U.S.C. § 1291. Still, we have an independent obligation to assure ourselves of jurisdiction. Green Valley Special Util. Dist. v. City of Schertz , 969 F.3d 460, 468 (5th Cir. 2020) (en banc ).

We have "jurisdiction of appeals from all final decisions of the district courts of the United States." 28 U.S.C. § 1291. "[T]here is no final decision if a plaintiff voluntarily dismisses a defendant without prejudice, because the plaintiff ‘is entitled to bring a later suit on the same cause of action.’ " Williams v. Taylor Seidenbach, Inc. , 958 F.3d 341, 343 (5th Cir. 2020) (en banc ) (quoting Ryan v. Occidental Petroleum Corp. , 577 F.2d 298, 302 (5th Cir. 1978) ). "And in a suit against multiple defendants, there is no final decision as to one defendant until there is a final decision as to all defendants." Id. ; see Fed. R. Civ. P. 54(b).

There is a potential jurisdictional issue concerning the chronology of two events: the plaintiff's voluntary dismissal and the district court's granting of a motion to dismiss. Health Choice voluntarily dismissed, without prejudice, its claims against certain defendants in the...