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In re Plavix Marketing, Sales Practice and Products Liability Litigation (No. II)

United States District Court, D. New Jersey

June 27, 2017

BRISTOL-MYERS SQUIBB CO., et al. Defendants. UNITED STATES OF AMERICA, et al., ex rel. ELISA DICKSON, Plaintiffs, Civil Action No. 13-1039 (FLW)(LHG)


          Honorable Freda L. Wolfson United States District Judge.

         Before the Court is the motion of Defendants Bristol-Myers Squibb Company (“BMS”), Sanofi-Aventis U.S. LLC, Sanofi U.S. Service Inc., and Sanofi-Synthelabo Inc. (collectively “Sanofi”) (together with BMS, “Defendants”) to dismiss the Fourth Amended Complaint (“4AC”) of relator Elisa Dickson (“Realtor”). In the 4AC, Relator brings a qui tam action, a member case of the Multi-District Litigation, In re: Plavix Marketing, Sales Practices and Products Liability Litigation, involving the alleged wrongful marketing and sales of Plavix (clopidogrel bisulfate), a prescription blood thinner manufactured by Defendant BMS and marketed in the United States by BMS and Sanofi. Relator brings this case on behalf of the United States and seventeen states, asserting claims for violation of the federal False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733 (Count I); conspiracy under the FCA, 31 U.S.C. § 3729(a) (Count II); and the False Claims Acts of twenty-four (24) states (Counts III-XXVI). Defendants move to dismiss the 4AC in its entirety, and in the alternative to limit the temporal scope of Relator's state FCA claims under the laws of five states, the FCAs of which became effective after March 30, 2005.

         For the reasons stated herein, the Defendants' Motion to Dismiss the 4AC is GRANTED, and Defendants' motion to restrict the retroactive application of the five state FCAs, which became effective after March 30, 2005, is denied as moot.


         The relevant facts of this action, as set forth in the 4AC and taken as true by this Court, are as follows. Plavix® (clopidogrel bisulfate) (“Plavix”) is a prescription blood thinner manufactured by BMS and comarketed in the United States by Sanofi. 4AC ¶ 1. Plavix has been approved by the United States Food and Drug Administration (“FDA”) and is indicated for the treatment of Acute Coronary Syndrome and for use following a recent myocardial infarction or stroke or established peripheral artery disease. Ibid. Plavix costs approximately $4.00 per pill. Aspirin, an over-the-counter blood thinner, costs approximately $0.04 per pill. Id. at ¶ 3.

         Relator claims that Defendants promoted Plavix as a superior drug to aspirin for certain indicated usages, when Plavix was no more effective than aspirin for those indicated usages and cost one hundred times more. Id. at ¶ 22. More than half of state Medicaid programs contain cost-based restrictions that limit coverage under Medicaid to cost-effective treatments. Ibid. In these states, Medicaid only pays for cost-effective drugs. Ibid. Where an equally effective but cheaper treatment is available for a particular course of treatment, the more expensive drug is not cost effective and cannot be reimbursed. Ibid. In these states, cost effectiveness is not just a requirement for participation in Medicaid, it is a condition precedent to reimbursement designed to ensure that a state's Medicaid program is a good steward of taxpayer dollars. Ibid.

         Relator alleges that Defendants targeted their marketing efforts, misrepresenting the effectiveness of Plavix relative to aspirin, at physicians and prescribers whose patients relied upon public assistance programs such as Medicaid. Id. at ¶ 3. Relator claims that Defendants' marketing efforts caused physicians to submit many prescriptions for Plavix in the mistaken belief that it was a cost-effective treatment. Ibid.

