[00:00:00] Speaker 00: Case number 20-7062, United States of America, X-Rail Elizabeth W. Kennedy et al. [00:00:07] Speaker 00: and Elizabeth W. Kennedy et al. [00:00:10] Speaker 00: versus Novo AS et al. [00:00:12] Speaker 00: Mr. Mendoza for the et al. [00:00:14] Speaker 00: Elizabeth W. Kennedy, Ms. [00:00:15] Speaker 00: Sean for the appellee, United States of America. [00:00:22] Speaker 05: You can begin Mr. Mendoza, good morning. [00:00:24] Speaker 02: Morning. [00:00:25] Speaker 02: Thank you, your honors, and may it please the court. [00:00:26] Speaker 02: My name is Nicolas Mendoza, representing appellant Elizabeth Kennedy. [00:00:31] Speaker 02: The government has abandoned the district court's reasoning below. [00:00:34] Speaker 02: The district court's sole and categorical holding was that the alternate remedy provision does not apply when the government elects to intervene in the key TAM. [00:00:43] Speaker 02: The government does not defend this holding and even concedes that the intervention decision is not necessarily dispositive to the applicability of the alternate remedy provision. [00:00:54] Speaker 02: Congress wrote the alternate remedy provision with the broadest possible language specifying that applied not withstanding the government's intervention decision under subsection B and that it applies to any alternate remedy available and elected by the government. [00:01:08] Speaker 02: Congress did so in part so that the government would not be able to whittle away the related share [00:01:13] Speaker 02: by reallocating funds away from the FCA action. [00:01:17] Speaker 05: But that is what the- I'm sorry. [00:01:18] Speaker 02: No. [00:01:19] Speaker 05: Do you want to sum up? [00:01:20] Speaker 05: Go ahead. [00:01:21] Speaker 02: Finish that sentence. [00:01:21] Speaker 02: That is what the district court has allowed in this case. [00:01:24] Speaker 05: Right. [00:01:24] Speaker 05: Sure. [00:01:26] Speaker 05: So the alternate remedy decision says, we all know alternate to what, right? [00:01:32] Speaker 05: And it says the government may elect to pursue its claim, singular claim through any alternate remedy. [00:01:42] Speaker 05: And claim is defined in 3729 B2 as essentially a false claim, right? [00:01:55] Speaker 05: It's not everything claimed the government could litigate against a defendant. [00:02:00] Speaker 05: It is only those claims that involve obtaining money, property through false or fraudulent pretenses. [00:02:07] Speaker 05: Is that right? [00:02:08] Speaker 02: Well, there is certainly, there are seven enumerated offenses in the False Claims Act and Congress is- I'm sorry, go ahead, finish yourself. [00:02:18] Speaker 02: Well, Congress's purpose in incentivizing the prosecution of those claims included preserving the incentive for the whistleblower by allowing the government flexibility, but also guaranteeing the relator a share should the government choose a different proceeding. [00:02:34] Speaker 05: A different proceeding for its claim. [00:02:37] Speaker 02: for its claim first alerted to it by the Relators Key Time Complaint? [00:02:44] Speaker 05: Its claim is defined specifically by the statute as a False Claims Act claim. [00:02:52] Speaker 02: Well, Your Honor, Section 3730 repeatedly refers to the action. [00:03:02] Speaker 02: So if Congress intended to limit the [00:03:08] Speaker 02: it the the government's claim to a sort of formal to the formal limits of the FCA action, it would have used the government may pursue the action and other proceeding. [00:03:20] Speaker 05: I'm just let me let me try this asking in 30 in the provision at issue here. [00:03:24] Speaker 05: 3730. [00:03:25] Speaker 05: Is it e five? [00:03:27] Speaker 05: Sorry. [00:03:28] Speaker 05: I see five, five. [00:03:29] Speaker 05: I apologize. [00:03:31] Speaker 05: Do you agree that when it says the government may elect to pursue its claim through any alternative remedy, the claim there refers to claim defined in the preceding section 3729. [00:03:46] Speaker 02: The claim refers to the government's, it refers to [00:04:00] Speaker 02: the government's claim within the valid key time action brought under 3729, but again- Let me try asking a little bit more precisely. [00:04:10] Speaker 05: I wasn't clear enough. [00:04:11] Speaker 05: There's a definition of claim in 3729. [00:04:15] Speaker 02: Yes. [00:04:16] Speaker 05: B2. [00:04:18] Speaker 05: When they talk about in C5, 3730 C5, the alternate remedy provision, the government may elect to pursue its claim [00:04:29] Speaker 05: through an alternate remedy. [00:04:31] Speaker 05: Is your position that claim means what it was defined to mean in the preceding section, or do you think claim there has a different meaning? [00:04:42] Speaker 02: I think the claim means, given that the sentence has any alternate remedy, we think the- It doesn't say for any claim. [00:04:53] Speaker 05: I'm just asking you, do you think claim means what it's defined to mean in 3729? [00:04:59] Speaker 05: Or do you think claim means something different? [00:05:05] Speaker 02: I think it means something different in that it refers to the government's [00:05:17] Speaker 02: the claims that the government could bring given the action within the context of subsection C, I think that's what makes the most sense. [00:05:26] Speaker 02: Otherwise there would be more specificity from Congress that the claim has to be a formal, formally what was raised under 3729. [00:05:43] Speaker 02: I'm sorry, I'm going into