PERRI v. NOVARTIS PHARMACEUTICALS CORPORATION

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

UNITED STATES OF AMERICA

ex rel. JOSEPH PERRI,

Civ. No. 15-6547

Plaintiff,

v.

OPINION and ORDER

NOVARTIS PHARMACEUTICALS

CORPORATION and EXPRESS

SCRIPTS, INC.,

Defendants.

KEVIN MCNULTY, U.S.D.J.:

This qui tam matter, brought by relator Joseph Perri (“Relator”) on behalf

of the United States, originally alleged that defendants Novartis

Pharmaceuticals Corporation (“Novartis”) and Express Scripts, Inc. (“ESI”)

engaged in a scheme in relation to Gilenya, a prescription drug, a scheme said

to violate the Anti-Kickback Statute (“AKS”). The original complaint asserted

four counts under the False Claims Act (“FCA”), the fourth of which was a

claim that Perri was terminated in retaliation for objecting to the kickback

scheme, in violation of 31 U.S.C. § 3730(h). In a substantial opinion (“Op.”, DE

38), I granted the defendant’s motion to dismiss the original complaint,

granting leave to amend.

Now the plaintiff has filed a First Amended Complaint. (“1AC”, DE 46)

The 1AC nevertheless retains most of the factual allegations of the original,

while adding a few more in response to deficiencies noted in the Court’s prior

opinion. The 1AC does not, however, amend or attempt to reinstate the three

main FCA claims. It reasserts only the claim of retaliatory dismissal, in an

amended version.

Now before the Court is the motion of the defendant, Novartis, to dismiss

the 1AC for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6). (DE 48)

For the reasons stated herein, the motion is denied. Familiarity with the case is

assumed; this opinion should be read in conjunction with my prior Opinion.

I. Standard

Federal Rule of Civil Procedure 8(a) does not require that a complaint

contain detailed factual allegations. Nevertheless, “a plaintiff’s obligation to

provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and

conclusions, and a formulaic recitation of the elements of a cause of action will

not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see Phillips v.

Cnty. of Allegheny, 515 F.3d 224, 232 (3d Cir. 2008) (Rule 8 “requires a

‘showing’ rather than a blanket assertion of an entitlement to relief.” (citation

omitted)). Thus, the complaint’s factual allegations must be sufficient to raise a

plaintiff’s right to relief above a speculative level, so that a claim is “plausible

on its face.” Twombly, 550 U.S. at 570; see also West Run Student Hous.

Assocs., LLC v. Huntington Nat. Bank, 712 F.3d 165, 169 (3d Cir. 2013). That

facial-plausibility standard is met “when the plaintiff pleads factual content

that allows the court to draw the reasonable inference that the defendant is

liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(citing Twombly, 550 U.S. at 556). While “[t]he plausibility standard is not akin

to a ‘probability requirement’ . . . it asks for more than a sheer possibility.” Id.

Rule 12(b)(6) provides for the dismissal of a complaint if it fails to state a

claim upon which relief can be granted. The defendant, as the moving party,

bears the burden of showing that no claim has been stated. Animal Science

Products, Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n.9 (3d Cir. 2011).

For the purposes of a motion to dismiss, the facts alleged in the complaint are

accepted as true and all reasonable inferences are drawn in favor of the

plaintiff. New Jersey Carpenters & the Trustees Thereof v. Tishman Const. Corp.

of New Jersey, 760 F.3d 297, 302 (3d Cir. 2014).1

1 In my prior opinion, I applied the heightened pleading standard of Fed.

R. Civ. P. 9(b) to the allegations of fraud in the submission of false claims.

Those dismissed counts, however, are not reasserted in the 1AC. I apply the

II. Discussion

The single count of the 1AC alleges that Relator was terminated from

employment in retaliation for his having objected to an illegal kickback scheme,

in violation of 31 U.S.C. § 3730(h). That kickback was the foundation of the

now-dismissed False Claims Act counts. (A claim is said to be “legally false” if

accompanied by a false certification that the claimant is in compliance with

federal law—here, the AKC.) Relator asserts, correctly, that a retaliation claim

does not require that the underlying conduct have turned out to be illegal

under the FCA. See Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d 176, 187

