United States ex rel. Health Choice Alliance, LLC v. Eli Lilly and Company, Inc., No. 19-40906 (5th Cir. 2021)
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The Fifth Circuit affirmed the district court's dismissal of Health Choice's qui tam actions under the False Claims Act on behalf of the United States alleging violations of the Anti-Kickback Statute by pharmaceutical companies. As a preliminary matter, the court explained that there is a potential jurisdictional issue concerning the chronology of two events: Health Choice's voluntary dismissal and the district court's granting of the United States' motion to dismiss. The court declined to create a circuit split and concluded that the prior without-prejudice dismissals did not deprive the district court's subsequent decision of finality. The court explained that the district court's order on the motion to dismiss was final because it adjudicated all the claims against all the remaining parties in the action at the time it was entered, and the prior voluntary dismissal does not alter that conclusion.
The court affirmed on the merits, construing the term "hearing" in 31 U.S.C. 3730(c)(2)(A) to require something more than a forum for a relator to convince the government not to dismiss. In this case, Health Choice got a hearing as required by section 3730(c)(2)(A). The court explained that, assuming without deciding, that the more burdensome Sequoia Orange test applies, dismissal of the Eli Lilly and Bayer cases was proper. In this case, the government has satisfied its burden of showing a rational relation between dismissal and its legitimate cost-saving purpose. Considering Health Choice's arguments and the record as a whole, the court held that Health Choice did not show that dismissal was "fraudulent, arbitrary and capricious, or illegal" under the strict Sequoia Orange standard.
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