United States District Court, D. Rhode Island
UNITED STATES OF AMERICA et al., ex rel. JOHN R. BORZILLERI, M.D., Plaintiffs,
BAYER HEALTHCARE PHARMACEUTICALS, INC., et al. Defendants.
MEMORANDUM OF DECISION
WILLIAM E. SMITH, Chief Judge.
case is before the Court on three motions: the United
States' Motion to Dismiss the Complaint Pursuant to
§ 3730(c)(2)(A) of the False Claims Act, ECF No. 166;
Manufacturer Defendants' Joint Motion to Dismiss the
Second Amended Complaint, ECF No. 157; and the Pharmacy
Benefit Manager Defendants' Joint Motion To Dismiss
Relator's Second Amended Complaint, ECF No. 163. After
careful consideration, the Court issued a text order on
September 27, 2019, GRANTING the United States' Motion to
Dismiss and DENYING both of Defendants' Motions to
Dismiss as moot. This memo explains the reasoning behind that
qui tam action, relator John R. Borzilleri alleges
that pharmaceutical manufacturers and “Pharmacy Benefit
Managers” schemed to defraud Medicare Part D, a federal
prescription-drug program, in violation of the False Claims
Act (“FCA”), 31 U.S.C. § 3729 et
seq., and various state laws. Relator's Second Amended
Compl. (“SAC”), ECF No. 95. The United States
(“the Government”) declined to intervene in this
action and now moves for its dismissal. United States'
Mot. to Dismiss the Complaint (“Gov't Mot. To
Dismiss”), ECF No. 166. Borzilleri also filed an almost
identical action in the United States District Court for the
Southern District of New York. United States ex rel
Borzilleri v. AbbVie, Inc., No. 15-CV-7881 (JMF), 2019
WL 3203000 (S.D.N.Y. July 16, 2019). In that action, Judge
Furman granted the Government's motion and dismissed all
of Borzilleri's FCA claims. Id. at *3. This
Court agrees with Judge Furman's well-reasoned opinion.
is structured to allow private plaintiffs to bring a civil
action on behalf of the United States, but also to allow the
Government substantial control over these actions.
See 31 U.S.C. § 3730(b). Specifically, the
Government has the right to “dismiss the action
notwithstanding the objections of the person initiating the
action if the person has been notified by the Government of
the filing of the motion and the court has provided the
person with an opportunity for a hearing on the
motion.” 31 U.S.C. § 3730(c)(2)(A). However, the
statute does not explicitly state what standard courts should
use to review the Government's motion to dismiss an
action under the FCA.
courts that have addressed this issue are split on whether
the Government must demonstrate a “rational
relation” between its reasons for dismissal and a
legitimate government interest, or whether the Government has
essentially “unfettered” discretion to dismiss.
See United States ex rel. Sequoia Orange Co. v.
Baird-Neece Packing Corp., 151 F.3d 1139, 1145 (9th Cir.
1998)(holding that the Government must demonstrate a
“valid government purpose” for dismissal and
“a rational relation between dismissal and
accomplishment of [that] purpose”)(internal citation
omitted); see also Ridenour v. Kaiser-Hill Co.,
L.L.C., 397 F.3d 925, 936 (10th Cir. 2005) (adopting the
“valid government purpose” standard); but see
Swift v. United States, 318 F.3d 250, 252 (D.C. Cir.
2003) (reading the statute to give the Government an
“unfettered right” to dismiss a qui tam action);
Riley v. St. Luke's Episcopal Hosp., 252 F.3d
749, 753 (5th Cir. 2001) (explaining in dicta that “the
government retains the unilateral power to dismiss an
action” under section 3730(c)(2)(A)). The First Circuit
has not yet formally adopted a standard, although the
District of Massachusetts expressed support for the more
discretionary standard espoused in Swift. Nasuti
ex rel. United States v. Savage Farms, Inc., No.
12-30121-GAO, 2014 WL 1327015 at *1 (D. Mass. Mar. 27,
2014)(adopting the Magistrate Judge's recommendation and
noting that the court finds the “Swift
rationale more persuasive” but declines to formally
resolve which standard applies).