(3d Cir. 2001) (holding that the FCA’s anti-retaliation provisions “do[ ] not

require the plaintiff to have developed a winning qui tam action”; they “only

require [ ] that the plaintiff engage in acts [made] in furtherance of an [FCA]

action.”) (citations, internal quotations, and alterations omitted). The FCA

claims from the original complaint, then, although deceased, continue to haunt

the case; they form the basis of Relator’s alleged whistleblowing, which

allegedly led to his dismissal.

A. Dismissal of Former Counts I, II, and III

I refer only briefly to Relator’s allegations of FCA violations based on the

kickback scheme; they are summarized more thoroughly in my prior opinion.

They arise from the relationship between Novartis, the manufacturer of

Gilenya, and ESI, a Pharmacy Benefit Manager (“PBM”) that sponsors

commercial, Medicare Part D (“Part D”), and Medicaid health plans. PBMs like

ESI administer prescription drug benefits and develop formularies, a list of

prescription drugs that are covered under a member’s prescription drug health

plan. PBMs generally negotiate with drug manufacturers, who offer discounts

and rebates to secure placement of their medications on the formulary.

Relator’s original theory of liability was that Novartis provided substantial

ordinary Rule 8 standard to the remaining retaliation claim, which does not

sound in fraud.

commercial discounts and rebates on Gilenya for ESI’s commercial health

plans in return for ESI’s Medicare Part D business.

Effective January 1, 2013, Novartis and ESI agreed to a 6.375% discount

on Gilenya for ESI’s Part D plans. For commercial plans, however, there was no

discount on Gilenya as of January 1, 2013. In October 2013, Relator alleges,

ESI threatened to remove Gilenya from both its Part D and commercial

formularies after a competitor placed a cheaper, safer, and comparably

efficacious drug on the market. In response, Novartis allegedly provided a

discount on Gilenya for ESI’s commercial plans (but not its Part D plans) in

exchange for the “continued” placement of Gilenya on the formularies. This

arrangement, according to Relator, amounted to a kickback to the commercial

plans at the expense of the Part D plan.

I dismissed the allegations of false claims under the FCA. The “threat” by

ESI was not alleged in a factual manner. Nor were any facts pled to

substantiate the allegation that the Novartis instituted the commercial

discount to induce ESI to retain Gilenya in its formularies. Relator Perri, I

pointed out, was an insider in relation to these transactions, and would know

the facts. The company’s failure to isolate the commercial negotiations from the

Part D negotiations, I held, did not violate any regulation; while perhaps

providing a potential opportunity for fraud, the merger of those functions did

not itself constitute fraud. I further found that the allegations suggested

equally plausible, legitimate justifications for the commercial discount. (Op.

28–32) Thus the factual allegations, I held, failed to satisfy the heightened

fraud-pleading standard of Fed. R. Civ. P. 9(b)

B. Dismissal of Retaliation Claim

I also dismissed the FCA retaliation claim — i.e., former Count IV, the

predecessor of the claim now asserted in the 1AC — for failure to meet the

ordinary Rule 8 pleading standards of Twombly and Iqbal, supra. In doing so, I

summarized the anti-retaliation law thus:

In Count IV, Relator alleges that his employment at Novartis

was terminated because he sought to bring “parity” between the

commercial and Part D discounts, and he expressed his concerns

about this “disparity” to his “supervisors.” . . .

Section 3730(h) provides a cause of action for employees who

assist the government in the investigation and prosecution of FCA

claims. Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d 176, 185–

86 (3d Cir. 2001).2 The FCA’s anti-retaliation provision provides as

follows:

Any employee, contractor, or agent shall be entitled to all

relief necessary to make that employee, contractor, or agent

whole, if that employee, contractor, or agent is discharged,

demoted, suspended, threatened, harassed, or in any other

manner discriminated against in the terms and conditions of

employment because of lawful acts done by the employee,

contractor, agent or associated others in furtherance of an

action under this section or other efforts to stop 1 or more

violations of this subchapter.

