United States v. Sumitomo Pharma America, Inc.

U.S. District Court, District of Minnesota September 11, 2024

Trial Court Opinion

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

United States of America, ex rel. Scott File No. 17-cv-1719 (ECT/LIB)
Louderback,

Plaintiff,

v. OPINION AND ORDER

Sumitomo Pharma America, Inc., formerly
known as Sunovion Pharmaceuticals, Inc.,

Defendant.
________________________________________________________________________
Jeffrey J. Goulder and Michael Vincent, Stinson LLP, Phoenix, AZ, and Sharon Robin
Markowitz, Stinson LLP, Minneapolis, MN, for Relator Scott Louderback.
John P. Bueker and Sandra H. Masselink, Ropes & Gray LLP, Boston, MA, and Joseph
T. Dixon, III, and Devin T. Driscoll, Fredrikson & Byron, P.A., Minneapolis, MN, for
Defendant Sumitomo Pharma America, Inc., formerly known as Sunovion
Pharmaceuticals, Inc.
________________________________________________________________________
Defendant Sunovion Pharmaceuticals1 manufactured a drug called Brovana. In
this qui tam lawsuit brought under the federal False Claims Act, Relator Scott
Louderback claims that Sunovion caused pharmacies to submit fraudulent claims for
Brovana to Medicare.2 Louderback’s fraud theory proceeds in three steps: (1) he alleges

1 In January 2024, the parties stipulated to amend the case caption because
Defendant Sunovion Pharmaceuticals, Inc., had changed its name to Sumitomo Pharma
America, Inc. ECF No. 135. Notwithstanding the name change and caption amendment,
Defendant in its briefing continued to refer to itself as “Sunovion.” See Mem. in Supp.
[ECF No. 144] at 5 (ECF pagination). That convention will be followed here.
2 It seems plausible that pharmacies submitted Brovana claims to federal health-care
programs in addition to Medicare. The operative Second Amended Complaint mentions
only Medicare. See generally 2d Am. Compl. [ECF No. 128].
that Sunovion paid rebates to pharmacies in exchange for the pharmacies’ agreements to
arrange for Medicare patients to receive Brovana prescriptions in situations where the
patients would have received a different drug or therapy; (2) this rebates-for-prescriptions

arrangement violated the federal Anti-Kickback Statute; and (3) by law, a claim that
includes items or services resulting from a violation of the Anti-Kickback Statute in turn
violates the False Claims Act.
Pursuant to Federal Rule of Civil Procedure 12(b)(6), Sunovion seeks dismissal of
Louderback’s Second Amended Complaint. This is the case’s second round of Rule

12(b)(6) motions. In the first round, Sunovion’s Rule 12(b)(6) motion was granted, and
the prior version of Louderback’s complaint was dismissed, because the pleading lacked
allegations plausibly showing that false claims resulted from Sunovion’s assertedly
illegal kickbacks. United States ex rel. Louderback v. Sunovion Pharms., Inc.,

703 F. Supp. 3d 961

, 977–980 (D. Minn. 2023); see United States ex rel. Cairns v. D.S. 

Med. LLC,

42 F.4th 828

, 834–37 (8th Cir. 2022) (interpreting “resulting from” in 18
U.S.C. § 1320a-7b(g) to require but-for causal relationship between kickback and claim).
Louderback was given the opportunity to file an amended pleading, and Louderback filed
the Second Amended Complaint.
Sunovion’s motion will be granted. The Second Amended Complaint alleges facts

showing that pharmacies dispensed Brovana and received rebates. It does not take the
necessary next step. That is, it does not plausibly allege that the rebates-for-prescriptions
agreements caused pharmacies to dispense Brovana in any situation where, absent the
agreements, a pharmacy or pharmacies would have dispensed a different drug or therapy.
I

The Second Amended Complaint doesn’t change Louderback’s core factual
allegations. To recap, Sunovion manufactures Brovana, a drug prescribed to treat chronic
obstructive pulmonary disease. 2d Am. Compl. ¶¶ 36–37. Considering just pharmacies’
acquisition cost and Medicare’s reimbursement rate, pharmacies would lose money on
Medicare-reimbursed Brovana prescriptions. Id. ¶¶ 57–60. Sunovion addressed this
problem by paying rebates to pharmacies that signed a “Sunovion Part B Agreement.”
Id. ¶ 68.3

Two provisions of the Part B Agreement remain essential to Louderback’s claims:
what Louderback terms (1) the “dispense-as-written” provision and (2) the
“counterdetailing” provision. According to Louderback, these two provisions require
pharmacies to dispense Brovana as prescribed by physicians and prohibit pharmacies
from educating prescribing physicians regarding less expensive equivalent or generic

alternatives to Brovana. Id. ¶¶ 76, 79. Based on these Part B Agreement provisions,

3 The First Amended Complaint attached the Part B Agreement as an exhibit. 1st
Am. Compl. [ECF No. 92] ¶ 6 and at 38–49. Though Louderback expressly intended to
attach it as an exhibit to the Second Amended Complaint, 2d Am. Compl. ¶ 6, he did not,
see generally id. The Part B Agreement will nonetheless be considered in adjudicating
Sunovion’s Rule 12(b)(6) motion. As a practical matter, Louderback clearly intended to
attach the Part B Agreement to the Second Amended Complaint, and it seems safe to
presume that its omission was just an oversight. As a legal matter, although it is true that
an amended complaint supersedes all previous versions, exhibits attached to previous
complaints may be considered if they are necessarily embraced by the operative amended
complaint. See Vanderford v. Schnell, No. 22-cv-971 (DSD/DJF),

