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State v. Bristol-Myers Squibb Co.

Court of Appeals of New Mexico

October 24, 2018

STATE OF NEW MEXICO ex rel. HECTOR BALDERAS, ATTORNEY GENERAL, Plaintiff-Appellee,
v.
BRISTOL-MYERS SQUIBB COMPANY, SANOFI-AVENTIS U.S. LLC, SANOFI U.S. SERVICES, INC. f/k/a SANOFI-AVENTIS U.S. INC., SANOFI-SYNTHELABO INC., and DOE DEFENDANTS 1 to 100, Defendants-Appellants.

          APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY Sarah M. Singleton, District Judge Pro Tem

          Office of the Attorney General Consumer & Environmental Protection P. Cholla Khoury, Assistant Attorney General Santa Fe, NM

          Robles, Rael and Anaya, P.C. Marcus J. Rael, Jr. Albuquerque, NM

          Baron & Budd, P.C. Daniel Alberstone Jonas P. Mann Peter KlausnerEncino, CA Russell Budd Dallas, TX Jules Burton LeBlanc IV Baton Rouge, LA for Appellee

          Arnold & Porter Kaye Scholer LLP Kirk Ogrosky Murad Hussain Washington, DC Anand Agneshwar New York, NY Modrall, Sperling, Roehl, Harris & Sisk, P.A. Earl E. DeBrine, Jr. Timothy C. Holm Albuquerque, NM for Appellants

          OPINION

          VANZI, Chief Judge.

         {¶1} In this interlocutory appeal, we consider whether a federal district court's dismissal of qui tam claims for failure to state a claim bars the State from pursuing different claims arising from similar facts, where the State had not intervened in the qui tam action. We conclude that it does not and, therefore, affirm the denial of Defendants' motion to dismiss.

         BACKGROUND

         Qui Tam Actions

         {¶2} In order to situate the facts leading to this appeal, we begin with an overview of qui tam actions generally and the relevant statutes that establish and govern them. "In a 'qui tam action,' a private plaintiff, . . . known as a 'relator,' brings suit on behalf of the government to recover a remedy for a harm done to the government." 36 Am. Jur. 2d Forfeitures and Penalties § 83 (2018) (footnotes omitted). "He or she pursues the government's claim against the defendant and asserts the injury in fact suffered by the government, which confers standing on the relator to bring the action as a representative of the [s]tate and as a partial assignee of the government's claim." Id. (footnotes omitted). A qui tam action arises only by statute, specifically authorizing a private party to sue on behalf of the government. Id. The federal False Claims Act (FCA) and state laws similar to it are typical qui tam statutes. See United Seniors Ass'n v. Philip Morris USA, 500 F.3d 19, 24 (1st Cir. 2007) (stating that the FCA is a "typical and commonly-invoked qui tam action").

         The FCA and the New Mexico Medicaid False Claims Act

         {¶3} "The [FCA] prohibits false or fraudulent claims for payment to the United States, and authorizes civil actions to remedy such fraud to be brought by the Attorney General or by private individuals in the government's name." 32 Am. Jur. 2d False Pretenses § 85 (2018); 31 U.S.C. §§ 3729-3733 (2012). Under the FCA, "[t]he Attorney General diligently must investigate a violation of the false claims statute[, ]" and "[i]f the Attorney General finds that a person has violated or is violating such statute, the Attorney General may bring a civil action against the person." 32 Am. Jur. 2d False Pretenses § 85; 31 U.S.C. § 3730(a). In addition, the FCA permits relators to "file qui tam civil actions on behalf of the United States for the making of a false claim against government funds." 32 Am. Jur. 2d False Pretenses § 85; 31 U.S.C. § 3730(b).

         {¶4} Similarly, the New Mexico Medicaid False Claims Act (MFCA), NMSA 1978, §§ 27-14-1 to -15 (2004), provides for liability where a person presents "a claim for payment under the medicaid program knowing that such claim is false" or otherwise defrauds the state through the state medicaid program. Section 27-14-4. Like the FCA, the MFCA requires the Human Services Department (HSD) to investigate suspected violations and permits HSD to bring a civil action. Section 27-14-7(A). In addition, the MFC A contains a qui tam provision that permits "[a] private civil action [to] be brought by an affected person for a violation of the [MFCA] on behalf of the person bringing suit and for the state." Section 27-14-7(B).

         {¶5} Both the FCA and MFCA require a relator to provide a copy of the complaint and written disclosure of material evidence possessed by the relator to the government so that the government may determine whether there is substantial evidence that a violation has occurred. 31 U.S.C. § 3730(b)(2); § 27-14-7(C). The complaint is sealed for at least sixty days to allow the government to undertake such an investigation. 31 U.S.C. § 3730(b)(2); § 27-14-7(C). Upon completion of the investigation, the government may either "proceed with the action, in which case the action shall be conducted by the [g]overnment[, ]" or decline to take over the action. 31 U.S.C. § 3730(b)(4); § 27-14-7(E). If the government declines to pursue the claims in the relator's complaint, "the person who initiated the action shall have the right to conduct the action." 31 U.S.C. § 3730(c)(3); § 27-14-8(D). Regardless of whether the government intervenes in the action, the relator may receive a portion of any ensuing recovery. 31 U.S.C. § 3730(d); § 27-14-9.

         {¶6} The FCA and MFCA differ in that, under the MFCA, the relator may continue the action only "[i]f the department determined that there is substantial evidence that a violation of the [MFCA] has occurred" and that "[i]f the department determines that there is not substantial evidence that a violation has occurred, the complaint shall be dismissed." Section 27-14-7(C), (E)(2). The First Suit: In re Plavix Marketing, Sales Practice & Products Liability Litigation

         {¶7} The first suit at issue was initiated in March 2011 by relator Elisa Dickson (Relator), who filed a complaint alleging that Bristol-Myers Squibb Company, Sanofi-Aventis U.S., LLC; Sanofi-Aventis U.S., Inc.; and Sanofi-Synthelabo, Inc., (Defendants), manufacturers and marketers of the prescription drug Plavix, promoted Plavix in violation of the FCA and various states' similar fraud statutes, including New Mexico's MFCA. See In re Plavix Mktg., Sales Practice & Prods. Liab. Litig. (No. II) v. Bristol-Myers Squibb Co., ___F.Supp.3d, ___ 2017 WL 2780744, at * 1-4 (D.N.J. 2017).[1] Pursuant to the provisions of the MFCA, Relator served New Mexico with "a copy of the complaint and written disclosure of substantially all material evidence and information [Relator] ...


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