31 U.S.C. § 3730(h)(1). To establish a claim for retaliation under

3730(h), a relator must show that “(1) he engaged in protected

conduct, (i.e., acts done in furtherance of an action under § 3730)”;

and “(2) that he was discriminated against because of his protected

conduct.” U.S. ex rel. Hefner v. Hackensack Univ. Med. Ctr., 495

F.3d 103, 110–11 (3d Cir. 2007) (internal citations omitted); see

DiFiore v. CSL Behring, LLC, 879 F.3d 71, 76 (3d Cir. 2018). To

demonstrate discrimination “because of” his or her activities in

furtherance of an FCA suit, a plaintiff must demonstrate that “(1)

his employer had knowledge he was engaged in protected conduct;

and (2) that his employer’s retaliation was motivated, at least in

part, by the employee’s engaging in protected conduct.” Hefner,

495 F.3d at 111 (internal citation and quotation marks omitted).

2 A retaliation claim does not require proof of a viable underlying FCA claim. As

the Court in Hutchins explained, the retaliation provisions “do[ ] not require the

plaintiff to have developed a winning qui tam action”; they “only require [ ] that the

plaintiff engage in acts [made] in furtherance of an [FCA] action.” Hutchins, 253 F.3d

at 187 (citations, internal quotations, and alterations omitted); see also Graham Cnty.

Soil & Water Conservation Dist. v. U.S. ex rel. Wilson, 545 U.S. 409, 416 n.1, 125 S. Ct.

2444, 162 L. Ed. 2d 390 (2005) (“[P]roving a violation of [the FCA] is not an element of

a § 3730(h) cause of action.”). [fn. in original]

As to “what activities constitute protected conduct, the case

law indicates that protected [conduct] requires a nexus with the in

furtherance of prong of [a False Claims Act] action,” which

“involves determining whether [plaintiff’s] actions sufficiently

furthered an action filed or to be filed under the [False Claims

Act].” Hutchins, 253 F.3d at 187 (alterations in original; internal

citation and quotation marks omitted). “Protected conduct”

includes “investigation for, initiating of, testimony for, or

assistance in” an FCA suit. Id.; 31 U.S.C. § 3730(h). It also

encompasses internal reports of FCA violations. Hutchins, 253 F.3d

at 187. Protected activity does not, however, include “an

employee’s investigation of nothing more than his employer’s non-

compliance with federal or state regulations.” Id. at 187-88.

There is also a required causation nexus. The FCA “requires

employees to prove they were discriminated against ‘because of’

their ‘protected conduct.’” Hutchins, 253 F.3d at 188; see also

DiFiore, 879 F.3d at 78 (holding that FCA requires “proof of ‘but-

for’ causation.”). In order to meet this “because of” element, “a

plaintiff must show his employer had knowledge that he was

engaged in ‘protected conduct’ and that the employer retaliated

against him because of that conduct.” Hutchins, 253 F.3d at 188.

This element cannot be satisfied unless, at a minimum, the

employee “put his employer on notice of the ‘distinct possibility’ of

[FCA] litigation.” Id.

Such notice of a “distinct possibility” of FCA litigation “is

essential because without knowledge an employee is contemplating

a False Claims Act suit, ‘there would be no basis to conclude that

the employer harbored § 3730(h)’s prohibited motivation, i.e.,

retaliation.’” Id. (citing Mann v. Olsten Certified Healthcare Corp.,

49 F. Supp. 2d 1307, 1314 (M.D. Ala. 1999)). An employer may be

on notice of a “distinct possibility” of litigation “when an employee

takes actions revealing the intent to report or assist the

government in the investigation of a [FCA] violation.” Id. at 189;

see also id. at 188 n.8 (noting that while “the ‘protected conduct’

and notice requirements are separate elements of a prima facie

case of retaliation under § 3730 . . . the inquiry into these elements

involves a similar analytical and factual investigation.”).

