Defendant's Attorney: Not Available

Description:

Balitmore, Maryland qui tam lawyer represented the Plaintiff.

Deborah Sheldon filed the initial Complaint (ECF 1), under seal, on August 11, 2014. See 31 U.S.C. § 3730(b)(2). The Amended Complaint followed on August 30, 2016, and was also filed under seal. ECF 16.

In the 179-page Amended Complaint (ECF 16), Sheldon alleges that between 2005 and 2014, Forest, “a leading manufacturer of pharmaceutical drugs,” defrauded the government and the Qui Tam States of more than $680 million. Id. at 6. In particular, Sheldon claims that Forest failed to include certain customer price concessions in its calculation of “Best Price,”[4] as that term is defined at 42 U.S.C. § 1396r-8(b)(3)(A)(i)(II) and in related regulations. Id. According to the Relator, “Forest paid rebates to two separate customers on the same dispensed drug units provided to the same patient.” Id.; see also id. ¶¶ 60, 61, 66-68. The Relator argues that Forest was obligated to calculate “Best Price” by aggregating, or adding, the two rebates. Id. at 6-7.

The government conducted a lengthy investigation of the allegations, and the suit remained sealed during that period of time. See ECF 17; ECF 21; ECF 23; ECF 24; ECF 26; ECF 30; ECF 33; ECF 35; ECF 37; ECF 39.[5] Eventually, on September 17, 2019, the United States and the Qui Tam States declined to intervene. ECF 41. Thereafter, on October 16, 2019, the suit was unsealed. ECF 42.

Defendant moved to dismiss the suit, pursuant to Fed.R.Civ.P. 12(b)(6) and Fed.R.Civ.P. 9(b). ECF 72. By Memorandum Opinion and Order of November 6, 2020, I dismissed the Amended Complaint for failure to state a claim. See ECF 86; ECF 87; ECF 92; United States ex rel. Sheldon v. Forest Labs., LLC, 499 F.Supp.3d 184 (D. Md. 2020) (Sheldon I).[6] I concluded that the Relator failed to plead falsity and scienter, as required under the FCA. ECF 92 at 43.[7]

Forest noted an appeal to the Fourth Circuit. ECF 88. For nearly three years thereafter, the suit wended a tortuous way through the appellate process. The judgment of dismissal was affirmed twice by the Fourth Circuit, first by a divided panel, see United States ex rel. Sheldon v. Allergan Sales, LLC, 24 F.4th 340 (4th Cir. 2022) (Sheldon II), and then, after a rehearing en banc, “by an equally divided court.” United States ex rel. Sheldon v. Allergan Sales, LLC, 49 F.4th 873 (Mem) (4th Cir. 2022) (Sheldon III). On June 30, 2023, the Supreme Court granted certiorari, vacated the judgment of dismissal, and remanded the case to the Fourth Circuit “for further consideration in light of United States ex rel. Schutte v. Supervalu, Inc., 598 U.S. [739] (2023),” which the Supreme Court had decided on June 1, 2023. See United States ex rel. Sheldon v. Allergan Sales, LLC, 143 S.Ct. 2686 (2023) (Sheldon IV).[8] By Order of August 2, 2023, the Fourth Circuit remanded the case to the District Court, with instructions to reconsider the suit “in light of” Schutte. ECF 100.

Forest has again moved to dismiss the Amended Complaint. ECF 112. The motion is supported by a memorandum (ECF 112-1) and eight exhibits. ECF 112-2 to ECF 112-7 (collectively, the “Motion”). Sheldon opposes the Motion. ECF 117 (“Opposition”). The Opposition is supported by 299 pages of exhibits. ECF 117-1 to ECF 117-8 (collectively, the “Opposition”). Forest has replied. ECF 118 (“Reply”). The Reply is supported by four exhibits. ECF 118-1 to ECF 118-4 (collectively, the “Reply”).

In addition, Forest filed a “Notice of Supplemental Authority,” drawing the Court's attention to a recent announcement by the Centers for Medicare & Medicaid Services (“CMS”). ECF 121 (“Notice”). The Notice is supported by an exhibit containing the announcement by CMS. ECF 121-1 (“Press Release”). Sheldon responded. ECF 122 (“Notice Response”).

In their respective submissions, both sides reference the Supreme Court's decision in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, 467 U.S. at 837 (1984). See, e.g., ECF 112-1 at 23-24; ECF 117 at 27. However, on June 28, 2024, the Supreme Court announced that “ Chevron is overruled.” See Loper Bright Enterprises v. Raimondo, ___ U.S. ___, 144 S.Ct. 2244, 2273 (2024). Therefore, by letter of July 3, 2024 (ECF 125), I invited the parties to address the impact of Loper, if any, on their positions. On July 10, 2024, both parties filed a response addressing the significance of Loper. ECF 126 (Forest); ECF 127 (Sheldon). And, on July 15, 2024, each side filed a reply to the opposing party's supplemental submission. ECF 128 (Forest); ECF 129 (Sheldon).

No hearing is necessary to decide the Motion. See Local Rule 105.6. For the reasons that follow, I shall again grant the Motion and dismiss the case.

* * *

United States v. Forest Labs., Civil Action ELH-14-2535 (D. Md. Oct 22, 2024)

Outcome: Case dismissed.

Plaintiff's Experts:

Defendant's Experts:

Comments: