Supreme Court Refuses to Weigh In On False Claims Act Off-Label Marketing Pleading Standards . . . For Now

There are hundreds of pending False Claims Act qui tam actions based on allegations that a pharmaceutical company caused false claims to be presented to government healthcare programs by promoting one of its drugs for off-label uses that have not been approved by the FDA. A large percentage of these qui tam actions were filed by current or former sales representatives of the pharmaceutical companies, and while these sales rep-relators were able to detail the underlying off-label promotions, they typically did not have access to the resulting claims submitted to government healthcare programs.

Pointing to the heightened pleading standards of Federal Rule of Civil Procedure 9(b), some courts of appeals have articulated a per se rule that such relators must plead the details of particular false claims—that is, the dates and contents of bills or other demands for payment—to overcome a motion to dismiss. Other decisions, however, have correctly held that a qui tam complaint satisfies Rule 9(b) if it contains detailed allegations supporting a plausible inference that false claims were submitted to the government, even if the complaint does not identify specific requests for payment.

Recently, the United States Supreme Court had an opportunity to clarify this pleading standard, when it considered whether to review the Fourth Circuit’s decision to affirm the dismissal of a sales rep-relator’s qui tam action, alleging Takeda Pharmaceuticals promoted its Kapidex drug for unapproved uses. In this matter, the lower courts had held that the relator did not sufficiently plead that false claims were actually submitted to the government, even though the relator provided sample claims and supplied statistical analysis. At the encouragement of the U.S. Solicitor General, the Supreme Court decided to deny cert on this case. The Court was likely swayed by the SG’s argument that the relator’s action would not clear even the most lenient Rule 9(b) pleading standards.

However, the real spotlight should be on the rest of the salient arguments found in the SG’s brief. Most notably, the SG states that the Rule 9(b) confusion “may be capable of resolution without the Court’s intervention.” For support, the SG points out that “even those circuits that initially endorsed the per se rule [adopted by the Fourth Circuit] have issued subsequent decisions that appear to adopt a more nuanced approach.” However, the SG stressed that if this perceived circuit split continues, the Supreme Court’s “review to clarify the applicable pleading standard may ultimately be warranted in the appropriate case.”

More information for whistleblowers is located at the Nolan Auerbach & White website.