​The U.S. Court of Appeals for the First Circuit recently called summary judgment “the put up or shut up moment in litigation.” On January 30, 2017, the relators in U.S. ex rel. Booker v. Pfizer – a long-running False Claims Act (“FCA”) case – were essentially told to “shut up,” when the Court upheld a grant of summary judgment for the defendants. The Booker ruling focuses on multiple issues critical to FCA claims – aggregate data as competent evidence, “reverse” false claims, and retaliation – and it will influence ongoing and future cases that touch on these issues.

Background

The relators, sales representatives in Pfizer Inc.’s Neuroscience Division, claimed that Pfizer had improperly promoted Geodon, an antipsychotic prescription drug. The complaint included FCA claims relating to the promotion of Geodon, “reverse” FCA claims arising from Pfizer’s alleged violation of a Corporate Integrity Agreement (“CIA”), and retaliation claims relating to Pfizer’s termination of one of the relators. The trial court dismissed the relators’ reverse FCA claim, and then granted summary judgment for Pfizer on the off-label promotion and retaliation claims. The relators appealed these rulings to the First Circuit.

Aggregate data is not enough to show the existence of false claims

The most significant part of the First Circuit’s opinion concerns plaintiffs’ burden of proof for FCA claims at summary judgment. The Court stated that “[w]hen FCA liability is predicated on a defendant’s alleged off-label promotion of drugs to medical providers,” a plaintiff generally must establish “the specific medical provider who allegedly submitted the false claim, the rough time period, location, and amount of the claim, and the specific government program to which the claim was made.” The relators’ evidence failed to establish the detail the Court required. As the Court noted, “After six years of litigation, relators’ only proffered evidence of actual false claims was aggregate data reflecting the amount of money expended by Medicaid for pediatric Geodon prescriptions (an off-label use) between January 2008 and March 2012, according to the National Disease and Therapeutic Index’s survey research.” In prior cases, the Court had “held that plaintiffs could use aggregate data together with strong circumstantial evidence to overcome summary judgment on the distinct issue of whether there was a causal link between fraudulent marketing and demonstrated off-label prescriptions . . .” But, it had not held that “such proof could be used to demonstrate the existence of false claims in an FCA case.” In the Court’s view, relators’ evidence failed to establish that the alleged off-label promotion led to any false claims being submitted to the government. Summary judgment was therefore appropriate.

Reverse False Claims

The relators’ reverse FCA claim was based on Pfizer’s alleged breach of its obligations under a CIA it had entered into with the U.S. Department of Health and Human Services (“HHS”). Under the CIA, Pfizer had an ongoing duty to report “probable” violations of the FCA to HHS. The agreement defined “reportable events” to include “a matter that a reasonable person would consider a probable violation of” the FCA. It also established a fine of $2,500 for each day Pfizer was in breach. Relators alleged that one of them had sent an email to Pfizer’s Corporate Compliance department claiming that his manager directed his department to take part in off-label promotion of Geodon. They contended that this email constituted a “reportable event,” and that by not informing HHS of it, Pfizer was in breach of the CIA and subject to the fine it imposed. Under the relators’ theory, by not paying the required fine, Pfizer was withholding funds from the government and subject to liability for reverse false claims under the FCA. Both the trial court and the First Circuit found otherwise. The First Circuit pointed out that “[u]nder the CIA, conduct becomes a ‘Reportable Event’ only ‘if Pfizer determines,’ after a chance to investigate, that the conduct is a ‘probable violation’ of a specific class of laws.” The relator’s email was not a reportable event because “nowhere in their much amended complaint do relators allege that Pfizer ever determined [the relator’s] complaint to be in any way credible and therefore a ‘Reportable Event.’” The First Circuit therefore upheld the trial court’s dismissal of this claim.

Retaliation

Finally, relators had alleged that Pfizer terminated one of them in response to his objecting to directions from his manager to engage in off-label promotion of Geodon. The First Circuit ruled that those objections, “absent any evidence that [they] concerned FCA-violating activity such as the submission of false claims, cannot show at the summary judgment stage that the employee engaged in conduct protected by the FCA.” Therefore, the First Circuit upheld the trial court’s grant of summary judgment.

Takeaways

The First Circuit’s ruling is a clear demonstration of the limits of aggregate evidence in FCA cases. Relators’ failure to provide evidence of specific false claims was fatal to their case, and will likely be problematic for future claims that are structured similarly. The ruling also highlights the limitations of the reverse false claims theory of liability and the importance of establishing a fulfillment of all payment conditions alleged as part of such a claim. The ruling also shows that any alleged retaliatory conduct under the FCA must be clearly tied to the statute and not related to general allegations of wrongdoing.