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Three times previously we have “reported from the front” on the federal government’s efforts to dismiss False Claims Act litigation – ostensibly (and often ostentatiously) filed in the government’s name – after the government has concluded that the particular case is more bother than it is worth.  The most recent of those posts was late last year, and reported on Polansky v. Executive Health Resources, Inc., 17 F.4th 376 (3d Cir. 2021).…

Continue Reading The FCA Front Moves To The Supreme Court

We’ve long believed that False Claims Act (“FCA”) cases – particularly in the health sciences area – are out of control.  Twenty-first century lawyers, and their solicitation techniques, have turned Abraham Lincoln’s Nineteenth Century law aimed at corrupt government contractors into its own form of corruption.  Today’s FCA racket is complete with professional relators, deceit…

Ever since Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), held that state-law claims alleging fraud on the FDA are preempted, plaintiffs have been attempting to find some other way of bringing claims that attribute FDA actions to a defendant’s false pretenses.  Since preemption is based on the Supremacy Clause, and the constitutional relationship between the federal and state legal systems, the doctrine doesn’t apply where recovery is sought under a federal statute.  Since the False Claims Act (“FCA”) is a federal statute, sporadic attempts have been made to bring private fraud-on-the FDA-claims under that statute.  Bexis, who invented what became the Buckman fraud-on-the-FDA/implied-preemption defense in the Bone Screw litigation, even worked on an amicus brief in one such case, United States ex rel. Gilligan v. Medtronic, Inc., 403 F.3d 386 (6th Cir. 2005), that was ultimately decided (favorably to the defense) on other grounds.

A little less than a year ago we reported on an excellent FCA result in United States ex rel. D’Agostino v. EV3, Inc., 153 F. Supp.3d 519 (D. Mass. 2015).  Ever since we’ve been holding our breath, because the First Circuit has been known for pro-plaintiff rulings in cases against our drug and medical device clients.  Indeed, the First Circuit once led our list the worst drug/medical device cases of the year for two years running – in 2012 and 2013.  Whether something’s changed since then in the First Circuit, we can’t say.  But we can report that the district court’s dismissal of fraud-on-the-FDA-based FCA claims in D’Agostino has just been affirmed with an excellently reasoned decision.  See D’Agostino v. EV3, Inc., ___ F.3d ___, 2016 WL 7422943 (1st Cir. Dec. 23, 2016).

The facts in D’Agostino were thoroughly explained in our prior post.  Briefly, the relator (a fired sales rep) alleged that the defendants pulled fast ones on the FDA with respect to the approvals/supplemental approvals of two medical devices, one called “Onyx” and the other “Axium” (these defendants evidently like “x” as much as did the former Standard Oil of New Jersey).  The relator-plaintiff claimed that the defendants:  (1) sought approval of Onyx for a narrow indication, but intended to promote it more broadly off-label (exactly the claim in Buckman); (2) failed to live up to promises made to the FDA concerning extensive surgeon training in using Onyx (also a form of fraud on the FDA); (3) concealed the failure of Onyx’s active ingredient in a different device (ditto); and (4) failed to recall earlier versions of Axium after obtaining FDA approval (not fraud on the FDA, but a theory that could dangerously penalize innovation).  See D’Agostino, 2016 WL 7422943, at ??? (for some reason WL has omitted star paging, so we’ll also cite to the slip opinion), slip op. at 4-8.  Critically, although the FDA was informed of all of these claims, the Agency never instituted any enforcement action, nor did the government elect to join the D’Agostino FCA action.  Id. at 9, 15.  As discussed in the prior post, the district court dismissed all of these claims with prejudice as futile.…

Continue Reading Fraud on the FDA Doesn’t Fly Under the FCA Either

What follows is the promised second guest post from Reed Smith’s Lindsey Harteis concerning the UHS v. Escobar False Claims Act case.  Lindsey’s first post set the stage.  The Supreme Court decided Escobar yesterday, so now she’s back with her take on the version of FCA “implied certification” that the unanimous Supreme Court recognized.

As always our guest posters deserve all the credit, and any blame, for the contents of their posts.

^^^^^^^^^^^

To someone born in 1984, the phrase “Elvis Lives” is tough to figure out.  We don’t know what things were like back when he was alive and on TV (from the waist up).  But we do get the general concept that something can live on after death, just in a different way.  And we definitely enjoyed the trio of violin-playing Elvises in a Coldplay music video a few years back.  So, Elvis is still around.  Just in a different way.

Unfortunately for us defense bloggers, so is the implied certification theory.  Yesterday the Supreme Court handed down its opinion in Universal Health Services, Inc. v. Escobar, No. 15-7, slip op. (U.S. June 16, 2016).  This is the pending Supreme Court decision we blogged about last month (here) that has determined both the scope and validity of the implied certification theory of False Claims Act liability.  While the theory survived, the opinion is not all bad news.  In fact, it should have relators all shook up more so than defendants.  So we’ll get going with a little less conversation and try to ease your suspicious minds about how a case that allows a pro-relator theory of liability to survive can actually still be good.

