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`Case 3:20-cv-00286-W-AGS Document 62 Filed 11/29/22 PageID.1160 Page 1 of 10
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`UNITED STATES DISTRICT COURT
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`SOUTHERN DISTRICT OF CALIFORNIA
`
`
`
` Case No.: 3:20-cv-286-W (AGS)
`
`ORDER GRANTING IN PART AND
`DENYING IN PART DEFENDANTS’
`MOTION TO DISMISS SECOND
`AMENDED COMPLAINT [DOC. 57]
`
`UNITED STATES OF AMERICA, et
`al.; ex rel. EVEREST PRINCIPALS,
`LLC,
`
`Plaintiffs and Relator,
`
`v.
`
`ABBOTT LABORATORIES, INC.
`a/k/a ABBOTT LABORATORIES,
`ABBOTT CARDIOVASCULAR
`SYSTEMS INC., and ABBOTT
`VASCULAR INC.,
`
`Defendants.
`
`
`
`Pending before the Court is Defendants Abbott Laboratories, Inc. a/k/a Abbott
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`Laboratories, Abbott Cardiovascular Systems Inc., and Abbott Vascular Inc.’s
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`(collectively, “Abbott” or “Defendants”) Motion to Dismiss Plaintiff and Relator Everest
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`Principals, LLC’s1 (“Plaintiff” or “Relator”) Second Amended Complaint for failure to
`
`
`
`1 Plaintiff brings this action on behalf of the United States of America, the District of Columbia, and the
`following 27 states: California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois,
`Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New
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`1
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`3:20-cv-286-W (AGS)
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`Case 3:20-cv-00286-W-AGS Document 62 Filed 11/29/22 PageID.1161 Page 2 of 10
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`state a claim under Federal Rule of Civil Procedure 12(b)(6). (Mot. [Doc. 59].) Relator
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`opposes the Motion. (Opp. [Doc. 60].) The Court decides the matter on the papers
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`submitted and without oral argument. See Civ. L.R. 7.1(d)(1).
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`For the reasons stated below, the Court GRANTS IN PART AND DENIES IN
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`PART Defendants’ Motion to Dismiss [Doc. 59].
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`
`
`I.
`
`BACKGROUND
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`Plaintiff and Relator Everest Principals, LLC is a “single member Delaware
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`limited liability corporation whose sole member was employed by Abbott from August
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`2015 to April 2017 as a Therapy Development Specialist in its Structural Heart
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`Division.” Defendant Abbott Laboratories is a publicly traded, global healthcare
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`company that owns the patent for MitraClip (or “MC Device”)—a medical device used
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`on certain cardiac patients. Defendant Abbott Laboratories, Inc. is allegedly the parent
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`company of Defendants Abbott Cardiovascular Systems Inc., and Abbott Vascular Inc.
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`Relator asserts claims against Abbott pursuant to the qui tam provisions of the federal
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`False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., the Anti-Kickback Statute
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`(“AKS”), 42 U.S.C. § 1320a-7b, and applicable analogue state laws. Specifically,
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`Relator alleges that Abbott violated the AKS by hosting events for doctors that amounted
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`to illegal remuneration by inducing government-paid MitraClip procedures.
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`This Court previously denied Abbott’s motion to dismiss Relator’s Federal False
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`Claims Act Claims (Counts 1-3) as alleged in the First Amended Complaint (“FAC”) and
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`granted Abbott’s motion to dismiss Relator’s State False Claims Act claims (Counts 4-
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`31) with leave to amend. As to the state FCA claims, the Court instructed that Relator
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`needed to plead with particularity how any false claims were submitted to each state.
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`Relator filed the Second Amended Complaint (“SAC”) on September 22, 2022, adding
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`
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`Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Virginia,
`and Washington. The federal government and these 27 states declined to intervene in this case. (Mot. at
`2; Doc. 8.)
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`3:20-cv-286-W (AGS)
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`

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`Case 3:20-cv-00286-W-AGS Document 62 Filed 11/29/22 PageID.1162 Page 3 of 10
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`new allegations to the State FCA claims (Claims 4 through XXIX, hereafter, “State FCA
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`Claims”). [Doc. 57.] Abbott now again attempts to challenge the legal sufficiency of the
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`State FCA Claims asserted in the SAC pursuant to Fed.R.Civ.P. 9(b).
`
`
`
`II. LEGAL STANDARD
`
`The Court must dismiss a cause of action for failure to state a claim upon which
`
`relief can be granted. FED. R. CIV. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6)
`
`tests the legal sufficiency of the complaint. Parks Sch. of Bus., Inc. v. Symington, 51 F.3d
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`1480, 1484 (9th Cir. 1995). A complaint may be dismissed as a matter of law either for
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`lack of a cognizable legal theory or for insufficient facts under a cognizable theory.
