United States v. Solvay Pharmaceuticals, Inc. , 871 F.3d 318 ( 2017 )

Case: 16-20259 Document: 00514153308 Page: 1 Date Filed: 09/12/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 16-20259 September 12, 2017
c/w No. 16-20509
Lyle W. Cayce
Clerk
United States of America, State of Illinois, State of California, State of
Florida, State of Tennessee, State of Texas, State of Massachusetts, State of
Delaware, State of Nevada, State of Louisiana, State of Hawaii, District of
Columbia, State of Virginia, State of Georgia, State of Indiana, State of
Michigan, State of Montana, State of New Hampshire, State of New Jersey,
State of New Mexico, State of New York, State of Oklahoma, State of Rhode
Island, State of Wisconsin, ex rel, JOHN KING; TAMMY DRUMMOND,
Plaintiffs - Appellants
v.
SOLVAY PHARMACEUTICALS, INCORPORATED,
Defendant - Appellee
Appeals from the United States District Court
for the Southern District of Texas
Before HIGGINBOTHAM, SMITH, and HAYNES, Circuit Judges.
PER CURIAM:
John King and Tammy Drummond (collectively, “Relators”) appeal the
district court’s grant of summary judgment to Solvay Pharmaceuticals, Inc., on
their False Claims Act (“FCA”) claims and a subsequent ruling that partly
granted court costs to Solvay. For the reasons explained below, we AFFIRM.
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I. Background
Relators are both former Solvay sales and marketing employees. They
brought this FCA suit against Solvay claiming that Solvay induced false
Medicaid claims through a nationwide off-label marketing and kickback
scheme to promote three drugs: Luvox, Aceon, and AndroGel. See 31 U.S.C.
§ 3729(a)(1)(A)–(B). They allege that this scheme proximately caused
physicians to prescribe these drugs for off-label uses to Medicaid patients, the
cost of which was reimbursed by the federal government. Relators also claim
they were retaliated against for their internal complaints about Solvay’s off-
label marketing. The district court granted summary judgment to Solvay on
all of Relators’ claims.
After final judgment, Solvay sought an award of $961,380.51 in taxable
costs against Relators under 28 U.S.C. § 1920. Relators objected to almost all
of those costs, claiming that Solvay was entitled to just $5,808.17. The district
court awarded Solvay $232,809.92. Relators appealed both the final order
granting summary judgment on all of Relators’ claims and the order granting
taxable costs to Solvay.
II. Standard of Review
“We review an order granting summary judgment de novo, applying the
same standards as the district court.” Cooley v. Hous. Auth. of City of Slidell,
747 F.3d 295, 297 (5th Cir. 2014). Summary judgment is appropriate when
“there is no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.” FED. R. CIV. P. 56(a). A disputed fact is
material if it has the potential to “affect the outcome of the suit under the
governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
“[W]e may affirm the district court’s decision on any grounds supported by the
record.” Phillips ex rel. Phillips v. Monroe Cty., 311 F.3d 369, 376 (5th Cir.
2002).
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“The district court has broad discretion in taxing costs, and we will
reverse only upon a clear showing of abuse of discretion.” Brazos Valley Coal.
for Life, Inc. v. City of Bryan, 421 F.3d 314, 327 (5th Cir. 2005) (quoting Migis
v. Pearle Vision, 135 F.3d 1041, 1049 (5th Cir. 1998)).
III. Discussion
A. FCA Claims
The FCA imposes civil liability and treble damages on any person who,
inter alia, “knowingly presents, or causes to be presented, a false or fraudulent
claim for payment or approval” to the United States government; or “knowingly
makes, uses, or causes to be made or used a false record or statement material
to a false or fraudulent claim.” 31 U.S.C. § 3729(a)(1)(A)–(B); see also United
States ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262, 267 (5th Cir. 2010).
An FCA claim consists of four elements: “(1) whether there was a false
statement or fraudulent course of conduct; (2) made or carried out with the
requisite scienter; (3) that was material; and (4) that caused the government
to pay out money or to forfeit moneys due (i.e., that involved a claim).” United
States ex rel. Longhi v. United States, 575 F.3d 458, 467 (5th Cir. 2009) (citation
omitted).
Relators have developed several theories of FCA liability with varying
degrees of connectivity between Solvay’s off-label marketing of Luvox, Aceon,
and AndroGel and the actual filing of false claims. Those theories are that
(1) Solvay marketed the three relevant drugs for off-label uses causing
physicians to prescribe them to Medicaid patients for those uses; (2) Solvay
lobbied members of state pharmaceutical and therapeutic committees (“P&T
committees”) to list these three drugs on their preferred drug lists; (3) Solvay
used misleading scientific literature to lobby the publisher of drug
compendium DRUGDEX Information System (“DrugDex”) to include the off-
label uses of these drugs in the compendium; and (4) Solvay paid doctors
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kickbacks to prescribe these drugs to Medicaid patients in violation of the anti-
kickback statute (“AKS”), 42 U.S.C. § 1320a-7b(b)(2)(A). 1 Relators also
brought an FCA retaliation claim challenging their terminations.
The district court disposed of all of Relators’ claims through a series of
partial summary judgment orders. Relators’ AndroGel claims were dismissed
on summary judgment for lack of jurisdiction under the FCA’s public disclosure
bar. For the remaining two drugs, Luvox and Aceon, the off-label marketing
claims failed to survive summary judgment because Relators’ evidence of
Medicaid claims was inadmissible and, even if it were admissible, did not
sufficiently demonstrate causation. Both the lobbying theories of liability
relating to state P&T committees and DrugDex and the retaliation claims also
failed to survive summary judgment due to insufficient causation evidence.