         In order for the cost of a drug to be reimbursed under Medicaid, the drug manufacturer must have entered into, and have in effect, a rebate agreement wherein the manufacturer agrees to give the applicable government payor back a percentage of the cost of the reimbursed drug. Id. at ¶ 92. Drugs that are covered by a rebate agreement are then statutorily divided into two distinct categories: those that require prior authorization from Medicaid prior to reimbursement and those that are reimbursed automatically when the drug is prescribed. Ibid. Each state maintains a preferred drug list, or formulary[1], that explicitly exempts certain Medicaid-eligible drugs from a prior authorization requirement. Medicaid is obligated to provide reimbursement for the cost of a drug on a state's formulary when the drug is prescribed by a physician for an “on-label” indication. Ibid. In other words, if a drug is on a state's formulary, once an “on-label” prescription for that drug is written and the prescription is filled, the cost for that prescribed drug is automatically reimbursed by the government. No other authorizations are required. Id. at ¶ 26.

         In addition to marketing to prescribing physicians, Relator also alleges that Defendants falsely marketed Plavix to the physicians and pharmacists on state formulary committees as a cost effective treatment eligible for listing on the states' formularies, when Plavix was not in fact so eligible, due to its lack of superior effectiveness to aspirin and significantly greater cost. Id. at ¶ 151. Relator claims that these marketing efforts fraudulently induced the formulary committees to include Plavix on each state's PDL/formulary, which triggered an automatic government obligation to reimburse Plavix prescriptions-even when Plavix did not meet the cost-effectiveness requirements for inclusion on the formulary. Ibid. Relator alleges that reimbursements for Plavix in this context constitute false claims under the FCA and under the state FCAs. Ibid.


         On March 30, 2011, Relator filed this case in the United States District Court for the Southern District of Illinois (“the transferor court”). The United States and its co-plaintiff States declined to intervene in Relator's claims. On November 29, 2012, Relator filed a Second Amended Complaint. Defendants moved to dismiss that pleading, and the transferor court granted that motion in part and denied it in part (“Dickson I”). See 289 F.R.D. 271 (S.D. Ill. 2013) (Dkt. No. 54.).

         The Judicial Panel on Multidistrict Litigation then transferred the case to this Court to be part of the Plavix® Multi-District Litigation. This Court then vacated Dickson I, in part, upon reconsideration, granted further dismissal in part, and granted Relator leave to amend her pleading (“Dickson II”). See 2013 WL 7196328 (D.N.J. Aug. 21, 2013) (Dkt. No. 88). On September 20, 2013, Relator filed a 149-page Third Amended Complaint (“3AC”). The 3AC's Prescriber Allegations and Formulary Allegations asserted that Defendants violated the federal FCA and numerous state FCAs by causing the submission of false claims for Medicare and Medicaid payment. Defendants moved to dismiss the 3AC in its entirety. On August 20, 2015, the Court granted Defendants' motion in part and denied it in part. The Court dismissed (1) all FCA claims based on Medicare Part D; (2) federal FCA claims based on the Medicaid plans of thirty-three (33) states, including the District of Columbia; (3) all FCA claims based on Plavix's inclusion on state formularies; (4) state FCA claims raised under the law of nineteen (19) states; and (5) all federal and state FCA claims for claims made prior to March 30, 2005, pursuant to the applicable statutes of limitations. See Dickson III, 123 F.Supp.3d at 619.

         The active claims remaining in the case after the Court's decision were (1) federal FCA claims based on Defendants' conduct in 17 States - Connecticut, Delaware, Idaho, Kansas, Maryland, Massachusetts, Mississippi, Montana, Nebraska, North Carolina, Ohio, Oklahoma, Rhode Island, South Dakota, Utah, Washington and Wyoming - each of which imposes a cost-effectiveness requirement as a condition for the reimbursement of drugs under that state's Medicaid program (“the Cost-Imposed States”); and (2) state FCA claims under the law of the seven Cost-Imposed States that have enacted their own FCAs - Connecticut, Delaware, Massachusetts, Montana, North Carolina, Oklahoma, and Rhode Island.