2023 WL 4489656

, at 
*1 (D. Minn. July 12, 2023), R. & R. adopted,

2023 WL 4936159

 (D. Minn. Aug. 2, 
2023).  Here, the Part B Agreement is embraced by the Second Amended Complaint 
because the Part B Agreement remains central to Louderback’s claims, it is cited several 
times, and its authenticity has not been questioned.  See Zean v. Fairview Health Servs.,

858 F.3d 520, 526

(8th Cir. 2017).
Louderback alleges that Sunovion provides rebates “to pharmacies in exchange for their
agreement to arrange for the prescription (by physicians), dispensing (by the pharmacists)
and purchase (by patients and pharmacies) of Brovana in circumstances when, but for the

[Part B] Agreement, they would prescribe, dispense, or purchase drugs manufactured by
Brovana’s competitors.” Id. ¶ 10.4
Louderback’s Second Amended Complaint adds several paragraphs directed
toward causation. See id. ¶¶ 122–29. Louderback alleges “[Sunovion] sells Brovana at a
wholesale price that exceeds the Medicare Maximum Price.” Id. ¶ 124(b). “Accordingly,

pharmacies cannot profitably offer Brovana to Medicare Part B beneficiaries unless they
receive a rebate or discount on Brovana dispensed to those patients.” Id. ¶ 124(c). The
owner of Deines Pharmacy, a pharmacy that signed a Part B Agreement, told Louderback
that Deines Pharmacy could not afford to sell Brovana without the Part B Agreement’s
rebate. Id. ¶ 125. The Second Amended Complaint includes eleven example instances

where Deines Pharmacy “sought—and received—reimbursement from Medicare Part B
while the [Part B] Agreement was in effect.” Id. ¶¶ 110, 125(b).5 Louderback alleges

4 In the first Rule 12(b)(6) round, a theory based on a third “promotional services”
provision was dismissed with prejudice. Louderback, 703 F. Supp. 3d at 980 n.7.
Louderback did not remove allegations regarding this theory from the Second Amended
Complaint. See, e.g., 2d Am. Compl. ¶¶ 3, 7, 71–72, 89–90, 92–93, 124, 146, 154, 160,
and 177. The Second Amended Complaint’s restatement of these promotional-services
allegations notwithstanding the theory’s with-prejudice dismissal prompted Sunovion to
file a motion to strike the allegations under Rule 12(f). ECF No. 147. The decision to
grant Sunovion’s Rule 12(b)(6) motion makes it unnecessary to decide Sunovion’s Rule
12(f) motion. The Rule 12(f) motion will be denied as moot.
5 With the Second Amended Complaint, Louderback filed a declaration of Deines
Pharmacy’s owner, Mitchell Deines. ECF No. 129. All the statements in this declaration
that “pharmacies failed to substitute Brovana’s competitors in situations where, absent
the [Part B] Agreement, they would have done so.” Id. ¶ 126. And “pharmacy sales
representatives did not promote Brovana’s competitors to physicians in situations where,

absent the [Part B] Agreement, they would have done so.” Id. ¶ 127. Louderback also
alleges that these two provisions “protected [Sunovion] from price competition, which
resulted in additional sales of Brovana.” Id. ¶ 128.
II
A

In reviewing a motion to dismiss for failure to state a claim under Rule 12(b)(6), a
court must accept a complaint’s well-pleaded factual allegations as true and draw all
reasonable inferences in the plaintiff’s favor. Gorog v. Best Buy Co.,

760 F.3d 787, 792

 
(8th Cir. 2014).  Although the factual allegations need not be detailed, they must be 
sufficient to “raise a right to relief above the speculative level.”  Bell Atl. Corp. v. 

Twombly,

550 U.S. 544, 555

 (2007) (citation omitted).  The complaint must “state a 
claim to relief that is plausible on its face.”

Id. at 570

.  “A claim has facial plausibility 
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).    “[T]he  tenet  that  a  court  must  accept  as  true  all  of  the 

appear in the Second Amended Complaint.  For this reason, it is not necessary to consider 
the declaration, and the declaration does not violate the rule that a party “cannot . . .  
defend a complaint by relying on a brief or affidavit that describes additional or different 
allegations that are not in the complaint.”  Fuller v. Honeywell Int’l, Inc., No. 24-cv-279 
(ECT/DJF),

2024 WL 3569496

, at *2 n.4 (D. Minn. July 29, 2024) (citing Al-Saadoon v. 
Barr,

973 F.3d 794, 805

 (8th Cir. 2020), and In re Agape,

773 F. Supp. 2d 298, 316

 
(E.D.N.Y. 2011)).                                                         
allegations contained in a complaint is inapplicable to legal conclusions.”

Id.

  These 
rules  are  derived  from  the  Supreme  Court’s  interpretation  of  Rule  8(a).    Twombly,

550 U.S. at 555

; Iqbal,

556 U.S. at 680, 684

.                             