The Court in Hutchins recognized several considerations in

evaluating whether the employer was on notice: whether the

plaintiff’s complaints led to internal or external investigations;

whether the plaintiff used the words, “illegal,” “unlawful,” “qui

tam,” “fraud” or “fraudulent” in characterizing his concerns

regarding the charges; whether the plaintiff’s “regular job duties”

involved “investigating and reporting fraud” or, similarly, whether

the plaintiff uncovered the alleged fraud through his performance

of specifically “assigned task[s]”; and whether the plaintiff can

rebut evidence that his supervisors had no knowledge of the

protected activity. Id. at 189-92 (citations omitted).

(Op. at 33–35)

Discussing the allegations of the original complaint in relation to those

standards, I found them insufficient:

Regarding the notice element, Relator alleges that at some

unspecified time and place, he “voiced his concerns about the

rebate structure to his ESI counterpart, Todd Jeffery.” (Compl.

¶110). This is the only allegation of whistleblowing that even

approaches concreteness. Elsewhere, Relator alleges that he

expressed his concerns about the “disparity” between the rebates

to his “supervisors.” (Compl. ¶¶136, 14). Jeffery, however, was not

Relator’s “supervisor”; he worked for ESI. What Relator appears to

mean is that he “believes” that this conversation with Jeffery

somehow “made its way to Novartis’s management in the second

week of June,” and was therefore equivalent to a statement to

Novartis. (Compl. ¶112). Relator’s allegation that he complained to

ESI is plainly insufficient to put Relator’s employer, Novartis, on

notice of some impropriety. And his factually unsupported,

speculative “belief” that word somehow got back to Novartis does

not bridge the gap. See also United States ex rel. Kester v. Novartis

Pharm. Corp., 23 F. Supp. 3d 242, 266 (S.D.N.Y. 2014) (noting that

FCA allegations made on “information and belief are inherently

speculative”); see also Zavala v. Wal-Mart Stores, Inc., 393 F. Supp.

2d 295, 313 (D.N.J. 2005).3

Just as important is the complaint’s failure to state that

Relator’s alleged statement to his supervisors at Novartis related to

a violation of the AKS or FCA. Indeed, it is not even clear whether

3 I observe in passing that a statement that happened to get back to the

employer strains the very meaning of an “internal report” of wrongdoing. [fn. in

original]

Relator is saying that he complained to ESI about ESI’s conduct or

about Novartis’s conduct.

Internal reporting, to be sure, can qualify as a protected

activity under the FCA, provided that the protected activity

concerns fraud on the government to obtain Medicare payments.

See Campion v. Ne. Utilities, 598 F. Supp. 2d 638, 658 (M.D. Pa.

2009) (dismissing retaliation complaint where plaintiff reported his

“concern about mischarging the government to his supervisor,” but

allegation “does not suffice to establish that he was acting ‘in

furtherance of’ a qui tam action” and was “unconnected to

exposing fraud or false claims against the federal government.”);

McKenzie v. BellSouth Telecomms., Inc., 219 F.3d 508, 516 (6th Cir.

2000) (“Although internal reporting may constitute protected

activity, the internal reports must allege fraud on the

government.”); see also U.S., ex rel. LaPorte v. Premier Educ. Grp.,

L.P., No. Civ. 11-3523 RBK/AMD, 2014 WL 5449745, at *13

(D.N.J. Oct. 27, 2014) (dismissing retaliation claim where

complaint failed to allege that relators “were investigating,

initiating, testifying for, or assisting with a FCA action when they

alerted [employer] to the alleged wrongdoing,” and failed to connect

alleged wrongdoing to FCA when complaining to employer);

Guerrero v. Total Renal Care, Inc., 2012 WL 2237689, at *5 (W.D.

Tex. Mar. 12, 2012) (finding that, in order for internal report to be

protected, it must “specifically allege fraudulent claims for federal

funds and not merely address concerns about general

misconduct.”). To be actionable under the FCA, however, the

internal report must actually be a report, and it must concern

fraud on the government.

