FOURTH DIVISION
BARNES, P. J.,
RAY and MCMILLIAN, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
March 23, 2016
In the Court of Appeals of Georgia
A15A1733. JORDAN et al. v. STATE OF GEORGIA.
BARNES, Presiding Judge.
Eight individuals brought suit on behalf of the State of Georgia against three
related pharmaceutical companies under the Georgia False Medicaid Claims Act
(GFMCA), OCGA § 49-4-168 et seq.1 The plaintiffs alleged that the companies
fraudulently obtained millions of dollars in Medicaid payments for an anti-psychotic
medication that the companies improperly marketed to healthcare providers for “off-
label” uses, such as to calm elderly patients with dementia and help them sleep.
The State moved to dismiss the complaint based on an earlier-filed federal
False Claims Act, 31 USC § 3729 et seq., suit against the same pharmaceutical
companies for similar claims. The State became a plaintiff in the federal suit before
1
The individual plaintiffs are Steven Jordan, J. Dorsey Smith, M. J. Collins,
Melvin Boykin, Barbara Dekle, Sheryl Thompson, Millie Reddish, and Mary Morton.
The defendant pharmaceutical companies are Janssen Pharmaceuticals, Inc., Janssen
Products, L.P., and Johnson and Johnson.
this case was filed, and entered into a settlement agreement with the pharmaceutical
companies after this case was filed. The trial court granted the State’s motion to
dismiss, and the plaintiffs have appealed.2 For the reasons that follow, we affirm.
In 2007, the legislature enacted the GFMCA and created a procedure by which
Georgia’s Attorney General or its private citizens could sue people and entities for
making false or fraudulent Medicaid claims that depleted the state treasury. OCGA
§ 49-4-168.2 (a), (b). The Act provides for penalties and damages to be assessed
against the defendants, and was designed to reward individuals “when their initiative
results in civil recoveries for this state.” Ga. L. 2007, p. 355, § 1/HB 551. See
Michael A. Sullivan, A “False Claims Act” Is Finally Enacted in Georgia, Ga, Bar
J., October 2007 at 12. Private citizens must file the action under seal in the name of
the State, and must first serve a copy of the complaint and any material supporting
evidence on the Attorney General. OCGA § 49-4-168.2 (c) (1), (2). The case remains
under seal for at least 60 days “to allow the Attorney General to investigate the
2
The appellate record in this case was originally transmitted under seal, and
after briefing the plaintiffs moved this court to unseal it. The State objected, and we
remanded the case for the trial court to determine whether to unseal all or part of the
record. Jordan v. State of Georgia, Case Number A15A0137. Upon remand, the trial
court entered an order unsealing the record, and the case was returned to this court
for resolution on the merits.
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allegations of the complaint” and either elect to intervene or move the court to extend
the time under which the complaint remains sealed. OCGA § 49-4-168.2 (c) (2), (3).
Before the expiration of the time during which the case is sealed, the statute directs
that the Attorney General shall either proceed with the action and prosecute the case
or decline to take over the action; if the latter, the private citizens have the right to
proceed with the action on their own. OCGA § 49-4-168.2 (c) (4). The trial court may
then unseal the complaint and the defendant may be served. OCGA § 49-4-168.2 (c)
(2), (5).
If the Attorney General elects to intervene, he may seek to limit the
participation of the individuals who initiated the action, may move to dismiss the
complaint, or may settle the complaint over the individual objections if the court
determines the settlement would be fair, adequate, and reasonable under all the
circumstances. OCGA § 49-4-168.2 (d) (1)-(3). Even if the Attorney General initially
elects not to intervene, he retains the right to intervene “at a later date for any
purpose, including, but not limited to, dismissal of the civil action notwithstanding
the objections of the person initiating the civil action,” as long as the person has been
notified by the Attorney General that a motion to dismiss has been filed and is given
an opportunity for a hearing on the motion. OCGA § 49-4-168.2 (f).