my robot. [00:05:45] Speaker 05: Don't worry about that. [00:05:46] Speaker 05: We'll give you some extra time for rebuttal. [00:05:48] Speaker 03: Thank you. [00:05:49] Speaker 03: If I could ask you about another phrase in C5, how do you understand the phrase [00:05:59] Speaker 03: you know, if an alternate remedy is pursued in another proceeding, the person initiating the action shall have the same rights in such proceeding as such person would have had if the action had continued under this section, right? [00:06:12] Speaker 03: To me, that phrase suggests that the action has not continued under this section. [00:06:18] Speaker 03: But of course, in this case, the action did continue and resulted in a very substantial remedy. [00:06:24] Speaker 03: So how do you understand [00:06:27] Speaker 03: that phrase would have had if the action had continued under this section. [00:06:32] Speaker 02: Well, I have two quick points on that, Judge Rao, if you'll allow me. [00:06:36] Speaker 02: First, the most logical reading of that sentence is that the [00:06:45] Speaker 02: the relator is given the same rights in the alternate remedy proceeding as if the FCA action had been litigated. [00:06:52] Speaker 02: And that's given the forcefulness of the notwithstanding instruction at the beginning of the provision, as well as the Supreme Court's direction in State Farm to not read out relator's rights without explicit language. [00:07:04] Speaker 03: But the second point on that is that in this case, we had to- So I'm sorry, you mean, so a settlement is not encompassed within that phrase? [00:07:14] Speaker 02: Well, in this case, neither action continued. [00:07:18] Speaker 02: So I think that's a good example of what I mean here. [00:07:24] Speaker 02: The remedy was settled as soon as it was elected, so it did not continue. [00:07:32] Speaker 02: So in this case, even with the government's more restrictive reading, it literally is [00:07:38] Speaker 02: correct that the sentence operates to give relators rights, uh, as if the FCA action had been litigated, which in this case it did not. [00:07:46] Speaker 03: And also litigated, it says continued. [00:07:50] Speaker 02: Correct. [00:07:50] Speaker 02: Your honor. [00:07:51] Speaker 02: And in this case, it did not continue. [00:07:52] Speaker 02: It settled as soon as it began. [00:07:54] Speaker 02: But, but, um, but I would also, uh, uh, uh, ask you to consider what would have happened if the government had litigated the FCA action in this case. [00:08:06] Speaker 02: It doesn't seem conceivable that they would have been able to sustain a parallel FDCA action if nothing else, because Novo Nordisk would not have consented to it. [00:08:18] Speaker 02: And it certainly seems even less likely that they would have been able to file the FDCA action after the FCA action had been litigated to judgment. [00:08:26] Speaker 02: So in terms of fulfilling Congress's purpose of preserving the relator's incentive, [00:08:35] Speaker 02: our reading here is the most logical, that we shouldn't treat the FCA action as if it had been continued just because the defendant consented to this unusual arrangement of two remedies for the same conduct. [00:08:55] Speaker 05: I'm sorry, Judge, are you done? [00:08:57] Speaker 02: Go ahead. [00:08:58] Speaker 05: If the government hadn't intervened, could Ms. [00:09:01] Speaker 05: Kennedy have added a claim for [00:09:05] Speaker 05: Ms. [00:09:05] Speaker 05: Brandon, marketing of the drug under the FDCA? [00:09:11] Speaker 02: No, Your Honor. [00:09:11] Speaker 05: She couldn't, because that wouldn't be a qualifying claim under the False Claims Act. [00:09:17] Speaker 02: That's correct. [00:09:19] Speaker 02: The False Claims Act does not allow her to plead that. [00:09:23] Speaker 02: However, she couldn't have pleaded an administrative proceeding for a civil money penalty either, which is expressly encompassed within the provision. [00:09:31] Speaker 02: Right. [00:09:32] Speaker 05: I'm just wondering on what claims she could bring. [00:09:35] Speaker 05: Right. [00:09:38] Speaker 05: You're right. [00:09:38] Speaker 05: The administrative ones are prosecuted by the government, for sure. [00:09:43] Speaker 05: Under your theory that that relators like Ms. [00:09:50] Speaker 05: Kennedy, who was obviously extremely helpful to the government here, can recover as long as the claim for recovery that's pursued through an alternate remedy arises from the same facts. [00:10:03] Speaker 05: that were disclosed by the Ketan Relator. [00:10:06] Speaker 05: What if the government had undertaken a criminal prosecution of the company in this case, or an individual in the company, relying on all those same facts and obtained a criminal fine? [00:10:23] Speaker 05: Are relators allowed a share of criminal fines? [00:10:27] Speaker 02: Well, Your Honor, criminal proceedings raise interesting questions, perhaps for other statutory reasons. [00:10:33] Speaker 05: I'm just asking whether, under your theory, it would meet a rising out of this same factual variation. [00:10:42] Speaker 05: What in the text here says that it wouldn't fit within the alternate remedy here? [00:10:46] Speaker 02: Well, it would fit within just within this provision that we're talking about. [00:10:52] Speaker 02: I'm saying that there may be other reasons why it might not be possible for a relator to seek a share. [00:10:59] Speaker 05: Is your position that relators could or could not? [00:11:04] Speaker 02: under our position is that within