Finally, the AKS claims did not survive summary judgment because there was
insufficient evidence that Solvay intended the kickbacks to induce payments
from Medicaid. The summary judgment orders in the district court involved
additional issues, but Relators do not challenge the district court’s judgment
on those issues so we do not consider them. 2
Because we conclude that Relators failed to produce sufficient evidence
to survive summary judgment on any of their briefed claims, we affirm the
district court’s grant of summary judgment to Solvay.
1 “The AKS provides no private right of action; therefore, a private plaintiff may not
sue a health care provider under the AKS alone.” United States ex rel. Ruscher v. Omnicare,
Inc., 663 F. App’x 368, 371 n.2 (5th Cir. 2016) (per curiam) (quoting United States ex rel.
Nunnally v. W. Calcasieu Cameron Hosp., 519 F. App’x 890, 893 n.5 (5th Cir. 2013)). We now
reiterate these holdings in a precedential, published opinion.
2 Relators’ Fifth Amended Complaint also includes counts under the false claims acts
of numerous states. However, because the state false claims issues are not raised at all in
the appellate briefing, we deem them waived. See Williams v. Parker, 843 F.3d 617, 622 n.14
(5th Cir. 2016) (“Failure to raise an issue on appeal is waiver.”).
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1. Public Disclosure Bar
The district court first determined that it lacked jurisdiction to consider
any of Relators’ AndroGel claims because they were subject to the FCA’s public
disclosure bar. The applicable version of the FCA’s public disclosure bar, which
has since changed, provides that “[n]o court shall have jurisdiction over an
action under this section based upon the public disclosure of allegations or
transactions . . . from the news media, unless the action is brought by the
Attorney General or the person bringing the action is an original source of the
information.” 31 U.S.C. § 3730(e)(4)(A) (2006) (emphasis added). 3 The statute
defines original source as “an individual who [1] has direct and independent
knowledge of the information on which the allegations are based and [2] has
voluntarily provided the information to the Government before filing an action
under this section which is based on the information.” Id. § 3730(e)(4)(B).
The district court determined that Relators’ AndroGel claims were based
on publicly disclosed allegations from a magazine article and that Relators’
pre-suit disclosure made the day before filing suit could not satisfy the
voluntary disclosure requirement of the original source exception.
Specifically, the district court concluded that because Relators’ pre-suit
disclosure satisfied the mandatory disclosure requirement under § 3730(b)(2),
it could not simultaneously satisfy the voluntary disclosure requirement under
§ 3730(e)(4). Relators appeal only the district court’s determination that they
are not original sources.
3 The section creating the public disclosure bar was amended in 2010, but the Supreme
Court has held that the amendment is not retroactive. Graham Cty. Soil & Water
Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280, 283 n.1 (2010) (noting that
section 10104(j)(2) of the Patient Protection and Affordable Care Act, Pub. L. 111–148, 124
Stat. 119, “replace[d] the prior version of 31 U.S.C. § 3730(e)(4) with new language” but
“makes no mention of retroactivity”); Abbott v. BP Expl. & Prod., Inc., 851 F.3d 384, 387 n.2
(5th Cir. 2017) (concluding that the 2010 amendment altered the jurisdictional nature of the
public disclosure bar). Accordingly, all citations to this section refer to the applicable 2006
version of the public disclosure bar.
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It is well established that the party invoking federal jurisdiction carries
the burden of establishing that jurisdiction is proper. United States ex rel.
Jamison v. McKesson Corp., 649 F.3d 322, 327 (5th Cir. 2011). Thus, it was
Relators’ burden to show that they qualified under the original source
exception; otherwise, the public disclosure bar “strips” the court of subject
matter jurisdiction. See United States ex rel. Fried v. W. Indep. Sch. Dist., 527
F.3d 439, 441–42 (5th Cir. 2008); see also § 3730(e)(4)(A) (stating that “[n]o
court shall have jurisdiction” if the public disclosure bar applies). However,
because “[a] challenge under the FCA jurisdictional bar is necessarily
intertwined with the merits,” we treat it as a motion for summary judgment.
Jamison, 649 F.3d at 326 (quoting United States ex rel. Reagan v. E. Tex. Med.
Ctr. Reg’l Healthcare Sys., 384 F.3d 168, 173 (5th Cir. 2004)).
Assuming without deciding that a single pre-suit disclosure can satisfy
both the pre-suit mandatory and voluntary disclosure requirements, Relators
still failed to create a genuine issue of material fact as to whether their pre-
suit disclosure to the government disclosed “the information on which the
allegations are based.” 31 U.S.C. § 3730(e)(4)(B). The Supreme Court has
interpreted the phrase “information on which the allegations are based” as
referring to the “information underlying the allegations of the relator’s action.”
Rockwell Int’l Corp. v. United States, 549 U.S. 457, 470–72 (2007) (abrogating
United States ex rel. Laird v. Lockheed Martin Eng’g & Sci. Servs. Co., 336 F.3d
346, 354–55 (5th Cir. 2003) (holding that a relator must have direct and
independent knowledge of information on which the allegations in the public
disclosure are based)). The Court further indicated that such information
includes knowledge of conduct suggesting that false claims were made to the
government. See id. at 475 (concluding that relator’s knowledge fell short
because he was not employed by the defendant during the relevant time period
and thus could not have known about the predicate conduct and subsequent
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false statements to the government). Indeed, without knowledge of conduct
that—when placed in the context of all of the other relevant information—
suggests that false claims were made to the government, Relators could not
allege an FCA claim. 4 See United States ex rel. Spicer v. Westbrook, 751 F.3d
354, 364–65 (5th Cir. 2014) (stating that “the statute attaches liability, not to
the underlying fraudulent activity or to the government’s wrongful payment,
but to the claim for payment” (quoting Longhi, 575 F.3d at 467)); United States
ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 188 (5th Cir. 2009) (stating that
proof of a false claim against the government is the “sine qua non” of liability
under the FCA). Accordingly, the Fourth Circuit has affirmed a finding that a
relator was not entitled to original source status where, inter alia, his pre-suit
disclosure never connected information about the alleged fraudulent conduct
with the filing of a claim for reimbursement from the government. United
States ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 353, 355 (4th Cir. 2009).