    In addition to meeting Rule 8(a)’s plausibility requirement, a False Claims Act 
relator  must  comply  with  Rule  9(b)’s  particularity-in-pleading  requirement.    United 
States ex rel. Joshi v. St. Luke’s Hosp., Inc.,

441 F.3d 552, 556

 (8th Cir. 2006) (“Because 
the FCA is an anti-fraud statute, complaints alleging violations of the FCA must comply 
with Rule 9(b).”).  “To satisfy the particularity requirement of Rule 9(b), the complaint 

must  plead  such  facts  as  the  time,  place,  and  content  of  the  defendant’s  false 
representations, as well as the details of the defendant’s fraudulent acts, including when 
the acts occurred, who engaged in them, and what was obtained as a result.”

Id.

  “The 
claim must identify who, what, where, when, and how.”  United States ex rel. Costner v. 
United States,

317 F.3d 883, 888

 (8th Cir. 2003).  “A relator can meet the Rule 9(b) 

requirements by pleading (1) ‘representative examples of the false claims,’ or (2) the 
‘particular details of a scheme to submit false claims paired with reliable indicia that lead 
to a strong inference that claims were actually submitted.’”  United States ex rel. Strubbe 
v. Crawford Cnty. Mem’l Hosp.,

915 F.3d 1158, 1163

 (8th Cir. 2019) (quoting United 
States ex rel. Thayer v. Planned Parenthood of the Heartland,

765 F.3d 914, 918

 (8th 

Cir. 2014)); see also United States ex rel. Benaissa v. Trinity Health,

963 F.3d 733

, 739–
40 (8th Cir. 2020).                                                       
                               B                                         
    The  False  Claims  Act  imposes  civil  liability  on  any  person  who  “knowingly 
presents, or causes to be presented, a false or fraudulent claim [to the Government] for 

payment or approval.”

31 U.S.C. § 3729

(a)(1)(A).  A claim under the False Claims Act 
generally has three elements: (1) the defendant presented or caused to be presented a 
claim for payment to the government; (2) the claim was false or fraudulent; and (3) the 
defendant knew the claim was false or fraudulent.  Olson v. Fairview Health Servs. of 
Minn.,

831 F.3d 1063, 1070

 (8th Cir. 2016).                               

    In this case, the alleged falsity arises from claimed violations of the Anti-Kickback 
Statute, 42 U.S.C. § 1320a-7b(b).  2d Am. Compl. ¶ 27.  Specifically, Louderback claims 
that Sunovion violated § 1320a-7b(b)(2).6  As relevant here, § 1320b-7b(b)(2) imposes 
criminal penalties on a person who:                                       
         knowingly  and  willfully  offers  or  pays  any  remuneration  
         (including  any  kickback,  bribe,  or  rebate)  directly  or   
         indirectly, overtly or covertly, in cash or in kind to any person 
         to induce such person . . . to purchase, lease, order, or arrange 
         for or recommend purchasing, leasing, or ordering any good,     
         facility, service, or item for which payment may be made in     
         whole or in part under a Federal health care program[.]         


6    As  with  the  original  Complaint,  the  Second  Amended  Complaint  cites 
§ 1320a-7b(b)(1) as the source of its Anti-Kickback Statute claim.  See 2d Am. Compl. 
¶¶ 27, 28, 92(b).  The Second Amended Complaint’s citations to this subsection are an 
oversight.  A § 1320a-7b(b)(1) violation occurs when a person “solicits or receives” 
illegal remuneration.  Here, Louderback claims pharmacies received illegal rebates, but 
he has not sued them.  Louderback targets Sunovion’s payment of rebates.  A different 
subsection,  §  1320a-7b(b)(2),  addresses  this  conduct.    Louderback  confirmed  at  the 
hearing  that  the  Second  Amended  Complaint  should  be  understood  to  rely  on 
§ 1320a-7b(b)(2).  Tr. [ECF No. 160] at 7, 10.                            
42 U.S.C. § 1320a-7b(b)(2)(B).  “[A] claim that includes items or services resulting from 
a violation of this section constitutes a false or fraudulent claim for purposes of [the False 
Claims Act].”  42 U.S.C. § 1320a-7b(g) (emphasis added).                  

    The italicized “resulting from” phrase is critical.  When a relator seeks to show 
that  a  claim  is  “false  or  fraudulent”  under  the  False  Claims  Act  because  the  claim 
“includes  items  or  services  resulting  from  a  violation  of”  the  Anti-Kickback 
Statute, 42 U.S.C. § 1320a-7b(g), the relator must show a “but-for causal [relationship] 
between an anti-kickback violation and the ‘items or services’ included in the claim.” 

Cairns,

42 F.4th at 831

.  A relator, in other words, must show “that the defendant[] 
would not have included particular ‘items or services’ absent the illegal kickbacks.”

Id. at 835

; see United  States  ex  rel.  Martin  v.  Hathaway,

63 F.4th 1043

,  1052–53 
(6th Cir.  2023) (same); see  also United  States  v.  Regeneron  Pharm.,  Inc.,  Civ. 
No. 20-11217-FDS,

2023 WL 6296393

, at *7–11 (D. Mass. Sept. 27, 2023) (same). In

the context of this case’s procedural posture and liability theory, then, Louderback must
allege facts plausibly showing that signatory pharmacies would not have included
Brovana prescriptions on Medicare claims absent the Part B Agreement’s
rebates-for-prescriptions arrangement, and he must allege these facts with the
particularity Rule 9(b) requires.