         On December 15, 2015, the Court stayed this case pending the Supreme Court's decision in Universal Health Servs., Inc. v. United States and Massachusetts, ex rel. Escobar, ___U.S. ___ ___, 136 S.Ct. 1989, 2001, 195 L.Ed.2d 348 (2016)) (hereinafter “Escobar”). On June 16, 2016, the Supreme Court decided Escobar. These proceedings were reopened on June 29, 2016.

         On August 16, 2016, without seeking leave to amend, Relator filed her fifth pleading: the 175-page Fourth Amended Complaint (“4AC”). The 4AC asserts claims for violation of the federal FCA, 31 U.S.C. §§ 3729-3733 (Count I), and for conspiracy to violate the federal FCA, 31 U.S.C. § 3729(a) (Count II), based on allegedly false Medicaid claims submitted in thirty-six (36) states. In addition to federal FCA claims based on conduct in the 17 Cost-Imposed States that this Court previously allowed to go forward, Relator also includes claims in 19 states - Alabama, Alaska, Arizona, Arkansas, Colorado, Florida, Georgia, Hawaii, Iowa, Louisiana, Maine, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Tennessee, Wisconsin - which this Court previously dismissed. Relator claims that these states too impose cost-effectiveness requirements in their Medicaid reimbursement schema, which were simply not pleaded in the 3AC. The 4AC also asserts claims under 24 state FCAs.[2] This figure includes 17 state FCA claims, which this Court previously dismissed - California, Colorado, Florida, Georgia, Illinois, Indiana, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Tennessee, Texas, Virginia, Wisconsin, District of Columbia. Again, Relator's rationale for resurrecting these claims is that these states also impose cost-effectiveness requirements, which were previously not pleaded. Relator's federal and state FCA claims in the 4AC incorporate this Court's previous ruling on the statutes of limitations, and do not seek recovery for false claims arising prior to March 30, 2005, except for revived previously dismissed claims under four State FCAs with longer or shorter limitations periods: New Mexico (four years), New York (10 years), Texas (four years), and Wisconsin (10 years). 4AC ¶ 51 n. 54.

         On January 30, 2017, Defendants moved to dismiss the 4AC in its entirety. On May 1, 2017, the Third Circuit issued its first reported opinion interpreting the Supreme Court's decision in Escobar. Defendants submitted a notice of supplementary authority on May 8, 2017, contending that the Third Circuit's precedential decision in United States ex rel. Petratos v. Genentech Inc., 855 F.3d 481 (3d Cir. 2017), compelled the dismissal of the 4AC for failure to allege that Defendants' fraud was material to any government Medicaid payor's decision to pay for Plavix. Relator opposed Defendants' arguments concerning Petratos on May 11, 2017. III. LEGAL STANDARD This Court has federal-question jurisdiction over the federal FCA claims under 28 U.S.C. § 1331 and 31 U.S.C. § 3732(a). Supplemental jurisdiction extends to the state FCA claims under 28 U.S.C. § 1367. See also United States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 302 (3d Cir. 2011). “The law of the transferee forum applies . . . to federal questions, though the Court may give the law of the transferor forum ‘close consideration.'” In re Nazi Era Cases Against German Defendants Litig., 320 F.Supp.2d 204, 214 (D.N.J. 2004), aff'd, 153 F.App'x 819 (3d Cir. 2005) (citing In re Korean Air Lines Disaster, 829 F.2d 1171 (D.C.Cir. 1987)). Accordingly, in considering the present motion to dismiss, the precedents of the Third Circuit control the merits of Relator's federal FCA claims. In re Nazi Era Cases Against German Defendants Litig., 198 F.R.D. 429, 439 n.16 (D.N.J. 2000) (“When dealing with cases that have been consolidated for pretrial proceedings pursuant to an order of the MDL Panel under 28 U.S.C. § 1407, the law of the transferor forum merits close attention, but should not be read to have stare decisis effect in a transferee forum situated in another circuit. See In re Korean Air Lines Disaster, 829 F.2d 1171, 1176 (D.C. Cir. 1987). For this reason the Court will apply the law of the Third Circuit, with due consideration given to the rulings of other circuits.”).[3] Because the Court exercises supplemental jurisdiction over the state FCA claims under the laws of twenty-four states, the Court must apply the state substantive law of each respective state to that state's FCA claim. Silverstein v. Percudani, 422 F.Supp.2d 468, 471 (M.D. Pa.), aff'd, 207 F. App'x 238 (3d Cir. 2006) (“A federal district court exercising supplemental jurisdiction over state law causes of action must apply the substantive law of the State [providing the cause of action] as interpreted by the State's highest court.”).