Here, Relators failed to present any evidence indicating that their pre-
suit disclosure connected the knowledge of Solvay’s conduct to false claims
made to the government. Relators cite to a declaration of their attorney, Joel
Androphy, and a PowerPoint presentation to support the details of their pre-
suit disclosure. 5 However, the declaration simply refers to discussions
4 Requiring relators to have direct and independent knowledge of information that,
when viewed in context, suggests the filing of false claims is also consistent with the FCA’s
dual goals of “preventing parasitic suits by opportunistic late-comers who add nothing to the
exposure of fraud,” Reagan, 384 F.3d at 174 (quoting Laird, 336 F.3d at 351), and
“encourag[ing] those who are either close observers or otherwise involved in the fraudulent
activity to come forward,” United States ex rel. Oliver v. Philip Morris USA Inc., 826 F.3d
466, 480 (D.C. Cir. 2016) (quoting United States ex rel. Barth v. Ridgedale Elec., Inc., 44 F.3d
699, 703–04 (8th Cir. 1995)); see also United States ex rel. Lam v. Tenet Healthcare Corp., 287
F. App’x 396, 400 (5th Cir. 2008) (“Congress’s intent was to encourage qui tam suits brought
by insiders, such as employees who come across information of fraud in the course of their
employment.” (quoting Laird, 336 F.3d at 355–56)).
The parties dispute whether any of this evidence should be considered in making the
5
FCA jurisdictional determination. However, we need not decide this issue because we
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Relators had with the Food and Drug Administration (“FDA”) about the off-
label marketing and kickbacks associated with AndroGel, as well as Relators’
terminations. But the declaration does not indicate that Relators connected
this information with any false claims presented to the government. Moreover,
the lack of detail about which off-label uses Solvay marketed or how it paid
kickbacks to physicians is an additional defect that makes the declaration
insufficient to support the voluntary disclosure necessary for the original
source exception. See Rockwell, 549 U.S. at 473 (indicating that a relator must
satisfy his original source status as to each theory of fraud in the complaint as
amended); Jamison, 649 F.3d at 332 (holding that a relator was not an original
source of the allegations in his complaint because the information on which the
allegations were based described the fraud only generally).
Although the PowerPoint presentation provides additional details about
the information disclosed to the FDA, the presentation does not suggest that
any false claims were submitted to the government. It makes no mention of
any FCA provisions, never suggests that the off-label marketing or the
remuneration caused prescriptions to be reimbursed by the government, and
never suggests any false certifications of compliance with the AKS. Instead,
the information disclosed in the PowerPoint presentation suggests only Food,
Drug and Cosmetic Act (“FDCA”) and AKS violations, not FCA violations. For
Relators to satisfy the FCA’s voluntary pre-suit disclosure requirement of
disclosing information underlying their FCA action, their disclosure must—at
a minimum—connect direct and independent knowledge of information about
Solvay’s conduct to false claims submitted to the government, i.e., suggest an
conclude that, even if all of the evidence is considered, Relators still failed to meet their
summary judgment burden.
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FCA violation. 6 Even assuming all of the information in the PowerPoint
presentation regarding possible FDCA and AKS violations came from Relators’
direct and independent knowledge, the presentation still fails to create a
genuine issue of material fact as to its disclosure of information on which the
FCA allegations are based because it is completely devoid of any indication
connecting such information with false claims presented to the government.
Accordingly, because Relators’ evidence of the information provided to
the government in their voluntary pre-suit disclosure does not suggest any
FCA violations, it is insufficient to support a finding that Relators disclosed to
the government the information underlying their FCA allegations prior to
filing suit. Consequently, Relators have failed to meet their summary
judgment burden as to their status as original sources under § 3730(e)(4) of the
FCA. Because the FCA public disclosure bar applies, the district court
correctly determined that it lacked jurisdiction to consider Relators’ AndroGel
claims.
2. Alleged Off-Label Marketing to Physicians
The FDCA prohibits a drug from being introduced in interstate
commerce unless the FDA approves the drug as safe and effective for each of
the uses suggested on its labeling. 21 U.S.C. § 355(a), (d); see also 21 C.F.R.
§ 310.303(a) (“[A] new drug may not be approved for marketing unless it has
been shown to be safe and effective for its intended use(s).”). The Medicaid Act
empowers states to deny reimbursement for a drug if “the prescribed use is not
6 Cf. United States ex rel. Rigsby v. State Farm Fire & Cas. Co., 794 F.3d 457, 462–63,
474 (5th Cir. 2015) (holding that direct and independent knowledge of information by claims
adjusters of fraudulent claims adjusting practices connected to claims for government-backed
flood insurance in the wake of Hurricane Katrina was sufficient to confer original source
status), aff’d on other grounds sub nom. State Farm Fire & Cas. Co. v. United States ex rel.
Rigsby, 137 S. Ct. 436 (2016); Oliver, 826 F.3d at 478 (“[I]n order to have ‘direct’ knowledge
for purposes of the original source exception, a relator must have some first-hand knowledge
that would lead him to believe that a fraud had been committed.” (collecting cases)).
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for a medically accepted indication.” 42 U.S.C. § 1396r-8(d)(1)(B)(i). 7 A
“medically accepted indication” is “any use for a covered outpatient drug which
is approved under the [FDCA] or the use of which is supported by one or more
citations included or approved for inclusion in any of the compendia described”
elsewhere in the statute. 42 U.S.C. § 1396r-8(k)(6). That is to say, states may
deny Medicaid reimbursement for drugs prescribed for off-label uses that are
not otherwise listed in compendia described in the Medicaid statute.
