8th Circuit Court of Appeals Greenlights Former Bayer Employee Qui Tam Whistleblower Suit

On October 15, 2013, the United States Court of Appeals for the Eighth Circuit green-lighted a whistleblower lawsuit brought by a former Bayer employee, alleging that the company deceptively marketed its Baycol cholesterol drug. See U.S. ex rel. Laurie Simpson v. Bayer Healthcare, et al., Case No. 12-2979 (8th Circuit, October 15, 2013).  The case was commenced seven (7) years ago by a former Bayer market research manager, Laurie Simpson.  Notably, Bayer withdrew Baycol in 2001 after fifty-two (52) reported deaths and countless other injuries that led to kidney failure.  Ms. Simpson appealed the dismissal of her qui tam whistleblower action brought under the False Claims Act, 31 U.S.C. Sections 3729-3733.  Whistleblower Simpson claimed Bayer fraudulently caused the government to make reimbursements for Baycol prescriptions through federal health insurance programs, including Medicare, Medicaid, and the Department of Defense.  The District Court previously dismissed Simpson’s claims, concluding that she failed to plead fraud with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure.  Interestingly, the Eighth Circuit affirmed the District Courts a dismissal relating to the Medicare/Medicaid claims, but reversed the District Court’s decision with regard to the Department of Defense contract claims, and remanded for further proceedings.

In early 1998, Bayer began marketing Baycol to compete with other cholesterol-lowering statin drugs.  Certain studies concluded Baycol was less effective at lowering cholesterol than competing drugs when Baycol was prescribed at the dosage initially approved by the FDA.  Bayer then sought and obtained approval from the FDA to sell Baycol at higher dosage levels.  Doctors began to report, however, that patients who were prescribed Baycol developed rhabdomyolysis, a rare but serious muscle disorder which destroys muscle cells released into the bloodstream.  In July 2001, the FDA asked Bayer to address these concerns about Baycol.  Bayer voluntarily withdrew Baycol from the market in August 2001.

In October 2006, relying in large part upon information through which she was privy to during her time at Bayer, Simpson filed a qui tam whistleblower action against Bayer as a relator on behalf of the government under the False Claims Act.  The whistleblower alleged that Bayer knew about, but downplayed, the risks of developing rhabdomyolysis through the use of Baycol.  Whistleblower Simpson also alleged Bayer misrepresented Baycol’s efficacy when compared to competing cholesterol-lowering drugs sold by other manufacturers, such as Lipitor and that Bayer paid illegal kickbacks to physicians to increase Bayer’s share of the market for statin drugs.

In upholding the DOD claims, but not the Medicare/Medicaid claims, the Eighth Circuit emphasized the direct contractual relationship between Bayer and the DOD, with respect to the government’s purchase of Baycol.  In addition, the Eighth Circuit focused on Bayer’s intentional downplaying of concerns about Baycol and rhabdomyolysis, and the fact that Bayer dismissed these concerns when raised by the DOD.  The fact that the DOD subsequently contracted for the purchase of Baycol was critical to the Eighth Circuit’s decision to uphold those claims as opposed to the alleged Medicare and Medicaid fraud.

In its motion to dismiss, Bayer contended that Simpson’s allegations were deficient because she did not include representative examples of false claims submitted for payment to the government.  Bayer argued the particularity requirements of Rule 9(b) required a relator to allege representative false claims in order to survive a motion to dismiss.  The District Court agreed with Bayer’s arguments and granted the Motion to Dismiss the Appeal, which followed.

While this decision may appear to be a positive development in support of whistleblower claims, in reality it is a mixed bag.  The reality is that by affirming the district court’s dismissal of the Medicare and Medicaid claims, the Eight Circuit essentially eliminated a large part of the case whereas the government presumably expended far more money on those claims as compared to DOD expenditures.   In addition, the basis upon which the Eight Circuit dismissed that part of the case, Rule 9(b), is troubling in the sense that it is the most recent case in which courts have held relators in pharmaceutical qui tam cases under the False Claims Act to a heightened pleading standard when bring such cases.  The reality is that the specificity now required to satisfy Rule 9(b) in many courts is difficult, but not impossible, to overcome.

What is the take away from the Simpson qui tam False Claims Act case?  Hire an experienced whistleblower attorney who understands the ever-evolving case law requiring detailing pleading requirements in order to maximize the likelihood of success in whistleblower cases.

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented numerous clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete the online form here.