         When considering a motion to dismiss a complaint for failure to state a claim upon which relief can be granted, pursuant to Fed.R.Civ.P. 12(b)(6), a court must accept all well-pleaded allegations in the complaint as true and view them in the light most favorable to the plaintiff. Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005). It is well settled that a pleading is sufficient if it contains “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). However, “[a]lthough the Federal Rules of Civil Procedure do not require a claimant to set forth an intricately detailed description of the asserted basis for relief, they do require that the pleadings give defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.” Baldwin Cnty. Welcome Ctr. v. Brown, 466 U.S. 147, 149-50 n. 3 (1984) (quotation and citation omitted). A district court, in weighing a motion to dismiss, asks “‘not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claim.'” Bell Atlantic v. Twombly, 550 U.S. 544, 583 (2007) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)); see also Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) (“Our decision in Twombly expounded the pleading standard for all civil actions.”) (internal citations omitted); Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (“Iqbal ... provides the final nail-in-the-coffin for the ‘no set of facts' standard that applied to federal complaints before Twombly.”).

         Following the Twombly/Iqbal standard, the Third Circuit applies a two-part analysis in reviewing a complaint under Rule 12(b)(6). First, a district court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Fowler, 578 F.3d at 210. Second, a district court must determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a “plausible claim for relief.” Id. A complaint must do more than allege the plaintiff's entitlement to relief. Id. However, this standard “‘does not impose a probability requirement at the pleading stage, ' but instead ‘simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary element.'” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 127 S.Ct. at 1965); see also Covington v. Int'l Ass'n of Approved Basketball Officials, 710 F.3d 114, 118 (3d Cir. 2013) (“[A] claimant does not have to set out in detail the facts upon which he bases his claim. . . . The pleading standard is not akin to a probability requirement, . . . to survive a motion to dismiss, a complaint merely has to state a plausible claim for relief.” (citations omitted)). Nonetheless, a court need not credit either “bald assertions” or “legal conclusions” in a complaint when deciding a motion to dismiss. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir. 1997). The defendant bears the burden of showing that no claim has been presented. Hedges v. U.S., 404 F.3d 744, 750 (3d Cir. 2005) (citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)).

         Finally, a court in reviewing a Rule 12(b)(6) motion must only consider the facts alleged in the pleadings, the documents attached thereto as exhibits, and matters of judicial notice. Southern Cross Overseas Agencies, Inc. v. Kwong Shipping Grp. Ltd., 181 F.3d 410, 426 (3d Cir. 1999).

         Because FCA claims allege fraud, they are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Wilkins, 659 F.3d at 301 n. 9; Frederico v. Home Depot, 507 F.3d 188, 202-03 (3d Cir. 2007). In order to satisfy Rule 9(b), a complaint must provide “all of the essential factual background that would accompany ‘the first paragraph of any newspaper story'-that is, the ‘who, what, when, where and how' of the events at issue.” In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 217 (3d Cir. 2002) (quoting Burlington Coat Factory, 114 F.3d at 1422). In order to satisfy the standards of 9(b) in the FCA context Relator “must provide particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted. Describing a mere opportunity for fraud will not suffice. Sufficient facts to establish a plausible ground for relief must be alleged.” Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153, 157-58 (3d Cir. 2014) (quotations omitted). See also Id. at 156 (In United States ex Rel. Wilkins . . ., we noted that we had never “held that a plaintiff must identify a specific claim for payment at the pleading stage of the case to state a claim for relief.”).