the FCA proceeding before judge Walton, if there had been a criminal proceeding, the alternate remedy provision would have allowed a criminal remedy, but that's very far away from- I understand it didn't happen here. [00:11:26] Speaker 05: I'm just asking had there been presumably not as part of the false claims act, but as a parallel action. [00:11:33] Speaker 05: a criminal prosecution, is it your position that it produced a fine, a substantial fine? [00:11:40] Speaker 05: Would Ms. [00:11:40] Speaker 05: Kennedy have been entitled to a key Tam Relators share of that fine arising out of the exact same facts? [00:11:48] Speaker 02: Ms. [00:11:48] Speaker 02: Kennedy could have moved within the FCA proceeding before Judge Walton [00:11:55] Speaker 02: Certainly, for a share of any alternate remedy, including certainly a criminal proceeding that was certainly within the within Congress could have predicted that in 1986 it was very common to go after. [00:12:08] Speaker 02: broad and in criminal actions. [00:12:11] Speaker 02: So certainly this is very broad language that Congress wrote, but I first asked this question. [00:12:15] Speaker 05: You mentioned that you thought there are other parts of the false claims act that would carve out criminal actions, but it sounds like for purposes of this alternate remedy recovery, your position is that criminal recoveries would also be encompassed. [00:12:30] Speaker 02: Well, not necessarily the false claims act. [00:12:32] Speaker 02: I mean, the district courts that have looked at this have differed a little bit, but generally the disputes have been over whether a relator has a right to intervene in a criminal action. [00:12:42] Speaker 02: But putting all that aside, that's not an issue in this case. [00:12:47] Speaker 02: For the purposes of the alternate remedy provision, certainly a criminal recovery would be within that language because otherwise the government could proceed criminally against a Ketam defendant [00:13:00] Speaker 02: and render them judgment-proof. [00:13:01] Speaker 02: And by the time the relator got to litigate her FCA action, the incentive to carry out the action and alert the government in the first place would have been destroyed by the criminal proceeding. [00:13:14] Speaker 02: So certainly, I think Congress wanted that incentive preserved. [00:13:19] Speaker 05: Do my colleagues have any more questions? [00:13:22] Speaker 05: All right, thank you very much. [00:13:23] Speaker 05: And we'll give you some time for rebuttal, Ms. [00:13:25] Speaker 05: Mendoza. [00:13:25] Speaker 02: Thank you, Your Honor. [00:13:35] Speaker 04: Good morning. [00:13:37] Speaker 04: May it please the court, Karen Shown, on behalf of the United States. [00:13:41] Speaker 04: And let me just apologize. [00:13:42] Speaker 04: There is some construction work that just started. [00:13:44] Speaker 04: So I apologize if you hear it. [00:13:47] Speaker 04: The purpose of the alternate remedy provision is to protect relators when the government pursues another fraud remedy in place of the relator's false claims act suit. [00:13:58] Speaker 04: But here, the government settlement under the Food, Drug, and Cosmetic Act didn't take the place of a relator suit. [00:14:03] Speaker 04: And indeed it couldn't have because it wasn't even a fraud remedy. [00:14:07] Speaker 04: The government intervened in Relator False Claims Act suit and settled it with Relator's consent and Relator received a $7.8 million share of the proceeds. [00:14:16] Speaker 04: And the district court correctly recognized that in these circumstances, the alternate remedy provision simply doesn't apply. [00:14:22] Speaker 05: When you say a fraud claim, is that a shorthand for the definition of claim in 3729? [00:14:31] Speaker 04: Yes, Your Honor, I meant a shorthand for a claim alleging false claims to the government under Section 3729. [00:14:38] Speaker 04: So the sort of claim that a relator could bring or that the government could bring on its own behalf under the false claim facts. [00:14:45] Speaker 05: If the government here, instead of pursuing that administrative remedy, had added an FDCA claim for equitable disgorgement or just any form of penalty to [00:14:58] Speaker 05: the existing QTAM action. [00:15:00] Speaker 05: So it intervenes and it adds claims as it's allowed to do, other claims as it's allowed to do. [00:15:05] Speaker 05: And let's say through settlement or litigation, there's a recovery that's collectively for all the claims pressed by the government and the false claim pressed by the relater. [00:15:17] Speaker 05: Would the relater be able to recover a share [00:15:23] Speaker 05: If there's just one judgment, what would happen? [00:15:25] Speaker 05: Would they recover a share of the total judgment, even though it included both False Claims Act claims and an FDCA claim? [00:15:32] Speaker 04: No, Your Honor. [00:15:33] Speaker 04: The relator would only be entitled to a fair of the proceeds with respect to the claims that the relator brought under the False Claims Act. [00:15:41] Speaker 04: I mean, a relator can only recover to the extent that she has a valid claim under the False Claims Act, and to the extent the government also asserted other non-False Claims Act claims. [00:15:53] Speaker 04: by the wrong way to phrase that. [00:15:54] Speaker 04: The relator isn't entitled to a share of those. [00:15:57] Speaker 05: What's your best case for that and for how it gets sorted out if there's just a lump sum damage award or settlement