Because off-label prescriptions may be ineligible for Medicaid
reimbursement, submitting such claims for Medicaid reimbursement may
result in FCA liability. See United States ex rel. Booker v. Pfizer, Inc., 847 F.3d
52, 58 & n.7 (1st Cir. 2017). Accordingly, when, as here, an off-label marketing
scheme is alleged to have violated the FCA, plaintiffs’ summary judgment
burden is to come forward with evidence sufficient to create a genuine issue of
material fact that the off-label marketing scheme caused physicians to make
off-label prescriptions that were submitted for Medicaid reimbursement.
Complicating matters is the fact that the FDA does not restrict
physicians from prescribing an otherwise FDA-approved drug for an off-label
use. See 21 U.S.C. § 396 (“Nothing in this chapter shall be construed to limit
or interfere with the authority of a health care practitioner to prescribe or
administer any legally marketed device to a patient for any condition or disease
within a legitimate health care practitioner-patient relationship.”). One
commentator has observed that “[o]ff-label prescription of drugs is common,
7 The First Circuit has noted that “whether state Medicaid programs actually have
the discretion to reimburse for off-label uses of a drug under the Medicaid statute ‘is up for
debate.’” United States ex rel. Booker v. Pfizer, Inc., 847 F.3d 52, 58 n.7 (1st Cir. 2017)
(quoting United States ex rel. Banigan v. Organon USA Inc., 883 F. Supp. 2d 277, 294 (D.
Mass. 2012)). If state Medicaid programs do have the discretion to choose between granting
or denying reimbursements for off-label prescriptions, Relators claims would fail because
they have not presented evidence showing that any states in this case have chosen to deny
reimbursements for off-label prescriptions. However, we need not decide this issue because
we conclude that Relators’ claims easily fail on other grounds.
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with as many as forty percent of all prescriptions issued involving off-label
use.” Stephanie Greene, False Claims Act Liability for Off-Label Promotion of
Pharmaceutical Products, 110 PENN ST. L. REV. 41, 46 (2005). Indeed, “in
many cases, off-label drug prescription may represent the standard of care in
the industry.” Id.
Relators’ remaining off-label marketing claims relate to the drugs Luvox
and Aceon. Luvox received FDA approval in 1994 for use in treating obsessive
compulsive disorder (“OCD”). Relators contend that Solvay marketed Luvox
for a broader “spectrum” of disorders that they labeled the “OC Spectrum,” a
marketing approach the FDA rejected. Aceon was approved to treat
hypertension in 1993. Relators assert that Solvay attempted to expand sales
of Aceon by claiming that it would also improve arterial health, was
particularly good for the kidneys of diabetic hypertensives, and reduced the
risk of secondary strokes.
The main issue on appeal is the sufficiency of Realtors’ evidence that this
alleged off-label marketing caused the filing of false Medicaid reimbursement
claims. Relators first argue that the district court ignored circumstantial
evidence purportedly showing a nationwide off-label marketing scheme,
execution of that scheme, and an impact on prescriptions to Medicaid patients.
The expert report claiming to show that off-label marketing actually impacted
Medicaid prescriptions, however, shows no such thing. The report concludes
that, because economic studies show that pharmaceutical marketing is
generally linked to increased pharmaceutical sales and Solvay uses marketing
as a means of increasing sales, Solvay’s off-label marketing scheme must have
caused increased off-label prescriptions reimbursed through Medicaid. But
this conclusion is speculative and therefore insufficient to preclude summary
judgment. Simmons v. Willcox, 911 F.2d 1077, 1082 (5th Cir. 1990)
(“[S]peculative allegations . . . are insufficient to create a genuine issue of
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material fact precluding summary judgment.”). At best, Relators’
circumstantial evidence suggests only the potential for a causal link between
Solvay’s alleged off-label marketing and off-label prescriptions but says
nothing about whether the marketing scheme actually caused off-label
prescriptions to Medicaid patients. Without evidence indicating that off-label
marketing actually caused off-label prescriptions to Medicaid patients
resulting in false claims to the government, Relators’ off-label marketing
theory of FCA liability cannot survive summary judgment. Cf. Grubbs, 565
F.3d at 192 (holding that allegations of a fraudulent billing scheme were
sufficient at the motion to dismiss stage to show that doctors’ fraudulent
records caused the hospital’s billing system to present fraudulent claims where
presenting such claims was the regular course of billing for the hospital); see
also Booker, 847 F.3d at 58 (holding that circumstantial evidence could be used
at the summary-judgment stage to prove causation, but “not that such proof
could be used to demonstrate the existence of false claims.”).
The only evidence Relators present that attempts to show the actual
effect of the off-label marketing scheme alleged in this case is a set of call notes
recorded by Solvay sales representatives about their telephone
communications with physicians regarding Luvox and Aceon. Relators
identify eight examples of causation, in which they connect a call note to an
off-label prescription made to a specific Medicaid patient. 8 Even assuming all
of the call notes are admissible, they still do not create a genuine issue of
material fact as to causation. Most of the call notes do not even discuss the
specific off-label use for which the relevant prescription was written. The few
8Relators have included only these eight examples in their appellate briefs and merely
stated that they offered others below. Any argument with respect to the other examples is
waived due to inadequate briefing. See United States v. Martinez, 263 F.3d 436, 438 (5th Cir.
2001).