         IV. ANALYSIS

         “[T]he FCA makes it unlawful to knowingly submit a fraudulent claim to the government.”[4] U.S. ex rel. Schumann v. Astrazeneca Pharm. L.P., 769 F.3d 837, 840 (3d Cir. 2014). “The primary purpose of the FCA is to indemnify the government-through its restitutionary penalty provisions-against losses caused by a defendant's fraud.” Wilkins, 659 F.3d at 304 (quotation omitted). To that end, the Act contains a qui tam provision that permits private parties (known as “relators”) to bring suit “on behalf of the United States against anyone submitting a false claim to the Government.” Schumann, 769 F.3d at 840 (internal quotation marks omitted) (quoting Hughes Aircraft Co. v. U.S. ex rel. Schumer, 520 U.S. 939, 941 (1997)). If a qui tam suit is successful, the relator has the opportunity to share in the recovery.

         The Third Circuit has recognized that “[t]here are two categories of false claims” that may form the basis of an FCA qui tam suit: (1) factually false claims; and (2) legally false claims. Wilkins, 659 F.3d at 305. “‘A claim is factually false when the claimant [knowingly] misrepresents what goods or services that it provided to the Government.' ‘[A] claim is legally false when the claimant knowingly falsely certifies that it has complied with' a material statute, regulation, or contractual provision. Such certification may be express or implied. ‘Under the ‘express false certification' theory, [a claimant] is liable under the FCA for falsely certifying that it is in compliance with' a material statute, regulation, or contractual provision.” United States v. Eastwick Coll., 657 F.App'x 89, 93-94 (3d Cir. 2016) (quoting Wilkins, 659 F.3d at 305). “By contrast, implied false certification liability attaches when a claimant ‘makes specific representations about the goods or services provided' and the claimant's ‘failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths.'” Id. (quoting Escobar, 136 S.Ct. at 2001).[5] “[T]he implied certification theory of liability should not be applied expansively, particularly when advanced on the basis of FCA allegations arising from the Government's payment of claims under federally funded health care programs.” Wilkins, 659 F.3d at 307. “Thus, under this theory a plaintiff must show that if the Government had been aware of the defendant's violations of the Medicare [or Medicaid] laws and regulations that are the bases of a plaintiff's FCA claims, it would not have paid the defendant's claims.” Ibid.

         In addition to factually false and legally false claims, the federal courts have recognized a narrow, third category of false claims obtained by “fraud-in-the-inducement.” “[A] fraudulently induced contract may create liability under the False Claims Act when that contract later results in payment thereunder by the government, whether to the wrongdoer or someone else.” United States v. Veneziale, 268 F.2d 504, 505 (3d Cir. 1959) (citing United States ex rel. Marcus v. Hess, 317 U.S. 537 (1943) (superseded by statute)). See also U.S. ex rel. Thomas v. Siemens AG, 593 F.App'x 139, 143 (3d Cir. 2014) (“Although the focus of the False Claims Act is on false ‘claims, ' courts have employed a fraudulent inducement theory to establish liability under the Act for each claim submitted to the government under a contract which was procured by fraud, even in the absence of evidence that the claims were fraudulent in themselves.”).

