United States v. EMD Serono, Inc.

370 F. Supp. 3d 483
CourtDistrict Court, E.D. Pennsylvania
DecidedApril 3, 2019
DocketCIVIL ACTION NO. 16-5594
StatusPublished
Cited by7 cases

This text of 370 F. Supp. 3d 483 (United States v. EMD Serono, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. EMD Serono, Inc., 370 F. Supp. 3d 483 (E.D. Pa. 2019).

Opinion

Savage, J.

In this qui tam action brought under the False Claims Act, 31 U.S.C. §§ 3727 - 33, and various state laws, relators SMSPF, LLC and Panzey Belgium Harris bring claims against pharmaceutical companies, EMD Serono, Inc., and Pfizer, Inc., and marketing consultants and specialists, Quintiles IMS Holdings, Inc.,1 and RXC Acquisition Company. They allege the defendants improperly engaged in "white coat marketing" and provided free nursing and reimbursement support services in violation of the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). The government, having completed its investigation and determining that the allegations lack merit, declined to intervene in the action. It now moves to dismiss all claims under 31 U.S.C. § 3730(c)(2)(A).2

Considering the parties' submissions and after a hearing, we conclude that the government's decision not to pursue this action is based on a legitimate governmental purpose and is not arbitrary. Therefore, we shall grant its motion and dismiss the action.

Factual Background

SMSPF, LLC is a limited liability shell company established by Venari Partners, LLC, doing business as National Health Care Analysis Group, a limited liability corporation comprised of other similar entities.3 These companies are relators in multiple qui tam actions making substantially the same allegations in eight judicial districts.4

*486SMSPF originally filed this action under seal on October 21, 2016.5 It amended the complaint to add Panzey Belgium Harris, a former Pfizer employee, as an individual co-relator on April 26, 2017.6 Relators filed a second amended complaint on December 28, 2018.7

The gravamen of the complaints are the same. Relators allege that the defendants, pharmaceutical companies and commercial outsourcing vendors, together engaged in "white coat marketing" and provided a variety of free services to induce doctors to prescribe the multiple sclerosis medication Rebif.8 They claim these actions violated the Anti-Kickback Statute, 42 U.S.C. § 1320a-7(b).

On June 27, 2018, after investigating the case for over 18 months, the government declined to intervene.9 We lifted the seal on August 30, 2018.10 The government now moves to dismiss this action pursuant to 31 U.S.C. § 3730(c)(2)(A).11 It contends that the allegations lack merit, and continuing to monitor, investigate, and prosecute the case will be too costly and contrary to the public interest.

Relators contend that the government has failed to demonstrate that its decision to dismiss has a rational relationship to a governmental interest. They argue that the decision to dismiss this action and the other similar actions is arbitrary, irrational, and not in the public interest.

Analysis

A private individual, known as a relator, can bring a qui tam action under the FCA on behalf of the United States. 31 U.S.C. § 3730(a), (b)(1) ; Graham Cty. Soil & Water Conservation Dist. v. United States ex rel. Wilson , 545 U.S. 409, 411-12, 125 S.Ct. 2444, 162 L.Ed.2d 390 (2005) (citing Vt. Agency of Nat. Res. v. United States ex rel. Stevens , 529 U.S. 765, 769-72, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000) ). Because a relator brings the action on behalf of the government, he must give the government notice of the action. The government may elect to intervene in the action then or later for good cause. Graham Cty. , 545 U.S. at 412, 125 S.Ct. 2444 ; 31 U.S.C. § 3730(b)(2), (c)(3). If the government declines to intervene, the relator has the right to proceed with the prosecution of the case on behalf of the government.

*48731 U.S.C. § 3730(b)(4)(B). In that event, the relator determines the course of the action. Id. § 3037(c)(3).

Even if the government does not intervene, it retains its rights throughout the litigation. The relator cannot dismiss the action without the written consent of the Attorney General. The government may move to stay the action if it would interfere with the government's investigation or prosecution in another matter. It may intervene in the action "at a later date upon a showing of good cause." See id. § 3730(b)(1), (c)(3)-(4). In short, the government may exercise its rights whether it intervenes or not.

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370 F. Supp. 3d 483, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-emd-serono-inc-paed-2019.