C
The Second Amended Complaint’s additional causation-directed allegations do
not clear Rule 8(a)’s plausibility bar.
(1) Louderback begins by alleging that just the rebates Sunovion paid pharmacies
that signed on to the Part B Agreement were the but-for cause of Brovana sales because
the rebates made it possible for these pharmacies to sell Brovana without losing money.

See 2d Am. Compl. ¶¶ 124–125. In other words, applying a fundamental economic
principle, Louderback points out that no rebates from Sunovion would have meant no
Brovana Medicare claims from pharmacies. I understand Louderback to be alleging that
every Brovana claim submitted by a signatory pharmacy resulted from the rebates. See
id. ¶ 125(a)–(c) (explaining that Deines Pharmacy would “never” have sold Brovana

without Sunovion’s rebates).
This causation theory is not faithful to Louderback’s False Claims
Act/Anti-Kickback Statute theory. Louderback does not claim that Sunovion’s rebates
were unlawful merely because they were rebates. He claims the rebates were unlawful
because they were conditioned on compliance with the Part B Agreement’s

“dispense-as-written” and “counterdetailing” provisions.
The Second Amended Complaint’s allegations reflect this theory plainly and
consistently. See, e.g., id. ¶ 3 (“Sunovion paid rebates and provided promotional services
to pharmacies and durable medical equipment providers . . . in exchange for their
agreement not to promote Brovana’s competitors to patients or physicians.”); ¶ 10 (“In

short, Defendant provides illegal kickbacks to pharmacies in exchange for their
agreement to arrange for the prescription (by physicians), dispensing (by the pharmacists)
and purchase (by patients and pharmacies) of Brovana in circumstances when, but for the
[Part B] Agreement, they would prescribe, dispense, or purchase drugs manufactured by
Brovana’s competitors.”); ¶ 89 (“In short, the [Part B] Agreement does precisely what the
AKS prohibits: Defendant offers participating pharmacies a rebate . . . in exchange for
their promise to recommend or arrange for physicians to prescribe, and patients to

purchase, Brovana in circumstances in which they would otherwise recommend or
arrange for the prescribing or purchasing of another drug.”); ¶ 92(a) (“Defendant offered
pharmacies a rebate . . . in exchange for their promise to arrange for physicians to
prescribe and patients to purchase Brovana in circumstances in which the pharmacies
would otherwise recommend one of Brovana’s competitors.”); ¶ 93(d) (“The [Part B]

Agreement gives pharmacies a rebate . . . in exchange for their agreement to suspend
their professional judgment and instead act as a salesforce for one particular prescription
drug.”). If Louderback’s theory were that the rebates alone violated the Anti-Kickback
Statute, there would have been no need to mention the Part B Agreement’s
dispense-as-written or counterdetailing provisions in the Second Amended Complaint.

Louderback’s motion-to-dismiss briefing confirms that his Anti-Kickback Statute
theory depends, not just on the rebates Sunovion paid, but on the Part B Agreement’s
dispense-as-written and counterdetailing provisions. In his opposition brief, Louderback
explained, “rebates are ‘discounts’ and do not constitute remuneration under the
[Anti-Kickback Statute] when they are conditional only on the purchase of a product; but

they do constitute remuneration if they are conditional on something else (here, the
restrictions).” Mem. in Opp’n [ECF No. 152] at 12. Louderback also explained that the
“fraudulent scheme . . . is largely contained in the [Part B] Agreement itself—particularly
its rebate, no-counterdetailing, and dispense-as-written clauses.” Id. at 14.
The disconnect between the rebates-only causation argument Louderback
advances in opposition to Sunovion’s motion and the liability theory he pleads in the
Second Amended Complaint is evident in another, seemingly important way. The

rebates-only causation argument is all-or-nothing. In other words, if Louderback could
show but-for causation by identifying just the rebates’ economic consequences (that is,
the rebates enabled signatory pharmacies to sell Brovana to Medicare beneficiaries at a
profit), then the Part B Agreement’s rebate provision caused the submission of every
Brovana Medicare claim filed by a signatory pharmacy. Louderback appears to confirm

this understanding in his opposition brief. See Mem. in Opp’n at 15 (“Thus, all Brovana
sales made by pharmacies that entered into the [Part B] Agreement resulted in Brovana
Medicare [c]laims.”). But the Second Amended Complaint is not all-or-nothing. It does
not claim that every Brovana Medicare claim submitted by a signatory pharmacy violated
the Anti-Kickback Statute. The pleading is based on the idea that compliance with the

dispense-as-written and counterdetailing provisions prompted pharmacies to prescribe
Brovana “in situations where they would otherwise have recommended lower priced
competitors or generics, such as non-nebulized LABAs.” 2d Am. Compl. ¶ 130. Section
1320a-7b(g) and Cairns require Louderback to allege facts plausibly showing that just
such “situations” occurred. As I understand Cairns, saying it was “every claim” won’t

work.
Louderback argues that the Eighth Circuit approves of his rebates-only approach
to alleging causation, but this is not persuasive. Specifically, Louderback says “Cairns
does not require that all of the activities induced, or sought to be induced, by the kickback
(here, both the pharmacy purchases for resale and the restrictions) cause the Medicare
claims, but rather that a violation causes the submission of the claims.” Mem. in Opp’n
at 10–11. The problem with this contention isn’t the take on Cairns; it’s that the