         In the 4AC, Relator pursues her federal and state FCA claims under both implied false certification and fraud-in-the-inducement theories of liability. First, Relator contends that Defendants caused physicians to submit prescriptions to Medicaid for payment by fraudulently marketing Plavix to those physicians as more effective than aspirin, despite Plavix being one-hundred times more expensive and no more effective. Relator contends that the claims to Medicaid, submitted by physicians who were subjected to Defendants' marketing efforts, contained an implied false certification that Plavix complied with state Medicaid program requirements that all prescriptions submitted for payment be for drugs that are cost-effective treatments. Because Plavix costs one-hundred times more than aspirin, but Relator alleges it to be no more effective, Relator contends that Plavix was not cost-effective and was not eligible for reimbursement under the laws of the thirty-six states imposing cost-effectiveness requirements in their Medicaid program. The Court shall refer to this category of claims as the “Prescriber Allegations.”

         Second, relying explicitly on the fraud-in-the-inducement theory enunciated by the Third Circuit in the context of a fraudulently induced contract in the unreported decision in Thomas, Relator contends that Defendants fraudulently induced state Medicaid formulary committees to place Plavix on their respective state PDLs - or formularies - by marketing Plavix to those committees as more effective than aspirin, when Plavix was not in fact more effective than aspirin. 4AC ¶ 98, n. 140 (incorporating Thomas into fraud-in-the-inducement theory). Relator again contends that Plavix therefore did not meet the state-law requirements for cost-effectiveness, a prerequisite to being included on the formularies of the thirty-six states imposing such requirements. The court shall refer to this category of claims as the “Formulary Allegations.”

         Defendants move to dismiss all of Relator's federal FCA claims in both categories. Specifically, Defendants argue that the Prescriber Allegations must be dismissed because (1) the law of the case bars Relator from reviving federal FCA claims based on alleged implied false certifications submitted in the 19 states and state FCA claims under the statutes of 17 states that this Court dismissed in its decision concerning the 3AC; (2) the Prescriber Allegations are deficient under Fed.R.Civ.P. 9(b); and (3) the Prescriber Allegations fail to meet the heightened pleading standard for materiality established by the Supreme Court in Escobar. Defendants argue that the Formulary Allegations must be dismissed because (1) the law of the case bars Relator from reviving the Formulary Allegations, which were dismissed in this Court's decision concerning the 3AC; and (2) the Formulary Allegations fail to state a claim under Thomas, or any other identified authority. Additionally, Defendants move, in the alternative, to dismiss Relator's state FCA claims to the extent based on the retroactive application of the state FCA statutes in five states which became effective after March 30, 2005. I will address each of Defendants' arguments in turn.

         A. The Prescriber Allegations

         1. Law of the Case

          “The law of the case doctrine directs courts to refrain from re-deciding issues that were resolved earlier in the litigation.” Pub. Interest Research Grp. of New Jersey, Inc. v. Magnesium Elektron, Inc., 123 F.3d 111, 116 (3d Cir. 1997). The rule was developed “to maintain consistency and avoid reconsideration of matters once decided during the course of a single continuing lawsuit.” In re Pharmacy Benefit Managers Antitrust Litig., 582 F.3d 432, 439 (3d Cir. 2009) (internal quotation marks and citation omitted). Law of the case is a matter of a court's discretion, but a court faced with revisiting a prior decision in the case “should be loathe to do so in the absence of extraordinary circumstances such as where the initial decision was clearly erroneous and would make a manifest injustice.” Id. (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 816 (1988)). In addition, a court may revisit its own decisions or one of a coordinate court where (1) new evidence is available; (2) “a supervening new law has been announced”; or (3) “whenever it appears that a previous ruling, even if unambiguous, might lead to an unjust result.” Id. The law of the case doctrine, however, only applies “to issues that the court actually decided, whether expressly or by implication.” Coca-Cola Bottling Co. of Shreveport v. Coca-Cola Co., 988 F.2d 414, 429 (3d Cir. 1993).

