Sixth Circuit Reinforces “Stringent” Pleading Standard in False Claims Act Cases

• Posted on: Dec 26 2017

What facts must you plead to pursue a false claims case?

In U.S. ex al Ibanez v. Bristol-Myers Squibb Co., the United States Court of Appeals for the Sixth Circuit (Sixth Circuit) reaffirmed the “stringent” pleading requirement for cases brought under the False Claims Act. The pleading standard comes from the Federal Rules of Civil Procedure 9(b) which requires the plaintiffs to plead their case with “particularity.” In Ibanez, the Sixth Circuit held that the “particularity” standard for litigating complex schemes or fraud under the False Claims Act could be satisfied by providing proof of a single representative sample – from start to finish-  of the alleged fraud.

The high bar set for plaintiffs seeking to bring a claim can reduce costly litigation and discovery periods for some plaintiffs with weak cases. However, critics of the heightened pleading standard point to a lack of available information and facts that could prevent

The case in Ibanez involves a lawsuit against a pharmaceutical company for allegedly encouraging medical professionals to prescribe the antipsychotic drug Abilify for off-label uses.  In short, the plaintiffs in the case allege that the pharmaceutical company’s promotion of Abilify for off-label uses caused pharmacies to submit “false claims” to the government when the government reimbursed the company for the price of the medication.

Pleading a Complex Scheme With Particularity

The plaintiff’s case rests upon what has become a popular legal approach to litigating False Claims cases – a “chain” or sequence of events that, taken as a whole, constitute a violation of the False Claims Act. In Ibanez, the Plaintiff first alleges that the pharmaceutical company promoted Abilify for off-label uses. Then, physicians prescribed the drug for off-label uses. After that, the patients filled their Abilify prescriptions for these off-label uses. Finally, pharmacies received government reimbursement for the prescription cost.

The Sixth Circuit responded by dismissing the case. According to the Sixth Circuit, in order to plead a complex scheme, the plaintiff must describe “each step with particularity.” This standard requires a plaintiff to “adequately allege the entire chain – from start to finish – to fairly show defendants caused false claims to be filed.”

While the pleading standard is high, the Sixth Circuit notes the high burden would be satisfied if the Plaintiffs were to provide a single representative sample. Therefore in order to be successful, the Sixth Circuit required: proof that a specific prescription for Abilify that was prescribed for an off-label reason and then filled by a pharmacy that was later reimbursed by the government.

Personal Knowledge Exception

There is an exception for someone with “personal knowledge” that a false claim was submitted and later paid by the government. Because the Plaintiffs did not allege they had any personal knowledge of the fraud, the Sixth Circuit said the “personal knowledge” exception did not apply in this case

The Sixth Circuit’s holding in Ibanez will almost certainly blunt future litigation under the False Claims Act for off-label prescriptions. Acknowledging the obvious effect of the high pleading standards, the Sixth Circuit described the False Claims Act as “an awkward vehicle” for litigating off-label drug prescriptions. If you are aware of a violation of the False Claims Act and would like competent advice on how to move forward, contact the experienced attorneys at Freiberger Haber LLP to ensure you obtain the rewards that you are entitled to.