Court does not need to decide which standard to adopt today
since the Government's motion would be granted under
either standard. See, e.g. Nasuti, 2014 WL 1327015
at *1 (holding that the government's motion to dismiss
should be granted under either standard of review); Chang
v. Children's Advocacy Ctr. of Del., No. 18-2311,
2019 WL 4309516, *2 (3rd Cir. Sept. 12, 2019)(declining to
take a side in this circuit split because relator failed
“even the more restrictive standard”);
AbbVie, 2019 WL 3203000, at *2. Under the stricter
standard, the Government has shown at least one “valid
government purpose” for dismissing this action -- the
burden this continuing litigation would place on the
Government's resources. See Gov't Mot. to
Dismiss 13-16. For example, Bozilleri's Complaint
alleges, among many other things, “widespread”
fraud among all the parties involved in Medicare Part D drug
coverage. SAC at ¶33. The Government explained that
litigating that allegation alone would necessitate an
“inquiry into a wide array of contractual, billing,
reporting, and analytical material by means of potentially
vast and intrusive discovery that will impact both the United
States and third parties.” Gov't Mot. to Dismiss
14. The Court has no reason to doubt the Government's
contention that further litigation in this action will impose
a significant burden on several federal agencies and take
resources away from the administration of parts of the
Medicare program. Id. at 15.
Government's desire not to expend more resources on this
lawsuit, especially where it has declined to intervene
because it “does not believe that it is in the public
interest to pursue this lawsuit, ” is a valid and
sufficient justification for the Government's dismissal.
Id. at 15; See e.g. Sequoia Orange, 151
F.3d at 1146 (“The district court . . . properly noted
that the government can legitimately consider the burden
imposed on the taxpayers by its litigation, and that, even if
the relators were to litigate the FCA claims, the government
would continue to incur enormous internal staff
costs.”); Swift, 318 F.3d at 254 (noting that
dismissal would also be proper under Sequoia Orange
because the Government's interest in not “expending
resources monitoring the case, complying with discovery
requests, and so forth” was “a legitimate
objective, and dismissal of the suit furthered that
objective.”). Similarly, the Nasuti Court
concluded that dismissal was appropriate because of the
Government's concern over incurring “substantial
costs in monitoring the litigation, . . . responding to
discovery requests, and clarifying Relator's
misstatements of the law.” 2014 WL 1327015, at *11.
Bozilleri's contention to the contrary, the potential
merit of his claims does not overcome the Government's
arguments for dismissal. Relator's Opp'n to United
States' Mot. to Dismiss (“Rel. Opp'n”),
ECF No. 170; see Sequoia Orange, 151 F.3d at 1144
(rejecting the contention that lack of merit is the exclusive
ground on which the government can seek dismissal);
United States ex rel. Wickliffe v. EMC Corp., 473
Fed.Appx. 849, 854 (10th Cir. 2012) (“[T]he potential
merit of a qui tam action is insufficient to overcome the
government's rational reasons for dismissing the
suit.”); Ridenour, 397 F.3d at 936, 940
(affirming grant of Government's motion to dismiss
despite the Government's concession that the
relator's claims have merit). Moreover, the
Government's position is strengthened by its steadfast
refusal to concede the merits of Borzilleri's claims.
See Gov't Mot. to Dismiss 15-16;
Nasuti, 2014 WL 1327015, at *11 (finding that
litigation costs represent a valid governmental interest
especially “in a case like this . . . where the
Government contends that Relator's claims lack
the “valid government purpose” standard, once the
Government has articulated that purpose, and a rational
relation between dismissal and accomplishment of that
purpose, the burden shifts to the relator to show that,
nonetheless, the dismissal is “fraudulent, arbitrary
and capricious, or illegal.” Sequoia Orange,
151 F.3d at 1145 (internal citation omitted). To meet that
burden, the relator must offer actual evidence of impropriety
or fraud, not mere speculation. Nasuti, 2014 Wl
1327015, at *12; United States ex rel. Toomer v.