Anti-Kickback Statute “violation” alleged in the Second Amended Complaint
encompasses the rebates in consideration for the dispense-as-written and counterdetailing
provisions. In other words, what Louderback must allege to show a “but-for causal
[relationship] between an anti-kickback violation and the ‘items or services’ included in
the claim,” Cairns,

42 F.4th at 831

, depends on the violation alleged.  The violation 

alleged here encompasses more than the rebates.  Louderback also cites a series of cases 
decided  by  district  courts  within  the  Eighth  Circuit  and  says  the  cases  support  his 
causation argument.  A careful read of these cases shows they are distinguishable for 
several reasons, most importantly because none analyzes specifically what a relator must 
allege to show but-for causation, much more when the alleged Anti-Kickback Statute 

violation  is  the  payment  of  rebates  conditioned  on  assertedly  unlawful  contractual 
obligations.  Mart v. Tactile Sys. Tech., Inc.,

595 F. Supp. 3d 788

, 808 (D. Minn. 2022); 
United States ex rel. Grant v. Zorn, No. 4:18-cv-00095-SMR-SBJ,

2021 WL 4145724

, at 
*8 (S.D. Iowa Mar. 8, 2021); United States v. Hart, No. 4:19-cv-00332-JAJ-CFB,

2020 WL 6051599

, at *5 (S.D. Iowa Apr. 1, 2020); Shoemaker v. Cardiovascular Sys., Inc.,

300 F. Supp. 3d 1046, 1049

  (D.  Minn.  2018);  United  States  ex  rel.  Fesenmaier  v. 
Cameron-Ehlen Grp., Inc., No. 13-cv-3003 (WMW/DTS),

2018 WL 11451362

, at *2
(D. Minn. Oct. 22, 2018).
To remain faithful to his theory, Louderback must allege facts plausibly tracing
causation through the Part B Agreement’s dispense-as-written and counterdetailing
provisions—that is, but for signatory pharmacies’ rebates-induced compliance with these

provisions, a pharmacy or pharmacies would have dispensed a drug or therapy other than
Brovana. Identifying the obvious economic incentives resulting from the rebates alone
doesn’t carry that pleading burden.
(2) Leaving the rebates-only causation theory aside, the Second Amended
Complaint does not allege facts plausibly showing that signatory pharmacies would not

have included Brovana prescriptions on Medicare claims absent the
rebates-for-prescriptions arrangement reflected in the Part B Agreement’s
dispense-as-written and counterdetailing provisions.
With respect to this issue, the Second Amended Complaint repeats the basic
problem with the pleading’s prior version—that is, it alleges causation as a conclusion.

The pleading alleges, for example: “Upon information and belief, pharmacies failed to
substitute Brovana’s competitors in situations where, absent the [Part B] Agreement, they
would have done so.” 2d Am. Compl. ¶ 126. It also alleges, “upon information and
belief, pharmacy sales representatives did not promote Brovana’s competitors to
physicians in situations where, absent the [Part B] Agreement, they would have done so.”

Id. ¶ 127. These paragraphs could be characterized as asserting a legal conclusion
because they merely frame Cairns’s basic rule to fit this case’s facts. These paragraphs
also could be characterized as conclusory because they allege the ultimate
liability-prompting fact without any supporting material. Either way, the allegations do
not plausibly show the but-for causation required under § 1320a-7b(g) and Cairns. See
Twombly,

550 U.S. at 555

 (recognizing that Rule 8(a) “requires more than labels or 
conclusions, and a formulaic recitation of the elements of a cause of action will not do”).  

Without more, Louderback has not “nudged [his] claims across the line from conceivable 
to plausible.”

Id. at 570

.                                               
    It is not difficult to hypothesize facts a relator might allege to plausibly show the 
but-for causation required under § 1320a-7b(g).  For example, the relator might possess 
personal knowledge of specific situations in which a pharmacist would have dispensed a 

Brovana  alternative  but  for  the  Part  B  Agreement’s  dispense-as-written  and 
counterdetailing  provisions.    The  relator  might  possess  data  showing  a  significant 
increase in the number of Brovana prescriptions, and a corresponding reduction in the 
number of Brovana-alternative prescriptions, beginning with pharmacies’ execution of 
the Part B Agreement.  Perhaps the relator might possess scientific studies establishing a 

causal link between contracts akin to the Part B Agreement and pharmacists’ tendencies 
to  adhere  to  dispense-as-written  and  counterdetailing  provisions.    Without  these  or 
comparable allegations, the Second Amended Complaint “do[es] not permit the court to 
infer more than the mere possibility of” causation, but that is not enough to satisfy Rule 
8(a) and state a claim for relief.  Iqbal,