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that do merely show physicians explaining their practices and how they
prescribe the drug, which provides no insight into whether Solvay marketed
the off-label uses to them, let alone caused them to make off-label
prescriptions. Relators also point to academic articles discussed in some of the
calls, but there is no indication that those articles came to the physicians’
attention because of Solvay. At bottom, the probative value of Relators’
causation evidence is primarily based on conjecture and speculation and is
therefore insufficient to create a genuine issue of material fact for trial. See
Little v. Liquid Air Corp., 37 F.3d 1069, 1079 (5th Cir. 1994) (en banc) (per
curiam). 9
3. Lobbying Activities
i. State P&T Committees
Several state Medicaid programs use P&T committees to decide whether
to place certain drugs on state preferred drug lists, thereby authorizing
prescriptions to Medicaid patients without pre-approval. These committees
are made up of practicing physicians, pharmacists, and others with recognized
expertise in prescribing, dispensing, and monitoring outpatient drugs, as well
as in drug use review and medical quality assurance. Relators allege that
Solvay violated the FCA by unduly influencing P&T committees to place
Solvay’s drugs on these preferred drug lists.
9 The parties suggested at oral argument that Medicaid pays for claims without asking
whether the drugs were prescribed for off-label uses or asking for what purpose the drugs
were prescribed. If this is true, given that it is not uncommon for physicians to make off-
label prescriptions, we think it unlikely that prescribing off-label is material to Medicaid’s
payment decisions under the FCA. See Universal Health Servs., Inc. v. United States ex rel.
Escobar, 136 S. Ct. 1989, 2003–04 (2016) (“[I]f the Government regularly pays a particular
type of claim in full despite actual knowledge that certain requirements were violated, and
has signaled no change in position, that is strong evidence that the requirements are not
material.”). Nevertheless, because Relators have failed to survive summary judgment on the
issue of causation, we need not reach the issue of materiality in this case.
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Assuming all of the relevant evidence is admissible for the three state
committees Relators challenge (Alabama, Kentucky, and California), Relators
have still failed to create a genuine issue of material fact as to causation.
Relators’ evidence shows Solvay’s campaign to get its drugs added to these
three state preferred drug lists and that those states ultimately added those
drugs to their preferred drug lists. However, Relators lack evidence indicating
that Solvay’s campaign caused these results. The supposed “smoking gun”
email not considered by the district court does not help Relators meet their
burden. The most generous reading of that email shows that the Alabama P&T
committee added Aceon to its preferred drug list because it determined that
the data on Aceon’s secondary prevention of strokes supported such a decision.
But there is no evidence indicating that the Alabama P&T committee—made
up of medical experts—was unduly influenced by Solvay’s alleged lobbying
campaign in making this determination.
Moreover, even assuming that the P&T committees were influenced by
Solvay’s campaign, Relators have not connected this theory of liability to the
filing of any false claims. First, Relators failed to show that particular conduct
they contend was “lobbying” of the P&T committees was improper under the
particular states’ rules and regulations governing the same. Second, even
assuming it was improper, Relators failed to discuss how placement on the
preferred drug lists caused false claims to be presented to Medicaid for
reimbursement. The closest explanation provided is that “drugs requiring
prior authorization are less likely to be prescribed.” But Relators do not point
to any record evidence indicating that false claims were actually filed because
Solvay’s drugs were placed on preferred drug lists. Again, Relators need more
than speculation to meet their burden as to causation. Perhaps the state P&T
committees were unduly influenced, but that does not absolve Relators from
their burden of producing evidence indicating that this influence caused actual
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false claims (as opposed to claims for approved uses) to be submitted for
Medicaid reimbursement. See Spicer, 751 F.3d at 364–65 (“[T]he statute
attaches liability, not to the underlying fraudulent activity or to the
government’s wrongful payment, but to the claim for payment[.]” (quoting
Longhi, 575 F.3d at 467)). Relators’ evidence is insufficient to create a genuine
issue of material fact on this matter.
ii. DrugDex
Relators argue that Solvay became subject to FCA liability by misleading
one of the three leading drug compendia, DrugDex. Medicaid reimbursement
is not just limited to FDA approved uses, but also includes medically accepted
indications listed on Medicaid compendia, including DrugDex. See 42 U.S.C.
§ 1396r-8(d)(1)(B)(i), (g)(1)(B)(i)(III), (k)(6). Relators’ theory of FCA liability is
that Solvay “manufactured medical literature” and engaged in “deception and
collusion” in an effort to have DrugDex list the off-label uses of Solvay’s drugs
so they “might be deemed eligible for reimbursement under the various
government health programs, especially Medicaid and Medicare.”
Relators first argue that Solvay suppressed negative studies about the
efficacy of Luvox for off-label uses that Solvay had a duty to disclose. Relators
also contend that Solvay paid for “smaller and lower quality studies” that
would support off-label uses for Luvox, creating an “echo chamber” in which
the majority of literature supporting off-label uses for Luvox was sponsored by
Solvay. DrugDex ultimately rated over two-dozen conditions as medically
accepted uses for Luvox, including off-label uses.
Relators again fail to create a genuine issue of material fact as to
causation. The best evidence Relators point to shows that Solvay’s Medical
Affairs department would generally communicate with medical compendia
publishers about Luvox entries and review DrugDex draft documents to verify
their accuracy as to the name of the drug, trademarks, and similar items. But
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Relators point to no evidence indicating that Solvay’s failure to publish studies
showing negative results while also paying for lower quality studies to support
Luvox’s off-label uses misled DrugDex’s publisher and caused it to list Luvox
on its compendium. There is no record evidence that Solvay communicated
with DrugDex’s publisher about these studies; in fact, the only evidence cited
indicates that there was no communication about the studies. As Solvay
suggests, DrugDex’s publisher was able to review the studies and decide
whether it was appropriate to rely on them. Because Relators failed to produce
any evidence suggesting that Solvay’s studies misled DrugDex’s publisher and
caused Luvox to be listed on DrugDex for off-label uses, which in turn resulted
in false claims to the government, their DrugDex claim cannot survive
summary judgment.