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`Balistreri v. Pacifica Police Dep’t., 901 F.2d 696, 699 (9th Cir. 1988). In ruling on the
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`motion, a court must “accept all material allegations of fact as true and construe the
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`complaint in a light most favorable to the non-moving party.” Vasquez v. L.A. Cnty., 487
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`F.3d 1246, 1249 (9th Cir. 2007).
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`Complaints must contain “a short and plain statement of the claim showing that the
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`pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). The Supreme Court has interpreted
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`this rule to mean that “[f]actual allegations must be enough to rise above the speculative
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`level.” Bell Atl. Corp. v. Twombly, 550 U.S. 554, 555 (2007). The allegations in the
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`complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to
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`relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
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`Twombly, 550 U.S. at 570).
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`Well-pleaded allegations in the complaint are assumed true, but a court is not
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`required to accept legal conclusions couched as facts, unwarranted deductions, or
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`unreasonable inferences. Papasan v. Allain, 478 U.S. 265, 286 (1986); Sprewell v.
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`Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Leave to amend should be
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`freely granted when justice so requires. See FED. R. CIV. P. 15(a). However, denial of
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`leave to amend is appropriate when such leave would be futile. See Cahill v. Liberty
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`Mut. Ins. Co., 80 F.3d 336, 339 (9th Cir. 1996); Plumeau v. Sch. Dist. No. 40 Cnty. of
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`3
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`Case 3:20-cv-00286-W-AGS Document 62 Filed 11/29/22 PageID.1163 Page 4 of 10
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`Yamhill, 130 F.3d 432, 439 (9th Cir. 1997).
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`State FCA claims must satisfy the heightened pleading requirements of Rule 9(b).
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`Rule 9(b) requires that in all averments of fraud or mistake, the circumstances
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`constituting fraud or mistake shall be stated with particularity. United States ex rel. Solis
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`v. Millennium Pharm., Inc., 445 F.Supp.3d 786, 794–95 (E.D. Cal. 2020) (citation and
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`quotations omitted). Relators must allege the “who, what, when, where, and how of the
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`misconduct charged.” Id. (citation and quotations omitted).
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`
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`III. DISCUSSION
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`A.
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`State Law FCA Claims
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`In this Court’s prior order, the Court dismissed Relator’s State FCA Claims
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`because “Relator ha[d] not alleged with particularity how any false claims were
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`submitted to each state identified in the FAC.” August 18, 2022 Order [Doc. 56]. In the
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`SAC, Relator adds new allegations, which it avers contain the necessary particularity with
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`respect to each state to meet the requirements of Rule 9(b). See SAC ¶¶ 145-47, 152,
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`154-55, 163, 165. Abbott argues that Relator’s new allegations still fail to provide
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`particularized facts as to the claims submitted to each state.
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`1. California
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`As to the California FCA claim, Relator adds the following in the SAC:
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`• Relator’s manager, Michael Meadors, assigned him/her to California
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`implanting physician Dr. S.K. for practice building support services. Mr.
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`Meadors told Relator that Dr. S.K. had a long-standing, important
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`relationship with Abbott, and thus, it was imperative to “keep him happy”.
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`Relator quickly learned that Dr. S.K was the top implanting MC implanting
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`physician in the world in terms of volume, and continually driving referrals
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`to Dr. S.K. was one way that Abbott maintained this partnership relationship
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`with Dr. S.K and kept him happy. From 2015 to 2021, Abbott’s payments to
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`Dr. S.K. exceeded one million dollars ($1,404,280.64), and from 2013-2020
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`Case 3:20-cv-00286-W-AGS Document 62 Filed 11/29/22 PageID.1164 Page 5 of 10
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`the State of California (MediCal) reimbursed Dr. S.K. $23,412.22 for the
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`MC TMVR implanting procedure for MediCal covered cardiac patient
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`beneficiaries. (SAC ¶ 163(a));
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`• On February 28, 2017, Abbott hosted a MitraClip marketing reception at El
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`Camino Hospital for MC implanting physician Dr. CR. The reception was in
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`the guise of a celebration of the 100th MitraClip procedure, and this
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`marketing event was typical of what Abbott management instructed its
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`national sales representatives to organize and host as a “Milestone
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`Celebration” in order to showcase the loyal implanting physicians and their
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`hospitals/medical centers. The physician being celebrated/marketed here was
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`paid over $250,000 by Abbott from 2015 to 2021, and was reimbursed by
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`the State of California (MediCal) over $12,000.00 for performing the MC
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`TMVR procedure on state healthcare program funded cardiac patients from
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`2013 to 2020. (SAC ¶ 163(b)).