556 U.S. at 679

.7              


7    The Second Amended Complaint alleges the causal relationship required under 
§ 1320a-7b(g) and Cairns “on information and belief.”  2d Am. Compl. ¶¶ 126–127.  If 
the allegations in these paragraphs survived Rule 8(a), “assertions based on ‘information 
and belief’ are seldom sufficient to satisfy Rule 9(b).”  Hennessey v. Gap, Inc.,

86 F.4th 823, 831

 (8th Cir. 2023).  Louderback identifies no reason why this general rule would 
not apply here.                                                           
    Louderback argues that the Second Amended Complaint plausibly alleges but-for 
causation even if his rebates-only causation argument is rejected.  See Mem. in Opp’n at 
16–19.  He says it is reasonable to presume that signatory pharmacies complied with the 

Part B Agreement’s dispense-as-written and counterdetailing provisions and that, had 
they not complied, pharmacists would on some occasions have prescribed a drug or 
therapy other than Brovana.  See

id.

  I understand § 1320a-7b(g)/Cairns in tandem with 
Rule  8(a)  to  require  more.    In  this  context,  Louderback  must  allege  facts  plausibly 
showing that a pharmacy would not have included Brovana on a Medicare claim but for 

the rebates-for-prescriptions arrangement reflected in the Part B Agreement.  Cairns,

42 F.4th at 836

.  If presumed adherence to an illegal arrangement were enough, it is 
difficult to see how § 1320a-7b(g)’s but-for causation element would mean anything at 
the motion-to-dismiss stage.  Regardless, Louderback’s arguments are best characterized 
as allowing an inference of the possibility of causation.  That is not enough.  Iqbal,

556 U.S. at 679

.8                                                             







8    Sunovion alternatively argues that actual damages are an element of claim under 
the False Claims Act and that Louderback has failed to plead them.  Mem. in Supp. at 
14–15.  Because the Second Amended Complaint does not allege but-for causation as 
required by § 1320a-7b(g), it is not necessary to address this question.

ORDER

    Based on the foregoing, and on all the files, records, and proceedings herein, IT IS 
ORDERED THAT:                                                             

    1.   Defendant’s Motion to Dismiss [ECF No. 142] is GRANTED.         
    2.   The Second Amended Complaint [ECF No. 128] is DISMISSED with    
prejudice.                                                                
    3.   Defendant’s Motion to Strike [ECF No. 147] is DENIED as moot.   
           LET JUDGMENT BE ENTERED ACCORDINGLY.                          


Dated:  September 11, 2024         s/ Eric C. Tostrud                     
                                  Eric C. Tostrud                        
                                  United States District Court

Trial Court Opinion

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

United States of America, ex rel. Scott File No. 17-cv-1719 (ECT/LIB)
Louderback,

Plaintiff,

v. OPINION AND ORDER

Sumitomo Pharma America, Inc., formerly
known as Sunovion Pharmaceuticals, Inc.,

703 F. Supp. 3d 961

, 977–980 (D. Minn. 2023); see United States ex rel. Cairns v. D.S. 

Med. LLC,

42 F.4th 828

alternatives to Brovana. Id. ¶¶ 76, 79. Based on these Part B Agreement provisions,

2023 WL 4489656

, at 
*1 (D. Minn. July 12, 2023), R. & R. adopted,

2023 WL 4936159

 (D. Minn. Aug. 2, 
2023).  Here, the Part B Agreement is embraced by the Second Amended Complaint 
because the Part B Agreement remains central to Louderback’s claims, it is cited several 
times, and its authenticity has not been questioned.  See Zean v. Fairview Health Servs.,

858 F.3d 520, 526

where Deines Pharmacy “sought—and received—reimbursement from Medicare Part B
while the [Part B] Agreement was in effect.” Id. ¶¶ 110, 125(b).5 Louderback alleges

760 F.3d 787, 792

 
(8th Cir. 2014).  Although the factual allegations need not be detailed, they must be 
sufficient to “raise a right to relief above the speculative level.”  Bell Atl. Corp. v. 

Twombly,

550 U.S. 544, 555

 (2007) (citation omitted).  The complaint must “state a 
claim to relief that is plausible on its face.”

Id. at 570

.  “A claim has facial plausibility 
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).    “[T]he  tenet  that  a  court  must  accept  as  true  all  of  the 

appear in the Second Amended Complaint.  For this reason, it is not necessary to consider 
the declaration, and the declaration does not violate the rule that a party “cannot . . .  
defend a complaint by relying on a brief or affidavit that describes additional or different 
allegations that are not in the complaint.”  Fuller v. Honeywell Int’l, Inc., No. 24-cv-279 
(ECT/DJF),

2024 WL 3569496

, at *2 n.4 (D. Minn. July 29, 2024) (citing Al-Saadoon v. 
Barr,

973 F.3d 794, 805

 (8th Cir. 2020), and In re Agape,

773 F. Supp. 2d 298, 316

 
(E.D.N.Y. 2011)).                                                         
allegations contained in a complaint is inapplicable to legal conclusions.”

Id.

  These 
rules  are  derived  from  the  Supreme  Court’s  interpretation  of  Rule  8(a).    Twombly,

550 U.S. at 555

; Iqbal,

556 U.S. at 680, 684

.                             