4. Anti-Kickback Statute
The AKS prohibits offering money or other things of value to entice
another party to provide a good or service that would be paid for by a federal
health care program. 42 U.S.C. § 1320a-7b(b)(2)(A). Relators allege that
Solvay paid illegal kickbacks to physicians through various marketing
programs. 10 They further allege that Solvay “knew these kickbacks would
induce physicians to write prescriptions for off-label uses or prescriptions
tainted by the kickbacks, which would in turn cause pharmacists to submit
claims for fraudulent Medicaid and Medicare Part D reimbursement.”
Medicaid claims induced by kickbacks are false if “the provider certified
compliance with the kickback statute in submitting a claim.” United States ex
rel. Colquitt v. Abbott Labs., 858 F.3d 365, 371 (5th Cir. 2017).
Relators’ evidence shows (1) physicians participating in Solvay programs
in which they were compensated for consultations or presentations and
10 Relators only appeal the AKS-based claims with respect to Texas Medicaid patients.
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(2) subsequent prescriptions by those physicians of Solvay’s drugs to Medicaid
patients. 11 Nowhere, however, do Relators cite to evidence creating a genuine
issue of material fact that such compensation, or any incidental benefits,
caused those physicians to prescribe to Medicaid patients. There was nothing
illegal about paying physicians for their participation in these types of
programs and there is no evidence that participation was conditioned upon
prescribing Solvay’s drugs to Medicaid patients. Although it is not an
unreasonable inference that Solvay intended these programs to boost
prescriptions, it would be speculation to infer that compensation for
professional services legally rendered actually caused the physicians to
prescribe Solvay’s drugs to Medicaid patients. 12 Accordingly, summary
judgment was appropriate on Relators’ AKS theory of liability.
5. Retaliation
Both Relators bring FCA retaliation claims against Solvay alleging they
were terminated for filing internal complaints about Solvay’s alleged off-label
marketing scheme. The elements of an FCA retaliation claim are: (1) the
employee “engaged in protected activity,” (2) the “employer, or the entity with
11As an initial matter, Solvay contends that Relators now rely on new evidence of
intent that they did not rely on in the district court, and thus we should not consider any
such evidence on appeal. We need not resolve this dispute, however, because, even if we
consider all of the evidence, Relators have not presented sufficient evidence to survive
summary judgment on their AKS theory of liability.
12 Relators also failed to create a genuine issue of material fact as to the AKS’s scienter
requirement. Proving a violation of the AKS requires evidence that “the defendant willfully
committed an act that violated the [AKS].” United States v. St. Junius, 739 F.3d 193, 210
(5th Cir. 2013). Because AKS liability is limited to prescriptions that were reimbursed by
the government, not private parties, 42 U.S.C. § 1320a-7b(b)(2)(A), satisfying the scienter
requirement of “willfully” requires evidence indicating that Solvay intended Medicaid to pay
for these prescriptions, see, e.g., Ruscher, 663 F. App’x at 374. Relators, however, do not cite
to evidence creating a genuine issue of material fact that Solvay intended for those physicians
to prescribe to Medicaid patients. As with causation, it would be speculation to infer that
Solvay specifically intended such prescriptions to be reimbursed by Medicaid. See, e.g., id. at
373 n.4 (“Relator’s arguments amount to mere speculation and are therefore insufficient to
create a genuine issue of material fact as to Omnicare’s intent.”).
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which he has contracted or serves as an agent, knew about the protected
activity,” and (3) “retaliat[ion] . . . because of his protected activity.” United
States ex rel. Bias v. Tangipahoa Par. Sch. Bd., 816 F.3d 315, 323 (5th Cir.
2016).
We “apply the McDonnell Douglas framework to the False Claims Act’s
anti-retaliation provision.” Diaz v. Kaplan Higher Educ., L.L.C., 820 F.3d 172,
175 n.3 (5th Cir. 2016); see McDonnell Douglas Corp. v. Green, 411 U.S. 792
(1973). Once an employee establishes a prima facie case, “the burden shifts to
the employer to state a legitimate, non-retaliatory reason for its decision. After
the employer states its reason, the burden shifts back to the employee to
demonstrate that the employer’s reason is actually a pretext for retaliation.”
Diaz, 820 F.3d at 176 (quoting LeMaire v. La. Dep’t of Transp. & Dev., 480 F.3d
383, 388–89 (5th Cir. 2007)). Here, Solvay stated that Relators were
terminated for creating unapproved marketing materials, and Relators admit
to violating Solvay’s marketing policies. 13 The district court held that Relators
failed to produce enough evidence of causation to create a genuine issue of
material fact that Solvay’s reasons for terminating them were pretextual. 14
We agree with the district court that neither King nor Drummond has
provided sufficient evidence of pretext to survive summary judgment. The
FCA prohibits adverse employment action taken “because of” protected activity
relating to an FCA suit. 31 U.S.C. § 3730(h)(1). Therefore, to survive summary
13 Ironically, given the allegations of improper marketing Relators make against
Solvay, Solvay provided supporting evidence to the district court indicating that King was
terminated for violating company policy by making unapproved alterations to promotional
materials that jeopardized Solvay’s relationship with another company, and that Drummond
was terminated for violating company policy by working on an unapproved letter campaign
and then attempting to solicit doctors to mail those letters out to patients.
14 The district court also determined that only King survived summary judgment on
the issue of protected activity. However, because we decide Relators’ FCA retaliation claim
on causation grounds, we do not reach the issue of protected activity.
