Judge Dismisses Off-Label and Kickback Allegations Against Bristol-Myers Squibb, But BMS Must Face Whistleblower Retaliation Suit

 

District Court Judge William Bertelsman recently dismissed False Claims Act (FCA) allegations against Bristol-Myers Squibb and Otsuka Pharmaceuticals brought by two former BMS sales reps. Despite finding the whistleblowers failed to show that the company engaged in either off-label promotion or kickbacks in violation of the FCA, however, Judge Bertelsman held that the whistleblowers adequately pled wrongful retaliation claims. According to the former sales reps, they tried to bring their compliance concerns up the company chain, but were instead punished with poor performance reviews. Both employees were terminated soon after without an opportunity to defend themselves, according to the complaint. 

Joseph Ibanez and Jennifer Edwards filed suit against their former employer in January 2011, alleging that BMS and Otsuka engaged in a scheme to promote Abilify, an atypical antipsychotic, off-label to pediatric and geriatric patients, and also offered kickbacks to physicians to get them to prescribe the drug. Judge Bertelsman found the relators’ claims to be insufficient on both counts due to lack of evidence connecting the manufacturers behavior to any specific false claim submissions.

In dismissing the off-label allegations, the Judge found the whistleblowers’ pleading did not raise a “strong inference” that BMS and Otsuka caused the submission of a false claim for payment “because such a conclusion requires no fewer than five sequential inferences drawn in Relators’ favor”:

• (1) that Defendants’ off-label promotion caused pediatric/geriatric psychiatrists to write prescriptions for Abilify,
• (2) that those prescriptions were for off-label uses of Abilify,
• (3) that the patients who received those prescriptions participate in federal-health-care programs,
• (4) that the patients actually filled the off-label prescriptions, and
• (5) that some entity submitted claims for reimbursement to the government on the off-label prescriptions.

Judge Bertelsman found that even accepting all the allegations as true, the whistleblowers’ complaint “certainly does not reach inferences (3) through (5).” The Judge found that the complaint failed to adequately allege whether doctors with whom BMS allegedly engaged in off-label promotion with “wrote even one off-label prescription to a participant in a federal health-care program…whether even one federal-health-care program participant actually filled a prescription from [those doctors]…and…whether any entity actually submitted a claim for reimbursement to the government for even one off-label prescription.”

The court was similarly put off by the lack of nexus between any alleged kickbacks and the ultimate submission of a claim. The plaintiffs also failed to show facts alleging that remuneration (including paid speaking engagements and free meals) paid by BMS was “intended to induce the utilization of federal-health-care services,” noted the court 

Whistleblower Retaliation Allegations

From 2005-2009, the relators worked for BMS as pharmaceutical sales representatives responsible for promoting Abilify to prescribing psychiatrists. In finding that both plaintiffs sufficiently pled their FCA-retaliation claims, Judge Bertelsman walked through both Edwards’ and Ibanez’s allegations as set forth in their complaints. These lists provide important red flags for manufacturers to look out for going forward.

View the full complaint ( Download Abilify FCA Opinion), with the relators’ FCA-retaliations claims beginning on page 23. 

Regarding Mr. Ibanez, an abbreviated list of his allegations are as follows:

• On or about 2008, Relator Ibanez began raising compliance issues with his employer, objecting to inappropriate detailing and inappropriate call targets for the promotion of Abilify
• On or around December of 2009, for example, Relator Ibanez emailed the BMS legal department regarding a compliance concern from a paid BMS speaker regarding the promotion of Abilify in the geriatric population.
• Thereafter, in January 2010, Relator was contacted by the Gary Delvecchio, Director of Compliance for U.S. Pharmaceuticals, and participated in a conference call with Mr. Delvecchio and a lawyer for the Neuroscience Division in which he discussed the speaker’s and his own concerns about patterns and practices of off-label promotions occurring with Abilify….Ibanez reported that, in a meeting discussing how to increase sales to a high quintile office where only patients 18 and under are seen, an OBS rep stated: “The [ABILIFY®] message is not important . . . it’s selling [ ] [ABILIFY®] in the physician’s office not [sic] matter their specialty.”
• After raising his concerns, Mr. Ibanez began to receive negative performance reviews and experience negative attention and other retaliatory conduct.
• By way of example, on April 12, 2010, Relator Ibanez was counseled by his superior for failing to “embrace teamwork” by objecting to inappropriate call targets. In that memorandum, Relator Ibanez’s manager Keith Watters stated: “[S]ince our 2009 restructuring, you have been very hesitant to embrace the new PFS targets…It seems as though you are very hesitant to work among your OBS colleagues with shared targets.” 
• Mr. Watters also criticized that “Some of the emails you have sent to [BMS representative] Marty & [Otsuka representative] Alec are very direct and state that they should not be calling on these targets.”
• After Relator Ibanez’s concerns about illegal promotion activities went unaddressed, Relator contacted representatives of the United States to report this information.
• The retaliatory conduct by BMS created a hostile work environment for Relator. The stress of this environment forced Relator to go on a health leave on or about May 2010.
• While on leave, Relator continued to discuss compliance issues with the BMS HR representatives.
• In response, HR informed him that they had begun investigating him for fraudulent sales calls.
• The information regarding these supposed fraudulent calls were fabricated. Instead of permitting Mr. Ibanez to evaluate or rebut this information, BMS notified him that he was being terminated on or about July 16, 2010. Mr. Ibanez received his last paycheck from BMS through July 23, 2010. 

The judge found the allegations showed that the relator’s “superiors were aware of his FCA-protected activity,” and that “the subsequent negative performance reviews of Relator Ibanez support the reasonable inference that BMS was displeased with his conduct.” Furthermore, Judge Bertelsman stated that “the fact that Relator Ibanez was terminated while on medical leave without an opportunity to respond to the allegations against him supports the reasonable inference that his termination was because of the FCA-protected activity in which he engaged.”

It will be interesting to see whether these allegations are fleshed out further in trial, but the case offers insight into what a court will look for when plaintiffs allege FCA-related retaliation. The case also drives home the point that companies should have policies and procedures in place to effectively respond to compliance concerns raised up the chain by employees.