    In addition to meeting Rule 8(a)’s plausibility requirement, a False Claims Act 
relator  must  comply  with  Rule  9(b)’s  particularity-in-pleading  requirement.    United 
States ex rel. Joshi v. St. Luke’s Hosp., Inc.,

441 F.3d 552, 556

 (8th Cir. 2006) (“Because 
the FCA is an anti-fraud statute, complaints alleging violations of the FCA must comply 
with Rule 9(b).”).  “To satisfy the particularity requirement of Rule 9(b), the complaint 

must  plead  such  facts  as  the  time,  place,  and  content  of  the  defendant’s  false 
representations, as well as the details of the defendant’s fraudulent acts, including when 
the acts occurred, who engaged in them, and what was obtained as a result.”

Id.

  “The 
claim must identify who, what, where, when, and how.”  United States ex rel. Costner v. 
United States,

317 F.3d 883, 888

 (8th Cir. 2003).  “A relator can meet the Rule 9(b) 

requirements by pleading (1) ‘representative examples of the false claims,’ or (2) the 
‘particular details of a scheme to submit false claims paired with reliable indicia that lead 
to a strong inference that claims were actually submitted.’”  United States ex rel. Strubbe 
v. Crawford Cnty. Mem’l Hosp.,

915 F.3d 1158, 1163

 (8th Cir. 2019) (quoting United 
States ex rel. Thayer v. Planned Parenthood of the Heartland,

765 F.3d 914, 918

 (8th 

Cir. 2014)); see also United States ex rel. Benaissa v. Trinity Health,

963 F.3d 733

, 739–
40 (8th Cir. 2020).                                                       
                               B                                         
    The  False  Claims  Act  imposes  civil  liability  on  any  person  who  “knowingly 
presents, or causes to be presented, a false or fraudulent claim [to the Government] for 

payment or approval.”

31 U.S.C. § 3729

(a)(1)(A).  A claim under the False Claims Act 
generally has three elements: (1) the defendant presented or caused to be presented a 
claim for payment to the government; (2) the claim was false or fraudulent; and (3) the 
defendant knew the claim was false or fraudulent.  Olson v. Fairview Health Servs. of 
Minn.,

831 F.3d 1063, 1070

 (8th Cir. 2016).                               

    In this case, the alleged falsity arises from claimed violations of the Anti-Kickback 
Statute, 42 U.S.C. § 1320a-7b(b).  2d Am. Compl. ¶ 27.  Specifically, Louderback claims 
that Sunovion violated § 1320a-7b(b)(2).6  As relevant here, § 1320b-7b(b)(2) imposes 
criminal penalties on a person who:                                       
         knowingly  and  willfully  offers  or  pays  any  remuneration  
         (including  any  kickback,  bribe,  or  rebate)  directly  or   
         indirectly, overtly or covertly, in cash or in kind to any person 
         to induce such person . . . to purchase, lease, order, or arrange 
         for or recommend purchasing, leasing, or ordering any good,     
         facility, service, or item for which payment may be made in     
         whole or in part under a Federal health care program[.]         


6    As  with  the  original  Complaint,  the  Second  Amended  Complaint  cites 
§ 1320a-7b(b)(1) as the source of its Anti-Kickback Statute claim.  See 2d Am. Compl. 
¶¶ 27, 28, 92(b).  The Second Amended Complaint’s citations to this subsection are an 
oversight.  A § 1320a-7b(b)(1) violation occurs when a person “solicits or receives” 
illegal remuneration.  Here, Louderback claims pharmacies received illegal rebates, but 
he has not sued them.  Louderback targets Sunovion’s payment of rebates.  A different 
subsection,  §  1320a-7b(b)(2),  addresses  this  conduct.    Louderback  confirmed  at  the 
hearing  that  the  Second  Amended  Complaint  should  be  understood  to  rely  on 
§ 1320a-7b(b)(2).  Tr. [ECF No. 160] at 7, 10.                            
42 U.S.C. § 1320a-7b(b)(2)(B).  “[A] claim that includes items or services resulting from 
a violation of this section constitutes a false or fraudulent claim for purposes of [the False 
Claims Act].”  42 U.S.C. § 1320a-7b(g) (emphasis added).                  

    The italicized “resulting from” phrase is critical.  When a relator seeks to show 
that  a  claim  is  “false  or  fraudulent”  under  the  False  Claims  Act  because  the  claim 
“includes  items  or  services  resulting  from  a  violation  of”  the  Anti-Kickback 
Statute, 42 U.S.C. § 1320a-7b(g), the relator must show a “but-for causal [relationship] 
between an anti-kickback violation and the ‘items or services’ included in the claim.” 

Cairns,

42 F.4th at 831

.  A relator, in other words, must show “that the defendant[] 
would not have included particular ‘items or services’ absent the illegal kickbacks.”

