United States ex rel. Lager v. CSL Behring, LLC

158 F. Supp. 3d 782, 2016 U.S. Dist. LEXIS 6398, 2016 WL 233245
CourtDistrict Court, E.D. Missouri
DecidedJanuary 20, 2016
DocketCase No. 4:14-CV-841 (CEJ)
StatusPublished
Cited by1 cases

This text of 158 F. Supp. 3d 782 (United States ex rel. Lager v. CSL Behring, LLC) is published on Counsel Stack Legal Research, covering District Court, E.D. Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States ex rel. Lager v. CSL Behring, LLC, 158 F. Supp. 3d 782, 2016 U.S. Dist. LEXIS 6398, 2016 WL 233245 (E.D. Mo. 2016).

Opinion

MEMORANDUM AND ORDER

CAROL E. JACKSON, UNITED STATES DISTRICT JUDGE

This qui tarn action is brought by relator Shane Lager pursuant to the False Claims Act, 31 U.S.C. §§ 3729, et seq. (FCA). Relator alleges that drug manufacturer CSL Behring, LLC, and its parent corporation CSL Behring Limited (collectively, CSL Behring) conspired with specialty pharmacies Accredo Health, Inc., (Accredo) and Coram LLC (Coram) to submit false claims to the United States for reimbursement for prescription drugs. After a period of review, the government declined to intervene. Defendants move to dismiss the complaint pursuant to Fed. R.CÍV.P. 12(b)(6) and 9(b). Defendant CSL Behring Limited additionally moves for dismissal for insufficient service of process, pursuant to Fed.R.Civ.P. 12(b)(5). Relator has filed responses in opposition and the issues are fully briefed.

I. Background

Relator worked for defendant CSL Behring for fourteen years in sales and sales management. He alleges that CSL Behring fraudulently reported inflated wholesale prices for the drugs Vibaglobin and Hizentra, causing government health programs to reimburse to Coram and Ac-credo more than what they actually pay for the drugs.

CSL Behring manufactures protein-based therapies, including Vivaglobin and [785]*785Hizentra. The drugs are classified as “DME infusion drugs” because they are self-administered by patients through a pump, which is “durable medical equipment” (DME). Vivaglobin was introduced in 2006 and was discontinued in 2011; Hiz-entra was introduced in 2010 and continues to be manufactured. According to relator, 70% of CSL Behring’s sales of Vivaglobin and Hizentra are made to defendants Co-ram and Accredo. Complaint ¶¶ 34, 36.

Pharmacies that dispense drugs to beneficiaries of government healthcare programs (e.g., Medicare) submit claims for reimbursement to the federal government. For most drugs, the government reimburses pharmacies based on a percentage of the average sales price (ASP). However, DME infusion drugs are reimbursed based on a percentage of the drug’s average wholesale price (AWP).1Unlike the ASP, which is based on actual sales data, the AWP is based on figures the drug manufacturer reports to third-party publishers (e.g., Red Book).2 U.S. Department of Health & Human Services, Office of Inspector General, OEI-12-12-00310, Part B Payments for Drugs Infused Through Du-rabie Medical Equipment at 2-3 (Feb.2013) (2013 OIG Report) [Doc. #53-1]. Also unlike ASP, AWP is not defined by law or regulation. U.S. Dept. of Health & Human Svcs., Office of Insp. Gen’l, OEI-03-05-00200, Medicaid Drug Price Comparison: Average Sales Price to Average Wholesale Price (June 2005) (2005 OIG Report) [Doc. #53-6]. The ASP is “substantially lower” than the AWP. Id. at 8 (in 2004, median percentage difference between ASP and AWP was 49%).

Relator alleges that CSL Behring reported inflated wholesale prices 'to the third-party publishers. As a result, the AWPs for Vivaglobin and Hizentra were established at $133 and $151,3 respectively, while' the pharmacies actually paid between $65 and $70. Relator alleges that the CSL Behring defendants use the “spread” between the actual cost and the AWP-based reimbursement rates to induce their customers, including Accredo and Coram, to buy their products. He further alleges that Accredo and Coram seek out patients covered by government health programs in order to take advantage of the spread. He alleges that the defendants conspired to[786]*786gether to make, or cause to be made, false claims to the government. He claims that, as a result of the defendants’ conduct, the federal government overpaid in excess of $100 million for Vivaglobin and in excess of $180 million for Hizentra.

II. Legal Standards

The purpose of a motion to dismiss under Rule 12(b)(6) is to test the legal sufficiency of the complaint. Fed. R. Civ. P. 12(b)(6). The factual allegations of a complaint are assumed true and construed in favor of the plaintiff, “even if it strikes a savvy judge that actual proof of those facts is improbable.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citing Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508 n. 1, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002)); Neitzke v. Williams, 490 U.S. 319, 327, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) (“Rule 12(b)(6) does not countenance... dismissals based on a judge’s disbelief of a complaint’s factual allegations.”); Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) (stating that a well-pleaded complaint may proceed even if it appears “that a recovery is very remote and unlikely”). The issue is not whether the plaintiff will ultimately prevail, but whether the plaintiff is entitled to present evidence in support of his claim. Scheuer, 416 U.S. at 236, 94 S.Ct. 1683. A viable complaint must include “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955; see id. at 563, 127 S.Ct. 1955 (stating that the “no set of facts” language in Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), “has earned its retirement”); see also Ashcroft v. Iqbal, 556 U.S. 662, 678-84, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (holding that the pleading standard set forth in Twombly applies to all civil actions). “Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955.

Rule 9(b) provides that, “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting the fraud or mistake.”

Rule 9(b)’s particularity requirement demands a higher degree of notice than that required for other claims, and is intended to enable the defendant to respond specifically and quickly to the potentially damaging allegations. To satisfy the particularity requirement of Rule 9(b), the complaint must plead such facts as the time, place, and content of defendant’s false representations, as well as the details of the defendant’s fraudulent acts, including when the acts occurred, who engaged in them, and what was obtained as a result. Put another way, the complaint must identify the “who, what, where, when and how” of the alleged fraud.

U.S. ex rel. Joshi v. St. Luke’s Hosp., Inc., 441 F.3d 552, 556 (8th Cir.2006) (internal citations omitted). A plaintiff must state an underlying basis for its assertions sufficient to provide an indicia of reliability. Id. at 557 (citation omitted).

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United States v. CSL Behring, L.L.C.
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Bluebook (online)
158 F. Supp. 3d 782, 2016 U.S. Dist. LEXIS 6398, 2016 WL 233245, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-lager-v-csl-behring-llc-moed-2016.