TerraPower, LLC, No. 4:16-cv-00226-DCN, 2018 WL 4934070,
at *6 (D. Idaho Oct. 10, 2018). Borzilleri fails to meet this
argument that the Government failed to adequately investigate
his claims is roundly rebutted by the Government's
detailed description of the lengthy, costly, and substantial
investigation it undertook over the course of several years
using multiple offices and agencies. Rel. Opp'n. 22-26;
Gov't Mot. to Dismiss 15-16; United States' Reply
Memorandum of Law in Further Support of its Motion to Dismiss
(“Gov't Reply”), ECF No. 177, 9-11; see
United States v. EMD Serono, Inc., 370 F.Supp.3d 483,
489 n.15 (E.D. Pa. Apr. 3, 2019) (concluding, based on the
Government's briefing, that the Government expended
“substantial time and resources” on its
investigation). The Relator has pointed the Court to
United States ex rel. Cimznhca, LLC v. UCB Inc.,
17-CV-765-SMY-MAB, 2019 WL 1598109 (S.D. Ill. Apr. 15, 2019),
in support of his arguments, but that case is
distinguishable. There, the Court found that the Government
had not conducted an investigation of the relator's
specific claims, instead pursuing only a collective
investigation of eleven cases filed by the relator against
various defendants. Id. at *3. Moreover, even a
failure to adequately investigate would prove, at the most,
mere negligence on the part of the Government. As Judge
Furman concluded, “nothing put forward by Borzilleri
suggests, let alone shows, that the Government's stated
reason for dismissing this action is fraudulent, arbitrary
and capricious, or illegal.” AbbVie, 2019 WL
3203000, at *3.
Borzilleri's remaining arguments can be boiled down to
his subjective disagreement with the underlying conclusions
of the Government's investigation. Rel. Opp'n 18-22.
But this Court declines to second-guess the Government's
investigation and conclusions when that is clearly not the
Court's role under § 3730(c)(2)(A). See
Gov't Reply 4.
is also not entitled to the discovery or evidentiary hearing
that he seeks. See Rel. Opp'n 2. To allow such a
costly process based merely on the relator's speculation
would defeat the very reason that the Government seeks
dismissal - to preserve its limited resources. United
States ex rel. Nicholson v. Spigelman, No. 10 C 3361,
2011 WL 2683161, at *3 (N.D. Ill. July 8, 2011) (explaining
that permitting the relator to conduct discovery would
“allow what the Government was trying to avoid in
moving to dismiss the action-costly and time consuming . . .
discovery with little prospect of significant recovery”
(quoting Ridenour, 397 F.3d at 938)); accord
Toomer, 2018 WL 4934070, at *6.
the Government has met its burden for dismissal under either
standard, and, as required by the statute, Borzilleri was
afforded the opportunity for a hearing. See Min.
Entry for Sept. 26, 2019; 31 U.S.C. § 3730(c)(2)(A).
Accordingly, Borzilleri's FCA claims are dismissed. His
common law claims for unjust enrichment and common-law fraud,
SAC ¶¶ 800-06, are dismissed because Borzilleri
does not have standing under the FCA to bring these claims on
behalf of the United States. See United States ex rel.
Walsh v. Eastman Kodak Co., 98 F.Supp.2d 141, 149 (D.
Mass. 2000); In re Pharm. Indus. Average Wholesale Price
Litig, No.01-12257-PBS, 2007 WL 4287572 at *5 (D. Mass.
Dec. 6, 2007). This Court declines to exercise supplemental
jurisdiction over Borzilleri's remaining state law
claims, SAC ¶¶717-803. Rodriguez v. Dual Mort.
Corp., 57 F.3d 1168, 1177 (1st Cir. 1995) (“As a
general principle, the unfavorable disposition of a
plaintiff's federal claims at the early stages of a suit
. . . will trigger the dismissal without prejudice of any
supplemental state-law claims.”).
foregoing reasons, the Government's Motion to Dismiss is
GRANTED. Borzilleri's FCA claims are thereby dismissed
with prejudice as related to Borzilleri, but without
prejudice as related to the United States. Additionally,
Borzilleri's state law claims are dismissed without
prejudice. Pursuant to this ruling, Defendants' Motions
to Dismiss, ECF Nos. 157 ...