The case is overall good for FCA defendants because the Supreme Court emphasized just how rigorous the materiality threshold is in these cases.  The bad news is that the implied certification theory is still (at least in some circumstances) valid.  (As a quick refresher, implied certification cases are founded on the idea that when a provider submits a claim for payment to the Government, that claim impliedly certifies compliance with all conditions of payment.  Thus, the theory goes, if the claim fails to disclose the defendant’s violation of a material statutory, regulatory or contractual requirement, that claim is false and actionable under the FCA.)…

Continue Reading Guest Post – FCA Implied Certification, the Slim, Early Elvis Version

How much is “enough?” Will we have enough money to retire someday? Did the Drug and Device Law College Sophomore study enough for her computer science midterm? Is there enough salt in the matzo ball soup? In the realm of summary judgment, we who represent defendants are painfully familiar with courts that dodge this question, allowing claims to proceed and avoiding the complicated issues of admissibility that determine whether a plaintiff has presented enough evidence to create a genuine issue of material fact.

Not so in United States of America ex rel. John King and Tammy Drummond, et. al. v. Solvay S.A., et al.. 2016 U.S. Dist. LEXIS 43133 (S.D. Tex. Mar. 31, 2016). In King, a False Claims Act case, the Relators claimed that the defendant promoted three drugs for off-label uses, and that the off-label promotion resulted in false claims being submitted for prescriptions paid for by government health care programs. King, 2016 U.S. Dist. LEXIS at *5. The defendants moved for summary judgment on these claims, arguing that the relators did not have any admissible evidence of false claims. Specifically, the defendants argued that the Relators relied on inadmissible Texas and New York claims data to create summary charts of supposed false claims and didn’t disclose who created the charts or explain how they were created. Further, the defendants objected to the Relators’ reliance on sales representatives’ “call notes,” arguing that the call notes contained hearsay and lacked foundation. Id. at *8-9.

New York Claims Data

The Relators claimed that the New York claims data was self-authenticating because it was produced in response to a subpoena. The court disagreed, holding, “. . .[W]hile certainly Relators’ assertion that the State of New York produced the New York Claims Data pursuant to a subpoena must be what was requested in the subpoena,” documents produced pursuant to a subpoena are not always self-authenticating. Id. at *13. In contrast to a case cited by the Relators, which involved documents that were going to be used against that producing party, the Relators, who sued on behalf of the State of New York, were using the documents to benefit New York. The court concluded that the New York claims data was not self-authenticating “simply because it was produced pursuant to a subpoena.” Id. at *13-14.…

Continue Reading Summary Judgment for Defendants in FCA Action: No Admissible Evidence of False Claims

This post is from the non-Reed Smith side of the blog.

Modglin v. DJO Global Inc., 2015 U.S. Dist. LEXIS 60812 (C.D. Cal. May 8, 2015) is one of those cases that has so much good stuff going on, we just want to dive right in.  It is the complete dismissal with prejudice of an attempt to state a False Claims Act (“FCA”) case against the manufacturers of Pre-Market Approved (“PMA”) bone-growth stimulators based on allegations that the manufacturers were aware their products were being used off-label – a fact they failed to disclose to Medicare and other federal healthcare plans when submitting claims for reimbursement.  We’ve got allegations of fraud, connected to off-label promotion, surrounding a PMA medical device and all tied up in a dismissal with prejudice.  It’s like package wrapped in shiny paper with a big red bow on top.  As pretty as the trappings are, we’re still going to rip them off to see what’s inside. And we don’t think you’ll be disappointed.

Relators’ specific allegations are that defendants requested reimbursement for stimulators approved for lumbar spine use when they knew that the stimulators were being used with the cervical spine – an off-label use – which they claim is not allowed.  Id. at *25.  So, what is allowed?  Under the Medicare Act, to be reimbursed, the device must be “reasonable and necessary” for diagnosis or treatment.  Id. at *13.  The Department of Health and Human Services (“HHS”) has decided that PMA devices generally can be reimbursed.  Id. at *15.  So far so good for stimulators.…

Continue Reading California Federal Court Gets Tough on Off-Label Promotion FCA Claims

Back in February, we hosted a guest post about United States ex rel. Rostholder v. Omnicare, Inc., 745 F.3d 694 (4th Cir. 2014), an extremely important False Claims Act (“FCA”) decision for the defense-side’s effort to prevent the FCA from being converted into an improper private enforcement mechanism for the FDCA.

We’ve got more news.  Certiorari has been denied.

Here’s a much briefer guest post (see our original one for details of the original decision) from Reed Smith partner Colin Wrabley (a member of the victorious team), putting this latest development in context.  As always our guest posters get all the credit (and any blame) for their work.…

Continue Reading Another Guest Post on Rostholder FCA Developments

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