at the end? [00:16:06] Speaker 04: I mean, I think the courts have held and I think it's well established that a relator has to have a valid claim [00:16:14] Speaker 04: to be entitled to recovery, whether it's through the suit. [00:16:18] Speaker 05: She had a valid claim. [00:16:19] Speaker 04: There's no question about that. [00:16:20] Speaker 04: But I think the corollary to that is to the extent there is recovery for a claim that could not be brought under the False Claims Act. [00:16:27] Speaker 04: If Relator had brought the FDCA claim or some other claim, I mean, she couldn't. [00:16:32] Speaker 04: That would have been dismissed. [00:16:33] Speaker 04: She couldn't bring that. [00:16:34] Speaker 05: And so the fact that the government- When the government brings them all in, then- But I think it's the- [00:16:42] Speaker 05: through hook or by crook, we're gonna have to divvy up the final, I just couldn't find any cases that address this situation. [00:16:49] Speaker 04: Yeah, I'm not aware of any cases. [00:16:51] Speaker 04: I'm sorry, I didn't mean to put you off. [00:16:52] Speaker 04: I'm not aware of any cases addressing that specific fact pattern, but I think the reasoning is the same, whether the government brought it in a separate action or brought it in the same action, the relator is only entitled to recover or her claims. [00:17:06] Speaker 04: And so, the fact that the government brought it all in one proceeding, I don't think changes [00:17:11] Speaker 04: the analysis or the end result. [00:17:13] Speaker 04: I think it's the same. [00:17:15] Speaker 04: Relator is entitled to recovery to the extent that there were proceeds from the claim that she brought. [00:17:22] Speaker 04: She's not entitled to recover for other claims. [00:17:25] Speaker 01: Doesn't the government invariably in these kinds of cases bring the False Claims Act piece and the FDCA piece together in one case? [00:17:39] Speaker 04: I don't know how it works in practice. [00:17:43] Speaker 04: I think there are often parallel proceedings. [00:17:46] Speaker 04: And putting aside the FDCA, there may be other proceedings, whether they're criminal proceedings, there may be proceedings under the tax code. [00:17:57] Speaker 04: There may be a lot of other proceedings that may go in parallel. [00:18:01] Speaker 04: I'm not sure that the government always brings, as a practical matter, always brings them in the same action. [00:18:05] Speaker 01: I thought as a practical matter, they were brought together. [00:18:09] Speaker 01: there would be obvious claim preclusion problems if they weren't brought together. [00:18:17] Speaker 01: They've arisen out of the same facts, right? [00:18:22] Speaker 04: I apologize, your honor. [00:18:23] Speaker 04: I just don't know how it works. [00:18:25] Speaker 01: I mean, the reason, the reason I ask, assume that's the case. [00:18:32] Speaker 01: The reason I ask is your position makes a lot of intuitive sense [00:18:38] Speaker 01: But what do we do with 37D1, which defines the relator's share as 15 to 25% of the proceeds of the action or settlement of the claim. [00:18:58] Speaker 01: But action to me reads more broadly than fraud claim. [00:19:08] Speaker 01: Action reads like it is the case in which the FCA cause of action and the FDCA cause of action are litigated. [00:19:28] Speaker 04: I think, well, but I think it goes back to the same point, which is that a relator isn't entitled to a fair [00:19:35] Speaker 04: of claims that she didn't even bring. [00:19:37] Speaker 04: I mean, the point is to encourage and provide an incentive for relators to bring these sorts of claims, but they're not entitled to recovery for claims that they didn't bring themselves. [00:19:52] Speaker 04: And I think Congress obviously knew that there may be other proceedings and the government may have other actions to pursue, but those aren't all [00:20:02] Speaker 04: fraud claims, and here the FPCA action is not, it's not a, I'll use the shorthand again, it's not a fraud remedy. [00:20:10] Speaker 04: It has nothing to do with allegations that there were false claims submitted to the government. [00:20:15] Speaker 04: It's a wholly different, that's a wholly different sort of action and for violation of the statute. [00:20:22] Speaker 04: It has nothing to do with fraud against the public space. [00:20:27] Speaker 03: One question I have is for the government to prevail here, we don't need to reach [00:20:36] Speaker 03: We can decide, I guess, either that the FTC action is not an alternative remedy, or we could decide that the government's pursuit of the FCA claim renders the alternate remedy provision inapplicable, right? [00:20:52] Speaker 03: We could decide on either one of those grounds for the government to prevail, which in your view is a narrower reading. [00:20:59] Speaker 03: I mean, there are not very many [00:21:02] Speaker 03: cases interpreting the FCA. [00:21:04] Speaker 03: And I'm concerned about unintended consequences of a broad ruling of this admittedly somewhat obscure provision. [00:21:15] Speaker 04: I'm not quite sure. [00:21:18] Speaker 04: I think probably the narrower ruling would just be that it [00:21:28] Speaker 04: I'm not sure that there is really a key distinction between the two in the sense that an alternate remedy is one that takes the place of a relator's claim. [00:21:40] Speaker 04: So it's one, as courts have recognized, that the government pursues in lieu of pursuing the False Claims Act suit. [00:21:47] Speaker 04: And so to the extent that the government actually pursued the False Claims Act suit and settled it, [00:21:56] Speaker 04: alternate remedy provision doesn't apply. [00:21:58] Speaker 04: And so I think that's probably one of your sort of one of your readings. [00:22:03] Speaker 04: The other would be to say that the FDCA action is not an alternate remedy. [00:22:08] Speaker 04: But the reason it's not an alternate remedy is because it doesn't take the place of the false claims act suit. [00:22:16] Speaker 04: It's not a fraud remedy. [00:22:18] Speaker 04: It's not [00:22:19] Speaker 04: It's not dealing with allegations of fraud against the government or the submission of false claims to the government. [00:22:24] Speaker 04: It's a very different violation of the law. [00:22:27] Speaker 04: And so it doesn't sort of as a matter of law take the place of a false claims act. [00:22:33] Speaker 04: So I think that the two kind of go hand in hand and I'm not not quite sure how to fully answer your question in terms of which is [00:22:40] Speaker 04: the narrower because I think they are in the sense sort of two sides of the same coin. [00:22:45] Speaker 03: Let me ask you some questions then about what it would mean for the government to pursue the FCA claim. [00:22:50] Speaker 03: So if the government intervenes, but then they proceed with the action, but they proceed to dismiss the action in that situation, would the FDCA claim be an alternate remedy? [00:23:06] Speaker 03: Because they've in some sense continued with it. [00:23:08] Speaker 03: They've entered, they've prosecuted, but they've exercised their prosecutorial discretion to dismiss the case, right? [00:23:15] Speaker 03: What happens to the FDCA claim in that? [00:23:19] Speaker 04: Yeah, I think in this case, if the government had dismissed the false claims act suit, that still would not make the FDCA action an alternate remedy. [00:23:28] Speaker 04: And the reason is because it's not a remedy for [00:23:32] Speaker 04: claim under the False Claims Act. [00:23:34] Speaker 04: It's not a remedy for allegations of submission of false claims to the government. [00:23:39] Speaker 04: It's a wholly different violation of the statute. [00:23:41] Speaker 04: So it's not a remedy for a claim within the meaning of the False Claims Act. [00:23:47] Speaker 04: And so it wouldn't be. [00:23:49] Speaker 04: Now, I mean, I think stepping back from this case, there might be circumstances where the government's dismissal [00:23:57] Speaker 04: could result in an alternate remedy if what the government pursued, an administrative fraud proceeding or some other civil fraud proceeding that actually did address the claim, that would be a different story. [00:24:10] Speaker 04: But I think here the key point is that the action under the Food, Drug, and Cosmetic Act is not, and I'll use the sure hand again, is not fraud remedy. [00:24:19] Speaker 04: It's not a remedy for the claim under the False Claim Act. [00:24:24] Speaker 05: I hear you did settlements. [00:24:27] Speaker 05: And so imagine the settlement in the False Claims Act suit was for $1,000. [00:24:33] Speaker 05: And then the simultaneous FDCA action was for $8 million or $10 million or $30 million. [00:24:49] Speaker 05: And so the government uses this [00:24:55] Speaker 05: non-FCA claim. [00:24:56] Speaker 05: The defendant doesn't care. [00:24:58] Speaker 05: They're going to pay the same amount one way or the other. [00:25:00] Speaker 05: If you want to stick it under in box A or box B, they don't care. [00:25:03] Speaker 05: But the government cares because it gets 100% versus 75% or 80% recovery. [00:25:11] Speaker 05: And so what's to stop the government, under your theory, from doing very small settlements or much smaller settlements of the FCA claim and then using some non-FCA type claim settlement [00:25:26] Speaker 05: put all the real recovery there and to keep the key tam, cut the key tam related around. [00:25:31] Speaker 04: I think what stops the government in part is another provision under under this under section 3730 c to capital b which gives the relator the right to object to a settlement and a settlement can proceed over the relator's objection only to the extent that the court determines after hearing that it is fair adequate and reasonable. [00:25:50] Speaker 05: And so I think to the extent there's a concern that the settlement- Well, the government may go into that and say, look, these are really high standards of proof. [00:25:59] Speaker 05: We don't think we are going to be able to prevail on the standards of fraud here. [00:26:03] Speaker 05: And let's make it not quite so transparent what's going on. [00:26:07] Speaker 05: And let's say that one's for a million dollars. [00:26:11] Speaker 05: But the government says, we're really worried about meeting the standard of proof of fraud, which is really hard here, sort of mens rea, the knowingly. [00:26:19] Speaker 05: um, here, uh, knowing as to the falsity. [00:26:23] Speaker 05: Um, so that's why we're settling that. [00:26:25] Speaker 05: And then we're going to go over here at the same time, or a week later, the Settling Defendant's not going to raise race through the CADA and says, here's our FDCA settlement. [00:26:37] Speaker 05: And that's where the huge amount of money is. [00:26:39] Speaker 05: And the PTAM relator doesn't know the FDCA settlements coming. [00:26:42] Speaker 05: I know it was mentioned here in the settlement agreement, but assume it's not mentioned. [00:26:46] Speaker 