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`Abbott argues that these additions are still insufficient to meet Rule 9(b)’s
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`particularity requirement. The Court disagrees. Taken together with all the allegations
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`already included in the FAC—specifically the allegations stating a claim under the
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`federal FCA and the allegations as to California’s Medicaid program—Relator has
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`adequately alleged a state FCA claim under California law at this juncture.
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`2. Florida
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`As to the Florida FCA claim, Relator adds the following in the SAC:
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`• Dr. J.R was a key Florida physician targeted by Abbott management for
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`patient-practice building. One example of Abbott’s approach to showing Dr.
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`J.R. the quid pro quo for his commitment to the MC device was manager
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`Michael Meador’s offering Dr. J.R. the opportunity to speak at Abbott’s
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`Annual TMVR Summit in 2017. In addition, from 2015-2021, Abbott made
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`payments to Dr. J.R. that exceeded $270,000.00, and the State of Florida
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`Medicaid program reimbursed Dr. J.R. nearly $5,000.00 from 2013 to 2020
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`Case 3:20-cv-00286-W-AGS Document 62 Filed 11/29/22 PageID.1165 Page 6 of 10
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`for MC TMVR procedure performed on state-funded cardiac patient
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`beneficiaries. (SAC ¶ 163(c));
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`• Another example of Abbott’s illegal marketing practices in Florida involved
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`assisting Dr. R.Q. for patient-practice building. The sales representatives
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`assigned to Dr. R.Q., Michelle Butler and Scott Reynolds, were specifically
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`directed by their manager Frank Sobczak to target Internal Medicine
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`physicians for referrals to MitraClip targeted implanters because many
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`internists and family practice physicians in Florida referred directly to
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`interventional cardiologists and performed the screening procedures that
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`clinical cardiologists do in other states. From 2015 to 2021, Dr. R.Q.
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`received over $300,000 in payments from Abbott, and from 2013 to 2021
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`was reimbursed by the State of Florida Medicaid program nearly $14,000.00
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`for performing the MC TMVR procedure on state government-funded
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`cardiac patient beneficiaries. (SAC ¶ 163(d)).
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`These allegations, along with the allegations already included in the FAC,
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`sufficiently allege that Abbott defrauded the Florida Medicaid program. At this stage,
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`these allegations are sufficient to satisfy the Rule 9(b) pleading standard.
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`3. Georgia
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`As to the Georgia FCA claim, Relator added the following in the SAC:
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`• Abbott hosted a National Sales Meeting in Denver and paid Georgia
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`implanting physician Dr. V.R. to speak to Abbott’s national sales force. The
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`theme of the conference was Abbott’s marketing strategies about owning the
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`customer, “OWN IT: Lead the Revolution.” Abbott’s management and sales
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`team from all over the country treated Dr. V.R. to a full display of Abbott’s
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`culture of engaging with the physician customers, and making them partners
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`in growing their business. From 2015- 2021, Dr. V.R. received monetary
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`payments from Abbott exceeding $270,000.00 and from 2013 to 2020, he
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`was reimbursed by the State of Georgia over $4,000.00 for performing the
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`3:20-cv-286-W (AGS)
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`MC TMVR procedure on cardiac patients covered by the state healthcare
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`program. (SAC ¶ 163(h)).
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`Taking these allegations as true, this speaking event and Abbott’s payments to Dr.
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`V.R. sufficiently state a claim for a violation of Georgia’s FCA. It is plausible that
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`Abbott paid Dr. V.R. to help grow his practice area, which would count as renumeration.
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`See United States v. Chang, 2017 WL10544289, at *7 (C.D. Cal. July 25, 2017).
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`4. New York
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`As to the New York FCA claim, Relator added the following in the FAC:
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`• Abbott’s sales representative, Linda Morgan, who marketed to and for
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`physicians in the Northeast, Connecticut and New York in particular, was
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`selected by management to present at Abbott’s April 2016 National Sales
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`meeting on the topic “Implanter Driven Programs.” The meeting was
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`attended by the National Sales Director, Abbott managers representing all
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`the states in the U.S., the U.S. Marketing Management team, as well as all of
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`the Therapy Development Specialists. In her presentation, Ms. Morgan
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`advised the attendees to focus their initial outreach for referrals in local
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`medical centers “with ‘in-reach.’” She also identified three medical centers
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`where she focused her referral outreach efforts and noted her success at
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`obtaining referrals from each location over the past three months, including
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`Montefiore Medical Center with 3 referrals, NorthShore University Medical
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`Center with 5 referrals, and NYU with 14 referrals. In addition, Ms. Morgan
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`trained the new hires, and with great specificity, instructed them about how
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`she successfully executed referral events for targeted physicians. For an
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`example of a best practice activity, to grow targeted implanting physician
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`Dr. G.T.’s patient base, Ms. Morgan explained how she coordinated with
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`marketing directors at various medical facilities to plan an “Over 55
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`Community Event” where Dr. G.T. could meet prospective patients and
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`referring physicians. Ms. Morgan also explained how she would schedule
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`3:20-cv-286-W (AGS)
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`dates for Dr. G.T. to attend Grand Rounds at neighboring hospitals for
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`potential patient referrals. From 2015 to 2021, Abbott made payments to Dr.