Relator may be saying that the protected FCA activity

consisted of his statements that commercial and Part D

contracting responsibilities should be separated. Such a

notification, if it occurred, would not be a notification of an FCA

violation, i.e., fraud on the government; at most, it is a notification

of non-compliance with industry guidelines. Cf. Hutchins, 253 F.3d

at 187-88. (noting that “employer’s non-compliance with federal or

state regulations” is insufficient). To the extent Relator argues that

this request put his employer on “notice,” it is insufficient.4

4 I add that Relator’s employer surely already knew whether negotiating

functions were merged or separate; Relator alleged that he was required by his

employer to take on that dual function. And the employer likewise was surely

In short, the complaint does not make clear what Relator

said, whether it was said to anyone at Novartis and if so to whom,

and whether the conversation notified the employer of any actual

fraud under the FCA. Cf. United States ex rel. Marlar v. BWXT Y-12,

LLC, 525 F.3d 439 (6th Cir. 2008) (reversing district court

dismissal of § 3130(h) retaliation claim where plaintiff alleged that

she “observed purportedly fraudulent activity and confronted her

employer about it,” she told employer that employer “was receiving

illegal large incentive payments under its contract with DOE

because [employer] was ‘underreporting [its employees’] work-

related injuries and illnesses. . . .She therefore connected her

complaint of [employer’s] actions, under-reporting, to a concern

about fraud on the federal government.”).

I conclude that the allegations fail to allege that Relator

notified his employer of conduct that was fraudulent under the

FCA. The only conversation concretely described is one with an ESI

representative, which Relator vaguely alleges must have gotten

back to his supervisors. But even directly advising a supervisor of

a difference in discounts or the failure to separate negotiating

responsibilities, without more, is not a protected report of fraud on

the government. Relator’s failure to plead sufficient facts to

establish these required elements warrants dismissal of this count.

Accordingly, Novartis’s motion to dismiss Count IV is

granted. This dismissal, too, is without prejudice.

(Op. at 35–38)

C. Discussion of Supplemental Allegations in the 1AC

Relator Perri believes that the supplemental allegations of the 1AC have

remedied the deficiencies of the retaliation claim in the original complaint. As

he notes, the anti-retaliation provision defines as protected conduct (a) acts “in

furtherance of” an FCA action, and (b) “other efforts to stop” an FCA violation.

See 31 U.S.C. § 3730(h).

Section 3730(h), in its pre-2010 form, contained only theory (a), and even

that appeared in a form arguably narrower form than the one contained in the

current version. The prior version of the statute listed examples, nonexclusive

already aware of the terms of the Part D and commercial contracts. [fn. in

original]

to be sure, of acts in furtherance of an FCA action: “investigation for, initiation

of, testimony for, or assistance in an action filed or to be filed under this

section . . . .”5 The implication seemed to be that the protected act needed to be

fairly closely tied to the pursuit of a potential FCA claim. See Hutchins, 253

F.3d at 187 (A protected internal complaint must at least place the employer

“on notice of the ‘distinct possibility’ of False Claims Act litigation.”).6

5 Section 3730(h), as enacted in the False Claims Act of 1986, read as

follows:

Any employee who is discharged, demoted, suspended,

threatened, harassed, or in any other manner discriminated against in

the terms and conditions of employment by his or her employer because

of lawful acts done by the employee on behalf of the employee or others

in furtherance of an action under this section, including investigation for,

initiation of, testimony for, or assistance in an action filed or to be filed

under this section, shall be entitled to all relief necessary to make the

employee whole.

