United States District Court, N.D. California
ORDER GRANTING UNITED STATES' MOTION TO DISMISS
DOCKET NO. 183
M. CHEN, UNITED STATES DISTRICT JUDGE
Jeff and Sherilyn Campie are former employees of Defendant
Gilead Sciences, Inc., a pharmaceutical drug manufacturer.
They have filed a qui tam action against Gilead, asserting,
inter alia, a claim for violation of the federal
False Claims Act (“FCA”). According to the
Campies, Gilead violated the FCA by submitting or causing to
be submitted false claims for payment under government
payment programs such as Medicare and Medicaid. See
31 U.S.C. § 3729(a)(1)(A).
this Court granted Gilead's motion to dismiss the
Campies' second amended complaint (“SAC”).
The Court dismissed not only the FCA claim but also related
claims based on state law, plus claims for retaliation under
both the FCA and state law. On appeal, the Ninth Circuit
reversed and remanded to this Court. Currently pending before
the Court is the United States' motion to dismiss.
Although the government is not a party to this action (having
declined to intervene), it is a real party in interest and
moves to dismiss pursuant to a provision in the FCA that
states as follows: “The Government may 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). The United
States is moving to dismiss only the FCA claim, and not any
related claims based on state law or any retaliation claims,
whether based on the FCA or state law.
considered the parties' and the United States' briefs
and supporting documents, as well as the oral argument of
counsel, the Court hereby GRANTS the motion.
FACTUAL & PROCEDURAL BACKGROUND
Operative Second Amended Complaint
reflected in the Ninth Circuit's decision on appeal, the
gist of the Campies' SAC is as follows. Gilead, a drug
manufacturer, produces anti-HIV drug therapies, including the
drugs Atripla, Truvada, and Emtriva. See United States ex
rel. Campie v. Gilead Scis., 862 F.3d 890, 895 (9th Cir.
2017). All three drugs contain the active ingredient
embricitabine, commonly known as FTC. See Id. at
the three drugs, Gilead had to obtain approval from the FDA
by filing new drug applications (“NDAs”).
In its NDA applications, Gilead represented to the FDA that
it would source the FTC from specific registered facilities
in Canada, Germany, the United States, and South Korea. But .
. . as early as 2006, Gilead contracted with Synthetics China
to manufacture unapproved FTC at unregistered facilities. For
a period of sixteen months beginning in December 2007, Gilead
brought illicit FTC from a Synthetics China facility into the
United States to use in its commercial drugs, claiming that
the FTC had come from its approved South Korean manufacturer.
. . .
Gilead ultimately sought approval from the FDA to use
Synthetics China's FTC in October 2008, but . . . had
been including products from Synthetics China in its finished
drug products for at least two years before this approval was
obtained in 2010.
to the Campies, Gilead also engaged in misconduct because it
used “falsified or concealed data in support of its
application to get Synthetics China approved by the
FDA” - e.g., Gilead claimed in its application
that “it had received three full-commercial-scale
batches of FTC from Synthetics China that passed testing and
were consistent with or equivalent to FTC batches made from
existing, approved manufacturers” but concealed the
fact that two of the three batches actually failed internal
testing. Id. “One of the batches purportedly
contained ‘residual solvent levels in excess of
established limits' and other impurities. A second batch
had ‘microbial contamination' and showed the
presence of arsenic, chromium and nickel contaminants.”
Id. Instead of reporting the failure to the FDA,
Gilead “secured two new batches and amended its
[application] to include the substitute data.”
Campies allege that Gilead violated the FCA because it sought
payment for its drugs containing FTC either directly or
indirectly from government programs, but payment for drugs
under these programs is contingent on FDA approval and,
“because the drugs paid for by the government contained
FTC sourced at unregistered facilities, they were not FDA
approved and therefore not eligible for payment under the
government programs.” Id. at 897.
March 2015, Gilead moved to dismiss the Campies' SAC.
Although the government had declined to intervene in this
lawsuit, it filed a statement of interest (as the real party
interest) in response to Gilead's motion, just as it did
when Gilead moved to dismiss an earlier complaint filed by
the Campies. See Docket No. 129 (government's
statement). Although the government did not take a position
on the ultimate merits of the Campies' lawsuit, it made
some arguments that were favorable to the Campies -
e.g., that the FCA can be violated even if the
defendant did not make a “direct misrepresentation . .
. to the payor agency” and that “a deviation from
the drug manufacturing process approved by the [FDA] could be
. . . tantamount to producing a drug that is not the same
drug approved by the FDA, thereby potentially forming the
basis of a FCA violation.” Docket No. 19 (St. at 2-2).
2015, this Court granted Gilead's motion to dismiss -
dismissing not only the FCA claim but also all remaining
claims, including those based on retaliation. See
Docket No. 142 (order). The Campies appealed. On appeal, the
United States filed an amicus brief. Again, the government
made arguments that were favorable to the Campies (without
taking a position on the ultimate merits of their case) -
e.g., that “a claim can be ‘false or
fraudulent' when someone represents that it has sold
something different from what was actually provided -
regardless of whether or not the resulting product was
‘worthless'” and that “it is possible
to state an FCA claim when a defendant makes false statements
to one government agency, and those false statements are
material to the submission of false or fraudulent claims to
another government agency.” United States ex rel.
Campie v. Gilead Scis., Inc., No. 15-16380 (9th Cir.)
(Docket No. 20) (Br. at 15, 22). Ultimately, the Ninth
Circuit found in favor of the Campies.
thereafter petitioned the Supreme Court for review.
Apparently, the Supreme Court asked the United States for its
views on petition, see Docket No. 200 (Friedman
Decl. ¶ 7), and, in response, the government filed an
amicus brief in November 2018. See Docket No. 200
(Friedman Decl., Ex. B) (amicus brief). In the brief, the
government argued, inter alia, that the Ninth
Circuit correctly held that “the government's
continued payment for a product, after learning that the
manufacturer has made misrepresentations to the government
regarding that product, can be strong evidence that the
misrepresentations were not material to the government's
payment decisions” but that, “under the
circumstances of this case, . . . the fact of continued
government payments did not by itself require dismissal of
respondents' claims at the pleading stage.” Docket
No. 200 (Friedman Decl., Ex. B) (Amicus Br. at 7).
in the same brief, the government also asserted for the first
time that, if the case were remanded back to the district
court, it would
move to dismiss [the Campies'] suit under Section
3730(c)(2)(A). That determination is based in part on the
government's thorough investigation of respondents'
allegations and the merits thereof. In addition, if this suit
proceeded past the pleading stage, both parties might file
burdensome discovery and Touhy requests for FDA
documents and FDA employee discovery (and potentially trial
testimony), in order to establish “exactly what the
government knew and when, ” which would distract from
the agency's public-health responsibilities.” Based
on all those considerations, the government has concluded
that allowing this suit to proceed to discovery (and
potentially a trial) would impinge on agency decisionmaking
and discretion and would disserve the interests of the United
No. 200 (Friedman Decl., Ex. B) (Amicus Br. at 15).