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`G.T. exceeding $200,000.00, and from 2013 to 2020 the State of New York
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`Medicaid program reimbursed Dr. G. T. nearly $5,000.00 for performing the
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`MC TMVR procedure on state government-funded cardiac patient
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`beneficiaries. (SAC ¶ 163(e));
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`• Abbott also provided free marketing and patient practice building for New
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`York implanting physician Dr. S.K. in the form of a free reception and
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`speaker program on April 11, 2016 and the opportunity to meet referring
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`physicians at the trendy Barcelona Wine Bar in Stamford, CT. From 2015-
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`2021, Abbott made payments to Dr. S.K. that exceeded $186,000.00, and
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`from 2013 to 2020, the State of New York Medicaid program reimbursed
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`Dr. S.K. nearly $12,000.00 for the MC TMVR procedure performed on
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`cardiac patients covered by New York state government healthcare
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`programs. (SAC ¶ 163(f));
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`• Abbott provided free marketing for its targeted New York physicians with a
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`cocktail reception and dinner program on April 12, 2016 at the Amali
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`Restaurant for Dr. N.P and Dr. C.K. with a program entitled, “New
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`Treatment Frontiers For Mitral Valve Disease.” A ruse Abbott used to assist
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`implanting physicians grow their patients through referrals was a template,
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`generic letter directed to referral physicians that Abbott created for Dr. C.K.
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`with Dr. C.K.’s hospital logo making it appear as if it were the hospital’s
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`stationery and letter from the physician, not an Abbott template letter to
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`potential referring physicians. Abbott paid Dr. C.K. over $52,000.00 from
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`2015-2021 and the New York State Medicaid program reimbursed Dr. C.K.
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`over $7,000.00 from 2013 to 2020 for performing the MC TMVR procedure
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`on New York state government-healthcare funded cardiac patients. This
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`outright marketing and public relations support and assistance to the
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`3:20-cv-286-W (AGS)
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`
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`physicians and hospital’s cardiac program by an Abbott representative is yet
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`another way Abbott provided valuable services and resources to their
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`MitraClip physician partners in growing and building their business and
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`practices all with the understanding and expectation they would be treating
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`patients with the MitraClip. (SAC ¶ 163(g)).
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`Taken as a whole, Relator alleges facts that, if true, would establish that Abbott
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`engaged in fraudulent conduct in New York that led to the defrauding of New York’s
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`Medicaid program. These allegations satisfy the Rule 9(b) pleading standard.
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`5. Other State FCA Claims
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` As to the other 22 state FCA claims included in the SAC, the Court agrees with
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`Abbott that the additions are insufficient to satisfy Rule 9(b)’s particularity requirement.
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`For all states other than California, Florida, Georgia, and New York, the SAC contains
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`only generalized and blanket allegations that do not specify the “who, what, when, where,
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`and how of the misconduct charged.” Millennium Pharm., Inc., 445 F.Supp.3d at 794–
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`95. Given Relator’s failure to allege specific facts about conduct occurring in these
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`states, despite being given the opportunity to do so in the Court’s prior order, the State
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`FCA Claims as to all states other than California, Florida, Georgia, and New York are
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`DISMISSED with prejudice.
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`/
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`/
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`/
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`/
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`//
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`IV. CONCLUSION AND ORDER
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`For the foregoing reasons, the Court GRANTS IN PART AND DENIES IN
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`PART Defendants’ Motion to Dismiss [Doc. 59]. Specifically, the Court DENIES
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`Defendants’ Motion to Dismiss as to the California FCA claim (Count 4), the Florida
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`FCA claim (Count 8), the Georgia False Medicaid Claims Act (Count 9), and the New
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`9
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`3:20-cv-286-W (AGS)
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`Case 3:20-cv-00286-W-AGS Document 62 Filed 11/29/22 PageID.1169 Page 10 of 10
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`York FCA claim (Count 21) AND GRANTS Defendants’ Motion to Dismiss as to the
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`remaining State FCA Claims WITHOUT LEAVE TO AMEND.
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`IT IS SO ORDERED.
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`Dated: November 29, 2022
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`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`10
`
`3:20-cv-286-W (AGS)
`
`