         Here, Defendants contend that this Court's dismissal of federal FCA claims based on false certifications of compliance with the law of non-Cost Imposed States in Dickson III, acts to bar federal FCA claims based on the law of those states in the 4AC. I disagree. “A False Claims Act violation includes four elements: falsity, causation, knowledge, and materiality.” Petratos, 855 F.3d at 487. In Dickson III, this Court dismissed federal FCA claims based on alleged false certifications of compliance with the law of all states except the Cost-Imposed States on the ground that Relator had failed to plead falsity in connection with the non-Cost-Imposed States. Specifically, the 3AC alleged that Plavix was not “medically necessary” and thus was ineligible for reimbursement under the Medicaid plans of various states. With regard to the Cost-Imposed States, Relator had successfully pleaded that in their legal definitions of medical necessity, “the Cost-Imposed States have included not only a cost-based restriction, but rather, . . . have also mandated that the cheaper alternative must be equally effective as Plavix.” In re Plavix Mktg., Sales Practices & Prod. Liab. Litig., 123 F.Supp.3d 584, 611 (D.N.J. 2015). This Court found such restrictions to be consistent with the limitations authorized by Medicaid, and found Relator to have pleaded that Plavix was not an equally cost-effective treatment to aspirin. Accordingly, although Relator had failed to plead falsity on the basis of “medical necessity, ” this Court held that Relator had adequately alleged, in the Cost-Imposed States, that physicians submitted claims with the implied false certifications that Plavix met state Medicaid cost-effectiveness requirements for reimbursement. For the same reasons, this Court then dismissed the Prescriber Allegations under the state FCAs of every state except the seven that were also Cost-Imposed states.

         With regard to the non-Cost-Imposed states, however, the Court found merely that Relator had failed to allege “how those states have defined ‘medical necessity'; in other words, there are no allegations relating to the types of restrictions by a state.” Id. at 610. Accordingly, this Court did not find that the non-Cost-Imposed states did not impose cost-effectiveness requirements as a prerequisite to Medicaid reimbursement, but rather only that there was a total lack of allegations as to the content of the state statutory requirements for reimbursement in those states.

         Relator now seeks to raise federal FCA claims on the basis of certifications of compliance with the laws of nineteen (19) of these previously dismissed states on the grounds that their statutory definitions of medical necessity, or other prerequisites to reimbursement, do indeed contain cost-effectiveness requirements, which Relator simply failed to plead in the 3AC. Relator also presents claims under seventeen (17) more state FCAs for states that allegedly also impose cost-effectiveness requirements for Medicaid reimbursement. It is clear that Relator should have sought leave to amend in order to bring such claims. Allowing Relator to bring federal claims for false certifications of compliance with the law of the nineteen previously dismissed states and state claims under the laws of seventeen previously dismissed states, however, does not require this Court to revisit or overturn the reasoning of its previous decision. In reviewing the 3AC, the Court found that only the Cost-Imposed states included allegations that cost-effectiveness was a precondition for Medicaid reimbursement, and the other states lacked any such allegations. In the 4AC, Relator now seeks to supply such allegations for nineteen additional states under the FCA and seventeen additional states under the state FCAs.

         “Generally, Rule 15 motions should be granted.” United States ex rel. Customs Fraud Investigations, LLC. v. Victaulic Co., 839 F.3d 242, 249 (3d Cir. 2016). In its most recent precedential FCA decision, the Third Circuit reversed a district court's denial of leave to amend, invoking well-settled Supreme Court precedent. “In Foman v. Davis, the Supreme Court held that the fundamental purpose of Rule 15 is to allow a plaintiff ‘an opportunity to test his claim on the merits, ' and although ‘the grant or denial of an opportunity to amend is within the discretion of the District Court, ' that discretion is abused if it is exercised without giving the plaintiff sufficient opportunity to make her case.” Ibid. (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). Here, Plaintiff's proposed additional allegations are consistent with the Court's decision in Dickson III, and there is no possibility of prejudice to Defendants in considering such allegations as they are equally subject to Defendants' legal challenges under 9(b) and 12(b)(6) as are the allegations concerning the Cost-Imposed States. Moreover, while this Court has certainly afforded Relator ample opportunities to make her case, as demonstrated by its previous grant of leave to amend in Dickson II, the Court finds in its discretion that it would not be in the interest of justice or the parties to deny Relator the opportunity to test the legal sufficiency of her claims in the present motion. Defendants' motion to dismiss the federal and state FCA Prescriber Allegations under the law of the case is denied.