6 This standard does (or did) not require an announcement that a qui tam

is imminent or underway, but it does require more than general grumbling

about allegedly unethical practices:

Determining what activities constitute “protected conduct” is a

fact specific inquiry. But the case law indicates that “the protected

conduct element ... does not require the plaintiff to have developed a

winning qui tam action.... It only requires that the plaintiff engage[ ] in

‘acts ... in furtherance of an action under[the False Claims Act].’ ”

Yesudian, 153 F.3d at 739 (quoting 31 U.S.C. § 3730(h)). Under the

appropriate set of facts, these activities can include internal reporting

and investigation of an employer's false or fraudulent claims. Id. at 742

(“[It] would [not] ... be in the interest of law-abiding employers for the

[False Claims Act] to force employees to report their concerns outside the

corporation in order to gain whistleblower protection. Such a

requirement would bypass internal controls and hotlines, damage

corporate efforts at self-policing, and make it difficult for corporations

and boards of directors to discover and correct on their own false claims

made by rogue employees or managers.”); see also Childree v. UAP/GA

CHEM, Inc., 92 F.3d 1140, 1146 (11th Cir. 1996), cert. denied, 519 U.S.

1148, 117 S. Ct. 1080, 137 L.Ed.2d 216 (1997); Hopper, 91 F.3d at 1269

(“[P]laintiff must be investigating matters which are calculated, or

reasonably could lead to a viable [False Claims Act] action.”); Neal, 33

F.3d at 864. “Mere dissatisfaction with one's treatment on the job is not,

of course, enough. Nor is an employee's investigation of nothing more

than his employer's non-compliance with federal or state regulations.”

Yesudian, 153 F.3d at 740 (citing Hopper, 91 F.3d at 1269); see also

Zahodnick, 135 F.3d at 914 (“Simply reporting his concern of a

The current version of the anti-retaliation provision, however, is broader.

Current Section 3730(h) defines protected conduct as including “lawful acts

done by the employee . . . in furtherance of an action under this section.” 7 It

deletes the examples (investigation, initiation, testimony, etc.) that tended to tie

such conduct to an identifiable FCA case. And the current version adds new

language, explicitly expanding the definition of protected conduct to include

“other efforts to stop 1 or more violations of this subchapter.” “The apparent

purpose of the amendment is to untether these newly protected efforts from the

need to show that an FCA action is in the offing. Indeed, we and other circuits

mischarging to the government to his supervisor does not suffice to

establish that Zahodnick was acting ‘in furtherance of’ a qui tam

action.”); United States ex rel. Ramseyer v. Century Healthcare Corp., 90

F.3d 1514, 1523 (10th Cir.1996).

As noted, employees need not actually file a False Claims Act suit

to assert a cause of action under § 3730. Requiring an employee to

actually file a qui tam suit would blunt the incentive to investigate and

report activity that may lead to viable False Claims Act suits. The False

Claims Act was enacted to encourage parties to report fraudulent activity

and was intended to “protect employees while they are collecting

information about a possible fraud, before they have put all the pieces of

the puzzle together.” Yesudian, 153 F.3d at 740 (citing Neal, 33 F.3d at

864).

Hutchins, 253 F.3d at 187–88. The abbreviated citations in the quotation are to

U.S. ex rel. Yesudian v. Howard Univ., 153 F.3d 731 (D.C. Cir. 1998); U.S. ex rel.

Hopper v. Anton, 91 F.3d 1261 (9th Cir. 1996); Neal v. Honeywell Inc., 33 F.3d

860, 864 (7th Cir. 1994), abrogated by Graham Cty. Soil & Water Conservation

Dist. v. U.S. ex rel. Wilson, 545 U.S. 409, 125 S. Ct. 2444 (2005); Zahodnick v.

Int'l Bus. Machines Corp., 135 F.3d 911, 914 (4th Cir. 1997).

7 The current version of Section 3730(h) reads as follows:

(h) Relief from retaliatory actions.--

(1) In general.--Any employee, contractor, or agent shall be entitled

to all relief necessary to make that employee, contractor, or agent

whole, if that employee, contractor, or agent is discharged,

demoted, suspended, threatened, harassed, or in any other

manner discriminated against in the terms and conditions of

employment because of lawful acts done by the employee,

contractor, agent or associated others in furtherance of an action

under this section or other efforts to stop 1 or more violations of

this subchapter.

