Third Time’s Not the Charm: FCA Suit Dismissed for Failure to Plead Materiality

On March 9, 2018, in United States ex rel. Schimelpfenig et al v. Dr. Reddy’s Laboratories Limited et al., a district judge in the Eastern District of Pennsylvania dismissed a False Claims Act suit alleging that the defendant pharmaceutical company that sold prescription drugs submitted false claims because the packaging had not been tested in accordance with federal requirements for child safety. Having already given the relators a chance to remedy the same deficiencies in the second amended complaint, Judge Jones dismissed the third amended complaint with prejudice after finding that relators failed to show that compliance with federal packaging requirements was material to the government’s payment decision. Thus, this decision is yet another example of a court implementing the Supreme Court’s guidance from the landmark United States ex rel. Escobar decision to enforce the materiality standard even on motions to dismiss.