3
Additionally, the GFMCA has a “first to file” provision, specifying that
“[w]hen a person brings a civil action under this subsection, no person other than the
Attorney General may intervene or bring a related civil action based on the facts
underlying the pending civil action.” OCGA § 49-4-168.2 (c) (6). The Act also
provides that “[i]n no event may a person bring a civil action under this article which
is based upon allegations or transactions which are the subject of a civil or
administrative proceeding to which the State of Georgia is already party.” OCGA §
49-4-168.2 (j).
The complaint and exhibits in this case were filed on March 20, 2013. The
exhibits included affidavits from the individual plaintiffs, six of whom are healthcare
workers who were or had been employed at Pleasant View Nursing Home and two
of whom were sales representatives for the defendants. On March 26, 2013, the
plaintiffs filed with the trial court a copy of the disclosure statement given to the
Attorney General, which included the complaint, exhibits, and a detailed summary of
the evidence supporting their claim. The plaintiffs contended that the defendant
pharmaceutical companies had caused false claims to be submitted to the State
Medicaid program “as a direct result of their false and misleading marketing of the
prescription drug Risperdal regarding its efficacy and safety profile, as well as their
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promotion of Risperdal for ‘off-label’ uses not approved by the U.S. Food and Drug
Administration.”
On May 21, 2013, the State requested a four-month extension of the time
during which it could elect to intervene, and asked the trial court to partially lift the
seal to disclose the complaint to other state attorneys general who were members of
the National Medicaid Fraud Control Units and to the U. S. Department of Justice
(DOJ). The plaintiffs consented to the extension and partial lifting of the seal.
The State submitted an in camera memo supporting its request for an extension
and to partially lift the seal, explaining that both the Fraud Control Units and the DOJ
had teams assigned to multiple federal cases involving the same allegations of fraud
against the same defendants, and that the State of Georgia was a named plaintiff in
those federal cases. The State sought to share the complaint so it would be able to
“evaluate the allegations with the government entities that have already invested
substantial resources into investigation of the same claims,” and thus make an
informed decision about whether to intervene in this action. The trial court granted
the extension and partially lifted the stay as requested.
The next pleading in the record is the State’s motion to dismiss the complaint
with prejudice, filed on March 19, 2014. The State argued that this action is
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jurisdictionally barred by the GFMCA because a federal lawsuit with identical claims
was filed almost ten years earlier, and because the State had already settled those
claims, precluding the trial court from obtaining jurisdiction to consider these claims.
Included with the motion was a copy of the fourth amended federal complaint filed
by Victoria Starr against these defendants on March 3, 2010, alleging complaints that
mirror those alleged in the case at bar.3 The State of Georgia was a named plaintiff
in the amended federal complaint, which contained detailed factual allegations about
the defendants’ illegal kickbacks and fraudulent promotion of Risperdal for use in
“elderly patients, children and prisoners . . . [who] suffer from a wide spectrum of
psychiatric mood disorders not normally considered by the FDA to be appropriate for
treatment with the highly sedating drug Risperdal.” Count 5 of the federal complaint
alleged that the defendants violated the GFMCA. The federal complaint was
dismissed on December 31, 2013, with an order that also unsealed itself, the amended
complaint, and the parties’ joint stipulation of dismissal.
The State also submitted as an exhibit to its motion to dismiss this case a copy
of the settlement agreement between the State and the pharmaceutical companies,
which acknowledged the States’ claims against the companies for their conduct in
3
Starr’s initial complaint was filed in April 2004.
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marketing Risperdal for off-label use and paying illegal remuneration to healthcare
and pharmacy providers to induce them to promote and prescribe the drug. The
agreement provided that Janssen Pharmaceuticals, Inc., would plead guilty to a
federal criminal charge of introducing misbranded drugs into interstate commerce and
that the defendants, while admitting no further wrongdoing, would pay to the United
States and participating States a total of $1,273,024,000 plus interest accrued until the
money was disbursed. Participating States, that is, those that signed the agreement
and agreed to dismiss with prejudice any similar pending state law claims they had
the authority to dismiss, were each allocated $33,435,877 plus interest, with
$13,285,638 payable directly to the States and the difference payable to the federal
government. The settlement agreement was signed by a representative of Georgia’s
Attorney General on September 3, 2013.