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judgment, Relators must point to evidence creating a genuine issue of material
fact that their complaints were the but-for cause of their terminations. See
Gross v. FBL Financial Servs., Inc., 557 U.S. 167, 176 (2009) (holding that the
language “because of” requires a “‘but-for’ cause of the employer’s adverse
decision” under ADEA retaliation claims); see also Univ. of Tex. Sw. Med. Ctr.
v. Nassar, 133 S. Ct. 2517, 2528 (2013) (“Given the lack of any meaningful
textual difference between the text in this statute and the one in Gross, the
proper conclusion here, as in Gross, is that Title VII retaliation claims require
proof that the desire to retaliate was the but-for cause of the challenged
employment action.”). Relators argue in their opening brief that their evidence
allegedly showing temporal proximity between protected activities and their
terminations, Relators’ positive performance reviews, Solvay’s
disproportionate disciplinary response that departed from its procedures, and
the disparate treatment of other employees is sufficient to survive summary
judgment on causation.
As a threshold matter, Relators discussed only temporal proximity and
job performance in the district court, and made a brief, unsupported reference
to disproportionate discipline. Relators have not shown any extraordinary
circumstances for omitting the additional arguments asserted on appeal.
Therefore, Relators’ causation arguments based on Solvay’s alleged departure
from disciplinary procedures and the disparate treatment of other employees
are waived. See Diaz, 820 F.3d at 176–77 (declining to consider evidence of
pretext for an FCA retaliation claim because relator failed to raise the
argument in the district court and presented no extraordinary circumstances);
see also Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915 (5th Cir. 1992)
(“Because the [nonmovant] failed to refer to [the evidence] in district court in
their summary judgment response, the [evidence was] not properly before that
court in deciding whether to grant the motion; therefore, [it] will not be
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considered here.”). 15 Similarly, a bare assertion to the district court that their
termination was “disproportionate in light of the circumstances” without any
record citation or discussion for support does not sufficiently raise that
argument in the district court. See Diaz, 820 F.3d at 176–77; Skotak, 953 F.2d
at 915. 16
Relators are left with the temporal proximity of their terminations to
their complaints and their positive performance reviews as evidence of
causation. “[T]emporal proximity alone is insufficient to prove but for
causation.” Strong v. Univ. Healthcare Sys., L.L.C., 482 F.3d 802, 808 (5th Cir.
2007). But “the combination of suspicious timing with other significant
evidence of pretext, can be sufficient to survive summary judgment.”
Shackelford v. Deloitte & Touche, LLP, 190 F.3d 398, 409 (5th Cir. 1999). 17
This standard can be met when “the plaintiff had highly positive performance
reviews up until the complaint was leveled against the company, and then
suffered a sharp decline in treatment immediately after the protected conduct
occurred.” Khalfani v. Balfour Beatty Communities, L.L.C., 595 F. App’x 363,
15 The district court rejected Relators’ additional assertion that “both worked under
consistently underenforced company policies.” Because Relators only mention this argument
in their reply brief, it is abandoned. See Turner v. Kan. City S. Ry. Co., 675 F.3d 887, 892 n.3
(5th Cir. 2012) (“[T]his Court will not consider a claim raised for the first time in a reply
brief.”).
16 Even if we consider Relators’ evidence related to disproportionate disciplinary
action, it fails to create a genuine issue of material fact as to whether their termination was
a disproportionate response to Relators’ infractions. The evidence Relators cite shows that
termination was an appropriate disciplinary action for violating company policies. It is
undisputed that Relators violated company policies. Moreover, Relators point to no evidence
indicating that their infractions merited lesser punishment. Relators’ bare assertions that
these infractions were minor and therefore undeserving of termination do not suffice at the
summary judgment stage.
Although Strong and Shackelford are retaliation claims under Title VII, they inform
17
our causation analysis here because such claims involve the same “but-for” causation
requirement at issue in FCA retaliation claims. See Nassar, 133 S. Ct. at 2527–28.
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366 (5th Cir. 2014) (per curiam). 18 In Shackelford, for example, the plaintiff
survived summary judgment because, in addition to showing “tight temporal
proximity” of being terminated within days of engaging in several protected
activities, there was also evidence of unfounded performance concerns by the
employer, warnings not to get involved in the protected activity, and disparate
treatment in job reviews. Shackelford, 190 F.3d at 408–09.
Here, Relators’ evidence of both being terminated at least three-and-a-
half months after making their complaints and positive performance reviews
prior to their terminations does not create a fact issue as to pretext. Relators
admit that they violated Solvay’s marketing policies and that employees may
be terminated for marketing policy violations. Furthermore, they do not point
to any causation evidence that is similar to the evidence described in
Shackelford. See id. Relators point to no evidence that Solvay raised dubious
performance problems as a reason for their terminations, mistreated them
immediately after their protected activities, or knew of their policy violations
prior to Relators’ positive performance reviews. 19 Simply put, Relators have
failed to show that a reasonable jury could conclude that their complaints were
the but-for cause of their terminations.
B. Taxable Costs
A district court may award certain taxable costs to a prevailing party.
See 28 U.S.C. § 1920; FED. R. CIV. P. 54(d)(1). “Taxable costs are limited to
relatively minor, incidental expenses” amounting to “a fraction of the
nontaxable expenses borne by litigants for attorneys, experts, consultants, and
18Although Khalfani is not “controlling precedent,” it “may be [cited as] persuasive
authority.” Ballard v. Burton, 444 F.3d 391, 401 n.7 (5th Cir. 2006) (citing 5TH CIR. R. 47.5.4).
19 Moreover, as previously discussed, Relators waived any arguments of
disproportionate discipline, disparate treatment, and departure from company procedures
because they failed to make these arguments and identify supporting evidence before the
district court.
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investigators.” Taniguchi v. Kan Pac. Saipan, Ltd., 132 S. Ct. 1997, 2006
(2012). Taxable costs may include, among other things, “[f]ees for printed or
electronically recorded transcripts necessarily obtained for use in the case” and
“[f]ees for exemplification and the costs of making copies of any materials
where the copies are necessarily obtained for use in the case.” § 1920(2), (4).