05: Doesn't know it's coming. [00:26:48] Speaker 05: So there's nothing to object to, or any objection is rejected by the district court. [00:26:53] Speaker 05: You understand the government's incentives here to split up its claims to the extent it's allowed to through the settlement process. [00:27:00] Speaker 04: Again, I think it really is a fairness issue. [00:27:03] Speaker 04: It doesn't turn something that's not otherwise an alternate remedy into an alternate remedy. [00:27:10] Speaker 04: And I think there is a perfect information at settlement. [00:27:14] Speaker 04: And there are a lot of variables and a lot of things to weigh. [00:27:17] Speaker 04: And I think to the extent the government has a valid concern about the ability to actually prevail through litigation and obtain a judgment. [00:27:30] Speaker 04: And so that's what makes settlement worthwhile. [00:27:33] Speaker 04: I mean, I think that's the same sort of analysis and calculus that the relator has to go through and that the court would have to assess and see whether the government was [00:27:43] Speaker 04: for raising a valid concern and whether the settlement taking into account all those sorts of variables and all the uncertainty, it's fair, adequate, and reasonable. [00:27:51] Speaker 04: But I think that really is something. [00:27:53] Speaker 05: Does the government have an obligation to tell the relator and the district court judge about any other remedies it intends to pursue for these same facts before a settlement's approved? [00:28:11] Speaker 04: I want to be careful here, because I think there may be some times when what the government can disclose. [00:28:16] Speaker 04: The government may not always be able to share everything, depending on what the other proceeding is. [00:28:22] Speaker 04: And for example, in the context of a criminal proceeding, there may be some confidentiality. [00:28:27] Speaker 05: Let's say for any other civil proceeding, because that's what I think is assumed here. [00:28:35] Speaker 05: Any other civil proceeding by the government? [00:28:38] Speaker 04: Again, I do want to be careful because there may be some confidentiality. [00:28:41] Speaker 05: Well, you could tell the pilot under seal with the district court, whether it's confidentiality. [00:28:46] Speaker 04: Yeah, I mean, I think certainly if the relator raised an objection and questioned the fairness or no. [00:28:52] Speaker 05: No, the relator doesn't know anything, doesn't raise an objection. [00:28:56] Speaker 05: Other than golly gee, I think we could prove the case. [00:28:59] Speaker 05: But doesn't object, it doesn't know about another proceeding. [00:29:01] Speaker 05: Do you think the government has an obligation so that the district court can assess the fairness [00:29:09] Speaker 05: of a settlement or dismissal decision to tell at least the district court, if not the relator, if there's some confidentiality reason about other civil remedies being pursued arising from these same facts. [00:29:23] Speaker 04: I think that the court isn't going to assess the reasonableness of the settlement unless the relator objects. [00:29:31] Speaker 04: So I think just sort of as a sort of an affirmative obligation, I don't think there's any obligation [00:29:37] Speaker 05: I said there was an objection, but the objection isn't based on the settlement. [00:29:40] Speaker 05: The objection is based on, I think, don't dismiss it. [00:29:42] Speaker 05: I think we can prove our case. [00:29:44] Speaker 04: I mean, I guess I'm sorry. [00:29:46] Speaker 04: I misunderstood your hypothetical. [00:29:49] Speaker 04: I apologize. [00:29:49] Speaker 04: I mean, I think to the extent that the court is then conducting some sort of hearing and looking at the question whether it is fair, adequate, and reasonable, then I think it is for the court to sort of ask [00:30:02] Speaker 04: what information it wants from the government. [00:30:04] Speaker 04: And to the extent that the court wants to know whether there are other actions, then yes, the government probably has a duty to disclose that. [00:30:12] Speaker 05: But I don't want to suggest that there's- Only if the court asks. [00:30:14] Speaker 05: To be clear, your position is only if the court asks. [00:30:22] Speaker 04: I may be [00:30:25] Speaker 04: sort of in over my head a little bit in terms of I can't promise what the government has to do without knowing all the circumstances of a particular case. [00:30:33] Speaker 04: I mean, I think to the extent we are in a situation where the the relator has objected and the district court is looking for information about the case, then I think it certainly would be reasonable for the government to [00:30:49] Speaker 04: to fair the relevant facts and circumstances with the court. [00:30:53] Speaker 03: On your view, though, the FDCA action is not an alternate remedy at all, and can never be an alternate remedy. [00:31:02] Speaker 03: Isn't that the government's position? [00:31:04] Speaker 04: That's correct, Your Honor. [00:31:08] Speaker 03: Yes. [00:31:08] Speaker 03: Okay. [00:31:09] Speaker 03: Then on Judge Millett's question, I mean, I think under your view, you wouldn't have to disclose that to the district court because it wouldn't be relevant to the FCA remedy at all. [00:31:23] Speaker 04: That's right. [00:31:23] Speaker 04: I mean, the only question for the court to be considering is whether the settlement under the False Claims Act is fair, adequate, and reasonable, and whether the recovery [00:31:33] Speaker 04: The proceeds, the settlement proceeds are reasonable with respect to the claim under the claim back. [00:31:40] Speaker 03: So can you just also tell me a little bit why. [00:31:42] Speaker 03: How do we know what an alternate remedy is right so you say very definitively FTC a is not even though arguably some of those. [00:31:52] Speaker 03: FDCA claims at least sound in something that sounds like fraud to the government. [00:31:57] Speaker 03: They're not FCA claims. [00:31:58] Speaker 03: I mean, what exactly is an alternate remedy or what would be included in that category on the government's view? [00:32:06] Speaker 04: I think it's one that is meant to take the place of a false claims act proceeding. [00:32:12] Speaker 04: So it's one that addresses allegations of false claims submitted to the government. [00:32:18] Speaker 04: So it's sort of fraud against the public best. [00:32:21] Speaker 04: And so, you know, I think that the quintessential example in the statute in C5 itself is an administrative fraud proceeding, where it's the same, you know, it's basically the same sort of claim. [00:32:32] Speaker 04: It's just adjudicated in a different proceeding. [00:32:38] Speaker 04: And I think that's sort of the gist of what an alternate remedy is. [00:32:42] Speaker 04: It's a remedy for the same claim, but just in a different form than a [00:32:46] Speaker 04: than a false claim fact suit, or it could potentially be another false claim fact suit. [00:32:51] Speaker 04: But I think the point is that it's still meant to address the same sort of allegations and the same sort of claim that you bring under the false claim facts. [00:33:00] Speaker 05: What if it wasn't obtaining their FDCA approval to market this drug? [00:33:05] Speaker 05: You made commitments to make disclosures and warnings to doctors and maybe warning labels or information with the drug. [00:33:14] Speaker 05: You made commitments. [00:33:16] Speaker 05: And the assertion is those were false commitments. [00:33:22] Speaker 05: You were never planning to keep them because you don't believe these disclosures really should have to take place. [00:33:28] Speaker 05: And so that's what the administrative proceeding was. [00:33:30] Speaker 05: You wrongfully obtained authorization to market this drug or marketed it improperly because you didn't include the appropriate disclosures and you never intended to. [00:33:45] Speaker 04: I think, again, it's, it's not that that doesn't have anything to do though with fraud against the government in the sense of No, but doesn't have to be the fist you're obtaining property as well. [00:33:57] Speaker 05: You're obtaining a license you're obtaining a permission and authorization from the government through false pretenses you say that isn't included. [00:34:04] Speaker 05: It doesn't mean anything in the definition. [00:34:07] Speaker 04: I don't know if there would be some theory of liability under the False Claims Act, but that's not the suit we have here. [00:34:15] Speaker 05: A request from the government is included to obtain something on your property. [00:34:22] Speaker 04: Your Honor, I don't want to speculate in terms of whether there would be some theory of liability under the False Claims Act. [00:34:28] Speaker 04: I think the key point here, though, is that's not the situation we have here. [00:34:32] Speaker 05: No, but you're asking for... We just don't get to write opinions that way. [00:34:37] Speaker 05: And so what assurance do we have against the government, especially in this double settlement situation where Judge Katz's wise point about race-to-cata is not gonna be implemented. [00:34:51] Speaker 05: What protection does a key term we later have if we adopt your definitions, adopt the rule you want in a case where the government puts most of the weight [00:35:06] Speaker 05: on the so-called non-FCA claim and most of the recovery there, but not so much that it's obvious what's going on and maybe doesn't say a word when the FCA settlement is going through. [00:35:20] Speaker 05: What protection? [00:35:24] Speaker 05: I think that the key protection is C to capital D. That can't happen if nobody knows what's going on and you weren't willing to say that there was any obligation. [00:35:33] Speaker 05: of the government to be upfront with what it's doing, even apart from a confidentiality concern. [00:35:41] Speaker 05: So I don't see how that's any protection at all if nobody else knows. [00:35:44] Speaker 04: But I think the fairness of whether the settlement under the False Claims Act is fair, adequate, and reasonable is sort of an independent question. [00:35:55] Speaker 04: The fact that the government may have an action for other claims that are not [00:36:01] Speaker 04: false claims, not the sort of claim that you would bring into the False Claims Act. [00:36:04] Speaker 04: The fact that the government may have that other action is really, in some sense, beside the point. [00:36:09] Speaker 04: I understand your concern about the shifting proceeds, but I think if that's the concern, then it's really just that what you're saying is that the settlement under the False Claims Act would not fair, adequate, and reasonable. [00:36:21] Speaker 04: That taking into account all the various [00:36:23] Speaker 04: You know, things to consider and the risks of litigation that that still is not fair adequate and reasonable and and that's what CPB is meant to address. [00:36:32] Speaker 04: And I think that's what we're