The plaintiffs objected to the State’s motion to dismiss, arguing that the State
failed to file notice of its intention to intervene or not in this case before the
expiration of the extension of time granted by the trial court. They also argued that
their case was the first filed because the unsealed federal documents do not show that
the federal plaintiffs had served the State with a copy of the complaint and all
material supporting information as required by OCGA § 49-4-168.2 (c) (1), or that
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the State investigated the Starr complaint and elected to intervene within the time
frame set out in the Act at OCGA § 49-4-168.2 (c) (2)-(4). Finally, they argued that
the Starr complaint failed to state the Georgia claim with the specificity required by
the Act.
Following a hearing in May 2014, the trial court granted the State’s motion to
dismiss in July 2014, finding that the State had settled the Starr case in November
2013. As a condition for recovery, the State agreed to release with prejudice claims
that the defendants
knowingly ... (a) promoted the sale and use of Risperdal for conditions
and patients which [were] not approved as safe and effective by the
Food and Drug Administration ... (b) made false and misleading
statements about the safety and efficacy of Risperdal; and (c) offered
and paid illegal remuneration to healthcare professionals and long term
care pharmacy providers to induce them to promote and/or prescribe
Risperdal in violation of [federal] and state anti-kickback statutes.
The trial court further found that the federal court had granted the State of Georgia’s
request for a dismissal with prejudice of the claims identified in the settlement
agreement, and that the federal dismissal order was a final judgment on the merits for
res judicata purposes. Finally, the court found that the claims in this case were based
on the same cause of action as the Starr case.
8
On an appeal of a trial court’s order that dismisses a cause of
action for failure to state a claim upon which relief can be granted, the
reviewing court must determine whether either party has presented
matters outside the pleading to the trial court, and if so whether the trial
court excluded or considered such matters. Therefore, if matters outside
the pleadings were presented to the trial court, which then considered
these matters as it resolved the case, then a reviewing court is required
to treat the resulting trial court’s order as a ruling on a motion for
summary judgment.
(Citations and punctuation omitted.) Johnson v. RLI Ins. Co., 288 Ga. 309, 310 (704
SE2d 173) (2010). The trial court in this case clearly considered matters outside the
pleadings, including the federal Starr complaint and settlement, and thus we must
treat the resulting order as a ruling on a motion for summary judgment. Id. Summary
judgment is proper when there is no genuine issue of material fact and the movant is
entitled to judgment as a matter of law, and we review a summary judgment grant de
novo, construing the facts in favor of the respondent. Muhammad v. Allstate Ins. Co.,
313 Ga. App. 531, 533 (2) (722 SE2d 136) (2012).
The plaintiffs assert that the federal complaint was procedurally and
substantively defective and therefore did not bar their claims under the GFMCA.
They also argue that the issue is not res judicata because defects in the federal
9
complaint prevented the State from settling the claims. We need not determine
whether the federal Starr complaint complied with what the plaintiffs describe as the
“mandatory procedures” of the GFMCA or whether the Starr complaint lacked the
specificity required by the GFMCA, because the record shows that the plaintiffs’
claims are barred by the doctrine of res judicata.
We have found no Georgia appellate cases addressing claims made under the
GFMCA, although the body of federal law interpreting the almost-identical federal
False Claims Act is extensive. We need not dive very deeply into the pool of federal
False Claims Act case law to resolve the case before us, however, because the
familiar doctrine of res judicata applies to bar this complaint.
The doctrine of claim preclusion (or res judicata) bars the parties to an
action from relitigating matters that were or could have been litigated in
an earlier suit. The doctrine facilitates the conclusive resolution of
disputes by reducing the expense and vexation attending multiple
lawsuits, conserving judicial resources, and fostering reliance on judicial
action by minimizing the possibility of inconsistent decisions.
