State v. Medimmune, Inc.

342 F. Supp. 3d 544
CourtDistrict Court, S.D. Illinois
DecidedSeptember 28, 2018
DocketNo. 09 Civ. 3919 (RJS)
StatusPublished
Cited by6 cases

This text of 342 F. Supp. 3d 544 (State v. Medimmune, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State v. Medimmune, Inc., 342 F. Supp. 3d 544 (S.D. Ill. 2018).

Opinion

Richard J. Sullivan, District Judge:

Plaintiff, the State of New York ("New York"), brings this action against Defendant MedImmune, Inc. ("MedImmune") alleging violations of the New York False Claims Act and a variety of other New York state laws stemming from MedImmune's participation in a kickback scheme designed to boost sales of MedImmune's neonatal respiratory drug, Synagis. (Doc. No. 49 (the "Complaint-in-Intervention" or "Compl.") at ¶ 1.) Now before the Court is MedImmune's motion to dismiss the Complaint-in-Intervention for failure to state a claim pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b). (Doc. No. 123.) For the reasons discussed below, MedImmune's motion is DENIED.

I. BACKGROUND

This case begins not with the New York Attorney General, but with Dr. Susan Vierczhalek ("Relator"), a licensed pediatrician and attending physician at Bellevue Hospital Center.1 (Doc. No. 102 ¶ 44.) On April 17, 2009, Vierczhalek filed a qui tam complaint (Doc. No. 70 (the "Original Complaint" or "Original Compl.") ), on behalf of the United States and 19 states (the *549"States")2 against MedImmune, Trinity Homecare LLC ("Trinity"), and OptionCare ("OptionCare") - for violation of the False Claims Act ("FCA"), 31 U.S.C. § 3729(a), and the States' FCA equivalents. (Original Compl. ¶¶ 18-23.) The theory underlying Vierczhalek's Original Complaint was that MedImmune, Trinity, and OptionCare violated the FCA by promoting so-called "off-label" uses of Synagis. (Original Compl. ¶¶ 3,4.) In other words, "the conditions that prompted the prescriptions of Synagis were not the FDA-approved indications, but rather a much more lenient set of broad criteria." (Id. ¶ 4.) According to Vierczhalek, the alleged off-label promotion "illegally influenced physicians to prescribe ... Synagis when they otherwise would not have prescribed [it]." (Id. )

Vierczhalek's case was stayed for a number of years as the States and the United States decided whether or not to intervene in the action. See 31 U.S.C. § 3730(b)(2) ; N.Y. State Fin. Law § 190(2)(b). On June 19, 2015, New York filed a notice of election to intervene, pursuant to N.Y. State Finance Law § 190(2)(b), as to Defendants Trinity and OptionCare. Concurrently with that notice, New York filed a proposed stipulation and order of dismissal, whereby Trinity and OptionCare jointly agreed to pay $22.4 million dollars. (Doc. No. 34 at 8.) All claims against Trinity and OptionCare were thereafter dismissed. (Doc. Nos. 35, 36.) Pursuant to whistleblower provisions of New York state law, Vierczhalek herself received $4,040,808.84 as part of the settlement. (Doc. No. 34 at 9.) Nevertheless, New York continued its examination of Vierczhalek's allegations with respect to MedImmune.

Thereafter, on March 31, 2017, New York elected to intervene and filed the Complaint-in-Intervention against MedImmune. (Doc. No. 49.) New York seeks to recover treble damages and civil penalties under the New York State False Claims Act, and to obtain a variety of other relief under related New York state law. (Id. ¶ 1.)

The theory of New York's Complaint-in-Intervention differs notably from the theory underpinning Vierczhalek's Original Complaint. Instead of focusing on off-label promotion, New York alleges that MedImmune engaged in a kickback scheme with Trinity, which resulted in Trinity presenting "false claims to Medicaid for Synagis from January 2007 through March 2011." (Compl. ¶ 3.) The gist of the scheme, as alleged, can be summarized as follows. Synagis is used to prevent the onset of lower respiratory tract disease caused by respiratory syncytial virus ("RSV"). (Compl. ¶ 69.) Synagis was approved by the FDA in 1998, and is prescribed to infants who are at risk of contracting RSV - ordinarily, babies who are born prematurely or who have heart or lung diseases. (Id. ) Trinity is a specialized pharmacy that "dispenses and delivers drugs to patient homes [and] provides or arranges for homecare services." (Id. ¶ 6.) It also "controlled the Medicaid business for Synagis in New York." (Id. ¶ 89.)

Thus, according to the Complaint-in-Intervention, MedImmune salespersons - dubbed the "Synagis people" by hospital staff (Compl. ¶ 132) - would curry favor with hospital administrators, including nurses and doctors, in order to gain access to the neo-natal intensive care unit ("NICU"). (Compl. ¶ 43.) That access allowed *550MedImmune to obtain "confidential personal information about specific babies from NICU logbooks and hospital records." (Id. ¶ 4.) This information, otherwise known as protected health information ("PHI") (id. ¶ 12), typically included an infant's name, gender, date of birth, medical record number, gestational birth weight, and hospital notes, as well as the mother's name, address, insurance information, and phone number. (Id. ¶ 8.) Of particular interest to MedImmune (and to Trinity) was the PHI of babies born prematurely, as these infants would be prime candidates for Synagis. (Id. ¶ 101.) Once in possession of the PHI, MedImmune would pass the information along to Trinity so that Trinity could use it as "leads" for its pharmaceutical representatives. (Id. ¶ 8.) In other words, Trinity used the PHI to pursue patients who would potentially need Synagis. (Id. ¶ 94.)

After receiving the PHI, Trinity would contact the infant's pediatrician or parents and attempt to secure a prescription for Synagis. (Id. ¶ 94.) The end goal was to turn these PHI-leads into "Trinity customers for outpatient Synagis prescriptions." (Id. ¶ 95.) Trinity would then present Synagis claims for reimbursement through New York's Medicaid program. (Id. ¶ 96.) New York alleges that this scheme, which ran from 2007 to 2011 (id. ¶ 187), resulted in "millions of dollars of Synagis Medicaid claims presented by Trinity" (id. ¶ 120). MedImmune benefited as sales of Synagis increased.

On January 22, 2018, MedImmune moved to dismiss the Complaint-in-Intervention. (Doc. No. 124.) Specifically, MedImmune argues that New York has not adequately pleaded a violation of the state or federal anti-kickback statutes. MedImmune also argues that New York has failed to sufficiently demonstrate a violation of the New York False Claims Act or its other state law claims. The motion was fully briefed on June 4, 2018. (Doc. No. 191.)

II. LEGAL STANDARD

To survive a motion to dismiss pursuant to Rule 12(b)(6) of the

Related

Cite This Page — Counsel Stack

Bluebook (online)
342 F. Supp. 3d 544, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-v-medimmune-inc-ilsd-2018.