Id. at 835

; see United  States  ex  rel.  Martin  v.  Hathaway,

63 F.4th 1043

,  1052–53 
(6th Cir.  2023) (same); see  also United  States  v.  Regeneron  Pharm.,  Inc.,  Civ. 
No. 20-11217-FDS,

2023 WL 6296393

, at *7–11 (D. Mass. Sept. 27, 2023) (same). In

42 F.4th at 831

, depends on the violation alleged.  The violation 

alleged here encompasses more than the rebates.  Louderback also cites a series of cases 
decided  by  district  courts  within  the  Eighth  Circuit  and  says  the  cases  support  his 
causation argument.  A careful read of these cases shows they are distinguishable for 
several reasons, most importantly because none analyzes specifically what a relator must 
allege to show but-for causation, much more when the alleged Anti-Kickback Statute 

violation  is  the  payment  of  rebates  conditioned  on  assertedly  unlawful  contractual 
obligations.  Mart v. Tactile Sys. Tech., Inc.,

595 F. Supp. 3d 788

, 808 (D. Minn. 2022); 
United States ex rel. Grant v. Zorn, No. 4:18-cv-00095-SMR-SBJ,

2021 WL 4145724

, at 
*8 (S.D. Iowa Mar. 8, 2021); United States v. Hart, No. 4:19-cv-00332-JAJ-CFB,

2020 WL 6051599

, at *5 (S.D. Iowa Apr. 1, 2020); Shoemaker v. Cardiovascular Sys., Inc.,

300 F. Supp. 3d 1046, 1049

  (D.  Minn.  2018);  United  States  ex  rel.  Fesenmaier  v. 
Cameron-Ehlen Grp., Inc., No. 13-cv-3003 (WMW/DTS),

2018 WL 11451362

550 U.S. at 555

 (recognizing that Rule 8(a) “requires more than labels or 
conclusions, and a formulaic recitation of the elements of a cause of action will not do”).  

Without more, Louderback has not “nudged [his] claims across the line from conceivable 
to plausible.”

Id. at 570

.                                               
    It is not difficult to hypothesize facts a relator might allege to plausibly show the 
but-for causation required under § 1320a-7b(g).  For example, the relator might possess 
personal knowledge of specific situations in which a pharmacist would have dispensed a 

Brovana  alternative  but  for  the  Part  B  Agreement’s  dispense-as-written  and 
counterdetailing  provisions.    The  relator  might  possess  data  showing  a  significant 
increase in the number of Brovana prescriptions, and a corresponding reduction in the 
number of Brovana-alternative prescriptions, beginning with pharmacies’ execution of 
the Part B Agreement.  Perhaps the relator might possess scientific studies establishing a 

causal link between contracts akin to the Part B Agreement and pharmacists’ tendencies 
to  adhere  to  dispense-as-written  and  counterdetailing  provisions.    Without  these  or 
comparable allegations, the Second Amended Complaint “do[es] not permit the court to 
infer more than the mere possibility of” causation, but that is not enough to satisfy Rule 
8(a) and state a claim for relief.  Iqbal,

556 U.S. at 679

.7              


7    The Second Amended Complaint alleges the causal relationship required under 
§ 1320a-7b(g) and Cairns “on information and belief.”  2d Am. Compl. ¶¶ 126–127.  If 
the allegations in these paragraphs survived Rule 8(a), “assertions based on ‘information 
and belief’ are seldom sufficient to satisfy Rule 9(b).”  Hennessey v. Gap, Inc.,

86 F.4th 823, 831

 (8th Cir. 2023).  Louderback identifies no reason why this general rule would 
not apply here.                                                           
    Louderback argues that the Second Amended Complaint plausibly alleges but-for 
causation even if his rebates-only causation argument is rejected.  See Mem. in Opp’n at 
16–19.  He says it is reasonable to presume that signatory pharmacies complied with the 

Part B Agreement’s dispense-as-written and counterdetailing provisions and that, had 
they not complied, pharmacists would on some occasions have prescribed a drug or 
therapy other than Brovana.  See

id.

  I understand § 1320a-7b(g)/Cairns in tandem with 
Rule  8(a)  to  require  more.    In  this  context,  Louderback  must  allege  facts  plausibly 
showing that a pharmacy would not have included Brovana on a Medicare claim but for 

the rebates-for-prescriptions arrangement reflected in the Part B Agreement.  Cairns,

42 F.4th at 836

.  If presumed adherence to an illegal arrangement were enough, it is 
difficult to see how § 1320a-7b(g)’s but-for causation element would mean anything at 
the motion-to-dismiss stage.  Regardless, Louderback’s arguments are best characterized 
as allowing an inference of the possibility of causation.  That is not enough.  Iqbal,

556 U.S. at 679

.8                                                             







8    Sunovion alternatively argues that actual damages are an element of claim under 
the False Claims Act and that Louderback has failed to plead them.  Mem. in Supp. at 
14–15.  Because the Second Amended Complaint does not allege but-for causation as 
required by § 1320a-7b(g), it is not necessary to address this question.

ORDER

    Based on the foregoing, and on all the files, records, and proceedings herein, IT IS 
ORDERED THAT:                                                             

    1.   Defendant’s Motion to Dismiss [ECF No. 142] is GRANTED.         
    2.   The Second Amended Complaint [ECF No. 128] is DISMISSED with    
prejudice.                                                                
    3.   Defendant’s Motion to Strike [ECF No. 147] is DENIED as moot.   
           LET JUDGMENT BE ENTERED ACCORDINGLY.                          


Dated:  September 11, 2024         s/ Eric C. Tostrud                     
                                  Eric C. Tostrud                        
                                  United States District Court

Reference

Status: Unknown