An opinion was issued on Tuesday in the Ninth Circuit by Judges S.R. Thomas, McKeown, and Clifton. The opinion related to a case filed by relator United Pharmacy Partners, LLC (UPPI) and the United States of America against Cardinal Health, Inc., Logmet Solutions LLC, Caring Hands Health Equipment & Supplies LLC, Obie B. Bacon, Demaurice Scott, and other unnamed entities.
The appeal came from the Eastern District of Washington, where the district court granted the defendant’s motion to dismiss UPPI’s qui tam complaint that alleged the defendants had violated the False Claims Act. The district court ruled that the plaintiffs had failed to state a claim in their complaint.
UPPI alleged that the defendants orchestrated a “rent-a-vet” scheme, specifically stating that they “misled the government into awarding contracts to the service-disabled veteran owned small businesses (SDVOSBs) for the supply and distribution of radiopharmaceutical products to Veteran Affairs hospitals.” Rather than providing the funding and responsibilities to the small businesses, the defendants allegedly performed the work and kept nearly all of the revenue, minus a small cut given to the SDVOSBs for nominal invoicing.
In order to find liability with a False Claims Act claim, a plaintiff must establish that a false statement or fraudulent course of conduct was made with scienter that was material and led the government to pay money, court documents state. The Eastern District of Washington concluded that the plaintiff’s first amended complaint failed to “plead falsity and materiality with sufficient particularity and plausibility to survive dismissal.” The Ninth Circuit disagreed with this in their opinion.
The Ninth Circuit asserts that the plaintiff’s first amended complaint, or FAC, presents two theories under which the defendants may be liable for their false statements, both of which viably plead falsity. They further ruled that the false certification claim was pleaded with sufficient particularity, and that it was enough for the plaintiffs to “allege particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.”
The opinion concludes that the plaintiff’s FAC adequately pleads both falsity and materiality, thus surviving the earlier dismissal.
Plaintiff UPPI is represented by Goldstein & Russell, while the defendants are represented by Crowell & Moring, Evans, Craven & Lackie, the Law Office of John H. Guin, and the Kanthaka Group.