later can still can raise her hand and say, I don't think this is fair adequate and reasonable. [00:36:37] Speaker 04: I think the government could really prove, you know, Has a strong claim and could really prove more and and [00:36:44] Speaker 04: get a better deal of litigation than we're getting here. [00:36:47] Speaker 04: And I think we later can do that, whether the government is pursuing or may pursue a separate action for a wholly different violation of the law. [00:36:59] Speaker 05: My colleagues have further questions. [00:37:02] Speaker 05: All right. [00:37:02] Speaker 05: Thank you. [00:37:03] Speaker 05: Thank you, Your Honor. [00:37:06] Speaker 05: OK. [00:37:06] Speaker 05: Mr. Mendoza, we'll give you two minutes for rebuttal. [00:37:10] Speaker 02: Thank you, Your Honor. [00:37:11] Speaker 02: I just want to quickly discuss the relatedness of the FDCA action. [00:37:16] Speaker 02: This is the exact same facts first alerted by my client in 2010. [00:37:22] Speaker 02: It alleges a form of fraud and practice, which is introducing misbranded drugs. [00:37:28] Speaker 02: There's no additional actual [00:37:30] Speaker 02: difference between the actions of the defendant in both proceedings and the government settled both of them simultaneously with novo nordis consent. [00:37:42] Speaker 02: but then waited until after the FCA action had been resolved to file the FDC action in the same court before the same judge with the same Department of Justice attorneys. [00:37:54] Speaker 02: So we don't, I disagree with my friend from the government that this is not in any way a form of fraud. [00:38:03] Speaker 02: This is the Congress did not impose any sort of formal [00:38:07] Speaker 02: fraud requirement on the alternate remedy. [00:38:10] Speaker 02: That's why it said any alternate remedy notwithstanding the government's decision to intervene. [00:38:15] Speaker 02: And Judge Katz is here completely correct that this is a very unusual thing for the government to have done the separate actions. [00:38:25] Speaker 02: And as Judge Millett, you were discussing that it wasn't, a relator was not, there's no right for the relator to know [00:38:34] Speaker 02: to participate in settlement negotiations or to get information from the government. [00:38:39] Speaker 02: What's afforded the relator is a relator share right and the right to object. [00:38:44] Speaker 02: Just on the right to object, I'd also like to point out that the district court has made no findings as to whether a relator agreed to waive her alternate remedy rights and [00:38:59] Speaker 02: There was nothing other than a reference to an FDCA action in the FCA settlement to the drug Victoza. [00:39:07] Speaker 02: It could have been for any conduct. [00:39:09] Speaker 02: It's certainly not a very strange thing for the government to do. [00:39:11] Speaker 05: Did your client inquire? [00:39:15] Speaker 05: Your client actually was given notice of another settlement. [00:39:19] Speaker 05: Did your client seeing that in the settlement agreement go, hey, wait, I need to know more about what that is, what the claim is there that's being settled before I can tell whether this is fair? [00:39:30] Speaker 02: Uh, your honor, the, um, the, uh, council for relator was told that, I mean, again, the district court didn't find this, uh, didn't address this, but, uh, council for relator was told that this was all the government could get from defendant Nova Nordisk. [00:39:45] Speaker 05: Uh, when you were told there was another action or settlement out there. [00:39:49] Speaker 05: My, my question to you is simply, did you inquire further about the [00:39:58] Speaker 05: relatedness or not of that proceeding to the factual allegations of issue here. [00:40:05] Speaker 02: I believe Council for Relator did inquire and there was a back and forth. [00:40:10] Speaker 02: This is discussed in the Frazier declaration. [00:40:14] Speaker 05: Do they tell alert the district court to any concerns or they had no concerns based on this back and forth? [00:40:21] Speaker 02: As far as I know, there was no communication about this with the district court. [00:40:27] Speaker 02: And in fact, the district court wasn't aware of the FTC action at all until it was filed in the district court on September 5th, four days after the FCA action was dismissed. [00:40:36] Speaker 05: So Ms. [00:40:37] Speaker 05: Kennedy's counsels didn't raise any concerns about this or question even just questions or need for information about this with the district court. [00:40:44] Speaker 02: Well, your honor, I can't speak. [00:40:48] Speaker 02: I wasn't there, but my understanding is this is discussed in the Frazier Declaration. [00:40:53] Speaker 02: I believe there was a back and forth over what- I'm asking whether anything was raised with the district court, and you said the district court didn't- No, your honor. [00:41:01] Speaker 02: A relator was not in a position to raise it with the district court. [00:41:05] Speaker 02: And yes, the government has many remedies and many possible actions against pharmaceutical companies, and this could have been [00:41:12] Speaker 02: for any, for unrelated conduct. [00:41:14] Speaker 02: And given the unusual structure of the settlements, that's what would have made sense. [00:41:20] Speaker 02: Thank you. [00:41:21] Speaker 05: Do you have any questions? [00:41:24] Speaker 05: No. [00:41:25] Speaker 05: Thank you to both counsel for your helpful arguments. [00:41:27] Speaker 05: The case is submitted.