         2. Rule 9(b)

         Defendants next seek reconsideration of their own previously denied motions to dismiss the Prescriber Allegations under Fed.R.Civ.P. 9(b). As this Court observed in Dickson III, Chief Judge Herndon, hearing this case in the transferor court prior to its transfer here, denied Defendants' Motion to Dismiss under Rule 9(b). See January 2013 Memorandum and Order. With regard to Defendants' assertions that the Second Amended Complaint was insufficient under Rule 9(b), Chief Judge Herndon stated that “Relator's instant allegations are sufficient to comport with the requirements of Rule 9(b) in this instance, ” and that “[a]s to which specific physicians such misrepresentations were allegedly made, and further which specific employees of defendants' instructed relator to make such misrepresentations, such details can be fleshed out in discovery.” Id. at 8-9. In response to Defendants' arguments that “relator is required at this stage in the proceedings to identify specific claims actually submitted which relator alleges were false, ” the court stated that it “does not feel such specificity is required in this instance.” Id. at 9 n. 6.

         In response to Defendants' renewed motion to dismiss under 9(b) in Dickson III, this Court observed that “[w]hile the Third Amended Complaint has added significant details as to the states' limitations on Medicaid and Medicare, . . ., and as to the states' formulary programs, . . ., the factual allegations otherwise remain the same as alleged in the Second Amended Complaint. Thus, with the exception of the Defendants' new arguments regarding the formulary allegations, Chief Judge Herndon's decision regarding the adequacy of Relator's pleading remains the law of the case.” In re Plavix Mktg., Sales Practices & Prod. Liab. Litig., 123 F.Supp.3d 584, 614 (D.N.J. 2015). I next found that none of the extraordinary circumstances warranting reconsideration of the transferor Court's prior decision were applicable and left undisturbed Chief Judge Herndon's decision that Relator's Prescriber Allegations were adequate under Rule 9(b). Ibid. I also noted that

when applying the standard of Rule 9(b) to claims under the FCA, the Third Circuit, like the First, Fifth, and Ninth Circuits, uses a “nuanced” version of the heightened pleading standard. Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153, 157 (3d Cir.2014). Under this reading “it is sufficient for a plaintiff to allege particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.” Id. at 156. The court also repeated the statement from Wilkins that “we ha[ve] never held that a plaintiff must identify a specific claim for payment at the pleading stage of the case to state a claim for relief.” Id. Thus, Defendants' argument that the Complaint must identify specific false claims is misplaced.

Dickson III, 123 F.Supp.3d at 614 n. 19.

         Looking now to Defendants' present motion, the allegations of the 4AC are substantially similar to the allegations in the 3AC concerning the Prescriber Allegations. Defendants do not dispute this, and instead argue that reconsideration is appropriate because the Supreme Court's decision in Escobar constitutes a supervening change in the law governing 9(b) pleading standards for particularity. In Escobar, the Supreme Court imposed a heightened pleading standard to allege the element of materiality in implied false certification cases under the FCA. Escobar, 136 S.Ct. at 1996. As discussed, infra, the decision indisputably states an intervening change of law in the standard to plead materiality under FCA, whether under Fed.R.Civ.P. 8(a) or 9(b). Escobar, 136 S.Ct. at 2004 n. 6 (“We reject Universal Health's assertion that materiality is too fact intensive for courts to dismiss False Claims Act cases on a motion to dismiss or at summary judgment. The standard for materiality that we have outlined is a familiar and rigorous one. And False Claims Act plaintiffs must also plead their claims with plausibility ...

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