Solvay sought taxable costs on both of these grounds, which the district
court granted in part. Relators argue on appeal that Solvay failed to show that
its costs were “necessarily obtained for use in the case.” Relators also contend
that the district court erred in overruling some of its specific objections to costs
related to deposition transcripts, photocopying, and e-discovery.
1. Materials Necessarily Obtained for Use in the Case
Relators claim that a document is only “necessarily obtained for use in
the case” if it “was actually used at trial or as a summary judgment exhibit.”
But we have interpreted “necessarily obtained for use in the case” to include
documents “reasonably expected to be used for trial or trial preparation” at the
time it was obtained. United States ex rel. Long v. GSDMIdea City, L.L.C., 807
F.3d 125, 130 (5th Cir. 2015). “Whether a deposition or copy was necessarily
obtained for use in the case is a factual determination within the district court’s
discretion, and ‘we accord the district court great latitude in this
determination.’” Id. (quoting Fogleman v. ARAMCO (Arabian Am. Oil Co.),
920 F.2d 278, 285–86 (5th Cir. 1991)); see also United States v. Kolesar, 313
F.2d 835, 840 (5th Cir. 1963).
To be sure, a party seeking to recover costs must explain why those costs
were necessary. See Fogleman, 920 F.2d at 286 (“While we certainly do not
expect a prevailing party to identify every xerox copy made for use in the course
of legal proceedings, we do require some demonstration that reproduction costs
necessarily result from that litigation.”). Here, Solvay submitted a declaration
listing costs incurred during the case and explaining why the court should
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allow it to recover those costs. The district court found that Solvay had shown
the necessity of some of its claimed costs and allowed Solvay to recover only
those costs.
Relators also claim that “[t]he vehicle for recovering the costs of
complying with discovery obligations is a protective order under Rule 26(e),”
and “section 1920 [and] Rule 54 . . . are not intended to govern the taxing of
discovery costs.” However, we have repeatedly said that “the authority of the
trial court to assess ‘necessary and reasonable’ costs incurred during discovery
‘can hardly be doubted.’” Rundus v. City of Dallas, 634 F.3d 309, 316 (5th Cir.
2011) (quoting Harrington v. Texaco, Inc., 339 F.2d 814, 822 (5th Cir. 1964)).
Discovery costs are recoverable under Rule 54 “if the party making the copies
has a reasonable belief that the documents will be used ‘during trial or for trial
preparation.’” Id. (quoting Fogleman, 920 F.2d at 285).
After reviewing Solvay’s declaration in support of its bill of costs, the
district court exercised its considerable discretion and determined that Solvay
adequately explained the necessity of its costs. Relators have failed to show
that the district court abused its discretion in making this determination.
2. Additional Objections to Solvay’s Costs
Relators objected to most of the costs billed for deposition transcripts,
photocopying, and e-discovery. Relators now appeal the district court’s
decisions overruling some of these objections.
As to the costs for deposition transcripts, Relators contend that the
district court should not have taxed any costs against them given the absence
of itemized invoices. We disagree. Solvay’s counsel explained why these
deposition transcripts were necessary to Solvay’s defense, and the district
court found Solvay’s justifications convincing and acted accordingly. In doing
so, the district court did not abuse its discretion.
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As to the photocopying costs, Relators claim that the district court should
not have awarded any photocopying costs because Solvay failed to provide
sufficient supporting documentation. The district court acknowledged that
Solvay’s invoices were not detailed but explained that, given nearly three
million pages of copies Solvay produced for its defense in this case, it would
have been impossible for Solvay to explain each page’s usefulness. The district
court also noted that Solvay had attested that the photocopying expenses were
necessarily incurred, had reduced its request to only fifty percent of the costs
actually incurred, and was not seeking costs for copies made by its employees.
In light of these circumstances, the district court found that the costs were both
necessary and reasonable.
We have previously affirmed awards for non-itemized photocopying
expenses. See, e.g., Long, 807 F.3d at 131; United Teacher Assocs. Ins. Co. v
Union Labor Life Ins. Co., 414 F.3d 558, 574–75 (5th Cir. 2005). District courts
have great latitude in making these determinations, and the district court here
did not abuse its discretion in exercising that latitude in determining
reasonable photocopying costs in light of the circumstances of this complex
case. See Rundus, 634 F.3d at 316.
As to the e-discovery costs, the district court disallowed the bulk of
Solvay’s request but did allow Solvay to recover for costs relating to (1) TIFF
image conversion, (2) scanning, (3) formatting electronic documents, and
(4) PDF conversion—per § 1920(4), which allows recovery for “exemplification”
and “making copies” of case materials. The district court explained that it
interprets § 1920(4) “narrowly” in this context but understands the statute to
allow a prevailing party to recover the costs of complying with an opposing
party’s request to reformat electronic documents or scan hard copies of
documents.
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Relators contend that Solvay did not provide sufficient information to
justify the necessity of these costs. To the contrary, Solvay explained their
necessity in its declaration of costs. The district court carefully considered
Relators’ objections and did not abuse its discretion by overruling those
objections.
Finally, Relators make a one sentence argument that “processing fees
paid to third-party providers to digitize large quantities of print materials or
to compile and convert electronic records”—that is, electronic formatting and
TIFF image conversion costs—are not costs related to “making copies” within
the meaning of § 1920(4). However, under similar circumstances, we have
previously held that a district court does not abuse its discretion in allowing
reimbursement of such costs. See Long, 807 F.3d at 131–32.
IV. Conclusion
For the foregoing reasons, the district court’s grant of both summary
judgment and taxable costs to Solvay is AFFIRMED.
25