(Citation and punctuation omitted.) Shurick v. The Boeing Co., 623 F.3d 1114, 1116
(II) (11th Cir. 2010) (final judgment in federal False Claims Act case precludes
further litigation in state whistleblower case involving, among other things, “the same
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common nucleus of operative fact”). The common-law doctrine of res judicata is
codified in this state at OCGA § 9-12-40, and for the bar to apply, “three prerequisites
must be satisfied: (1) identity of the parties or their privies; (2) identity of the cause
of action; and (3) previous adjudication on the merits by a court of competent
jurisdiction.” (Citations omitted.) Brown & Williamson Tobacco Corp. v. Gault, 280
Ga. 420, 421 (627 SE2d 549) (2006).
The three prerequisites necessary to bar further litigation in this case are met.
First, the parties are in privity. The State of Georgia became a plaintiff in the Starr
suit, this suit was brought by the plaintiffs on behalf of the State, and both cases were
filed against the same pharmaceutical companies. “A privy is generally defined as one
who is represented at trial and who is in law so connected with a party to the
judgment as to have such an identity of interest that the party to the judgment
represented the same legal right.” (Citation and punctuation omitted.) Brown &
Williamson Tobacco Corp., 280 Ga. at 421 (1). In Brown, the executor and widower
of a woman who died of lung cancer brought a product liability suit against Brown
and Williamson, seeking compensatory and punitive damages. Our Supreme Court
determined that the punitive damages claim was barred by the doctrine of res judicata,
because the State had previously brought and settled a similar suit against the
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company. Id. at 421-423 (1). The court reasoned that, while the compensatory
damages claim was personal, the State had brought its punitive damages claim on
behalf of all of its citizens and therefore was in privity with the individual plaintiffs
with regard to that claim. Id. Similarly, in this case, the State and the plaintiffs acting
on behalf of the State were in privity.
Second, the cause of action in the prior suit is the same as the cause of action
in the present case. While the plaintiffs correctly assert that the information in their
complaint and exhibits is more specific to Georgia than the information contained in
the Starr complaint, the actions alleged in the federal suit clearly encompass those
alleged in the state suit. In the federal action, the State sought compensatory damages
to reimburse the treasury for funds spent by the State for health care costs attributable
to the pharmaceutical companies’ improper promotion and marketing of Risperdal.
In the current proceeding, plaintiffs also seek compensatory damages on behalf of the
State to reimburse the treasury for funds spent by the State for health care costs
attributable to the pharmaceutical companies’ improper promotion and marketing of
Risperdal. Thus, we “find identity of the causes of action.” Brown & Williamson
Tobacco Corp., 280 Ga. at 423 (2).
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The third prerequisite for the application of the doctrine of res judicata requires
that the prior claim be adjudicated on the merits by a court of competent jurisdiction.
OCGA § 9-12-40. The plaintiffs argue that this prerequisite is not met because the
Starr settlement was conditioned on the termination of this case, and this case has not
terminated. The State points out that the settlement was not conditioned on the actual
termination of this case, but rather on the State’s agreement “to dismiss with prejudice
any state law claims which the State has authority to dismiss” and not to “engage[]
in litigation” with the defendants regarding the covered conduct. The federal court
granted the State’s request to dismiss with prejudice the claims against these
defendants as described in the settlement agreement. “A voluntary dismissal with
prejudice constitutes a judgment on the merits for purposes of res judicata with regard
to the same parties and the same cause of action.” (Citation and punctuation omitted.)
Dept. of Transp. v. Revco Discount Drug Centers, 322 Ga. App. 873, 875 (1) (746
SE2d 631) (2013).
As all three prerequisites to finding this action barred by res judicata have been
met, the trial court did not err in granting the State’s motion to dismiss.
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2. The plaintiffs’ remaining enumerations of error questioning the procedural
and substantive validity of the Starr complaint under the GFMCA are rendered moot
by our holding in Division 1.
Judgment affirmed. McMillian, J., concurs. Ray, J., concurs in judgment only.
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