31 U.S.C. § 3730(h).

have recognized that the amended language broadens the scope of protected

activity.” United States ex rel. Grant v. United Airlines Inc., 912 F.3d 190, 200–

01 (4th Cir. 2018) (citing cases).

In the 1AC, Perri now alleges more clearly that he made a direct “internal

complaint to his supervisor” that implicated not just the rebate disparity but its

illegality. (DE 51, Opp. Brf. at 6) The 1AC describes that internal complaint as

follows:

70. Perri requested an in-person meeting with Birch[8] to

express his concerns. The meeting occurred near the end of the

first, and beginning of the second, fiscal quarter of 2014, and was

uncharacteristically formal. Usually the two met over meals or sat

at the conference table in Birch’s office. This time, however, Birch

remained behind his desk. Perri conveyed his concerns to Birch,

and explained how increasing the disparity between the

commercial and Part D rebate rates would expose the swap,

subjecting Perri and Novartis to government prosecution. Perri

went as far as to say that he “did not want to go to jail.” Birch’s

response was, “f**k the government.”

(1AC ¶ 70) Earlier in the 1AC, Perri defines the “swap” as the purposeful use of

the commercial rebate to bring about what amounted to a disguised kickback

at the expense of the Medicare and Medicaid side of the business. (E.g., 1AC

§§ 27–30, 42, 64–65).

In addition, Perri invokes the second prong of the current version of

section 3730(h). His theory is no longer that his statements to Jeffery at ESI

somehow got back to Novartis and therefore constituted an internal complaint.

Now he says that his statements to Jeffery were “efforts to stop 1 or more

violations” of the FCA:

72. Perri eventually decided to relay his concerns to his

counterpart at ESI, Todd Jeffrey, in hopes that ESI would demand

parity. Perri thought Jeffrey would be sympathetic to his concerns

8 The reference is to Greg Birch, Novartis’s Vice President of Managed

Care, to whom Perri reported. (1AC § 51)

since each were being used by their respective companies to carry

out this scheme.

73. After Perri’s conversation with Jeffrey, ESI did demand

an equal Part D rebate rate.

(1AC ¶¶ 72, 73)

These allegations, I find, are sufficient to set forth a claim of FCA

retaliation. Employing a heightened Rule 9(b) standard of review, I ruled that

the original complaint failed to set forth an FCA claim as such, but that is not a

prerequisite to a retaliation claim. Section 3730(h) is broader than that. It

never required a successful or even viable FCA claim, because it was aimed at

encouraging whistleblowing. See p.5 n.2, supra. And now, in its current

version, the statute encompasses “other efforts” to head off a potential FCA

violation. These allegations will bear the interpretation that Perri intended his

statements to be understood by his audience — sophisticated players in the

pharmaceutical industry — as a warning against violation of the FCA.

The 1AC also contains allegations from which retaliation could be

inferred. It alleges that Perri had received outstanding performance reviews in

the days preceding his dismissal on June 17, 2018. His dismissal occurred

within a reasonably short time (how short is not quite clear) after the alleged

protected activity. Perri alleges on information and belief that word of his

conversation with Jeffery got back to Novartis in June 2018, although his basis

for that belief is unstated. He alleges that his sudden firing took place the day

before a scheduled meeting with ESI on the subject of the Gilenya discount.

That his severance package was accompanied by a demand that he waive any

whistleblower claim is hardly conclusive, but is suggestive, of a retaliatory

mindset. (1AC ¶¶ 75–78)

Perri’s, of course, is not the only possible interpretation. It may be an

issue of fact whether the dismissal was in retaliation for the whistleblowing, or

the other way around. But such comparisons are not within the scope of a

motion to dismiss governed by Rule 8 (as opposed to Rule 9(b)). I am

constrained to credit the allegations of the complaint as true.

ORDER

IT IS THEREFORE, this 16th day of April, 2020

ORDERED that the motion (DE 48) of defendant Novartis to dismiss the

First Amended Complaint is DENIED.

/s/ Kevin McNulty

____________________________________

Kevin McNulty

United States District Judge