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Usually, when res judicata comes up in our cases, we are trying to fend it off. Luckily, non-mutual offensive res judicata is rarely recognized, so plaintiffs usually fail when trying to preclude the drug or device manufacturer from putting up a full defense based on a prior ruling or verdict in a different case. Occasionally, in serial product liability litigation, we find a plaintiff trying to sue over the same injury twice, but that rarely requires motions, let alone motions based on res judicata. Today, however, we are discussing a Georgia state court case where a drug company’s settlement with Georgia and other governmental entities in a longstanding federal case precluded eight Georgians from suing the same company on behalf of Georgia. Were we to channel a fellow blogger, we might draw some parallel to “The Walking Dead,” which is filmed in Georgia and had been based in Georgia until season 5 (when the gang headed up to Virginia). We might say something about how related cases that pop up after an adjudication on the merits are like “walkers” and have to be disposed of accordingly. We might inject some spoilers by mentioning which main character got shot in the most recent episode and which main character is rumored to die in the next episode. We might even connect these events to an earlier failure to resolve an earlier dispute more definitively. Instead, we will just stick to the case.

Jordan v. State, No. A15A1733, 2016 Ga. App. LEXIS 176 (Ga. App. Mar. 23, 2016), does not have the drug manufacturer as a party to the appeal because it was the State of Georgia that filed and won the motion to dismiss below (although treated as a motion for summary judgment on appeal). This procedural quirk flows from the nature of qui tam litigation. In 2004, a relator named Starr filed a suit in the Eastern District of Pennsylvania against her former employer claiming that its marketing of a prescription anti-psychotic for off-label uses created liability under various statutes, including the federal False Claims Act for reimbursement by various governmental entities. (Some of this background is presented in Jordan, but some details are added from public information.) Over time, other relators filed similar cases, the United States intervened, and Starr’s complaint was amended to include claims under the later-enacted Georgia False Medicaid Claims Act (GFMCA) and various similar state statutes. In late 2013, there was a massive settlement of criminal and civil cases between the manufacturer, the United States, and a number of states—including Georgia—resulting in, among other things, payment of millions of dollars to Georgia and a dismissal with prejudice of the Starr case.Continue Reading Some Good Georgian Res Judicata

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It’s not as if the standard for amending pleadings is a particularly hot DDL topic, but here we go for the second time this week discussing a case where precisely that was at issue.  This time the case was U.S. ex rel. D’Agostino v. EV3, Inc., 2015 U.S. Dist. LEXIS 173025 (D.Mass. Dec. 30, 2015), and, again, the motion to amend was denied.  The reasons for the denial were futility and undue delay.  The reasons for those reasons are fairly interesting.

But first, permit us to vent about qui tam cases.  That “ex rel” in the caption of today’s case tells you that it is a qui tam case.  The D’Agostino case was brought by a former employee of one of the defendants.  Some might call him a whistle-blower.  Some, as we shall see, might not.  He was a medical device sales rep and he alleged that the defendants violated the federal False Claims Act and the False Claims Acts of twenty-six states and the District of Columbia.  A False Claims qui tam action is brought on behalf of the government.  It is a relic from the Civil War era and arose to address sellers of war goods who were cheating the government.   A do-gooder who knew about the cheating would file an action and get moneys returned to the treasury, with the do-gooder taking a cut.  Everybody wins, right?  By the way, the do-gooder is not actually called a do-gooder; instead, the term “relator” is used.  After the relator files a qui tam action, the government then decides whether it wants to intervene in the case.

In D’Agostino, the governments  did not intervene.  By the light of any sentient onlooker, that decision not to intervene suggests that the case is not especially strong.  It also appears that some of the whistle-blowing was no big deal, because some of the allegations were already matters of public disclosure.  That is not at all atypical of these cases.  While the qui tam plaintiffs bar likes to brag about how it is doing a public service, more often the cases are merely opportunistic lunges for bounties.  That qui tam plaintiffs bar is also indignant that not every state has seen fit to pass its own False Claims Act.  Multiple false claims acts multiply bounties without actually increasing any worthwhile enforcement.  And we have not yet even gotten to the bit about how the allegations of false claims are specious because there is no actual false claim.Continue Reading D.Mass. Invokes Public Disclosure Bar, Demands Specificity, and Refuses to Second-Guess FDA in Dismissing Axium/Onyx Qui Tam Case

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Halloween has come and gone.  The Drug and Device Law Little Dogs stayed in their costumes (Batgirl and a rabbi) long enough to be photographed for (unsuccessful) entries for a pet costume contest.  There was ample candy – about 15 pounds, which more than sufficed for the seven times the doorbell rang. And we enjoyed the modest stream of excited kids, flushed with the thrill of pretending to be something they weren’t.

We assume that the plaintiff/relator in United States ex rel Gerasimos Petratos v. Genentech, 2015 U. S. Dist. LEXIS 146525 (D.N.J. Oct. 29, 2015) is less thrilled.  In this qui tam action, plaintiff pretended that the wrongdoing he alleged was something it wasn’t:  a violation of the False Claims Act.  The court summed it up in the first paragraph of its decision: “This case concerns whether the False Claims Act can be extended to cover wrongful behavior that does not lead to a false claim.  It cannot, so Plaintiff’s Amended Complaint must be dismissed.”  Petratos, 2015 U.S. Dist. LEXIS 146525 at *1.  Two big issues were decided:  (1) no product liability-style (prescriber specific) causation in FCA cases; and (2) the FCA is not a catch-all negligence per se statute for regulatory violations.  The defense won both, so this case is significant.

The allegations surrounded defendant Genentech’s anti-cancer drug Avastin, a “monoclonal antibody cancer drug that limits the growth of tumors by preventing the growth of blood vessels that feed tumors.”  Id.  The court explained that, in 2010, the Oncologic Drugs Advisory Committee of the FDA recommended denying approval of Avastin for metastatic breast cancer due to concerns about clinical trial data Genentech had provided.  Nevertheless, later that year, the FDA approved Avastin for treatment of patients with metastatic breast cancer.  Id. at *3.   The approval “was conditioned on completion of adequate studies showing the drug’s clinical benefit.”  Id.   Subsequent clinical studies failed to demonstrate such benefit, and the FDA removed the metastatic breast cancer indication from Avastin’s label in 2011.  Id.  The drug, which can cause serious side effects, remains approved to treat metastatic colorectal cancer, nonsquamous non-small cell lung cancer, glioblastoma, and metastatic renal cell carcinoma.  Id.  In addition, it is used off label for renal cancer, ovarian cancer, ovarian cancer, pancreatic cancer, and various eye diseases.   Id. Continue Reading No False Claims Act Case Where There is No False Claim – DNJ Throws Out Qui Tam Action Against Genentech

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

For the last two years during the week of Halloween, we’ve posted about the scary case of United States v. King-Vassel, 728 F.3d 708 (7th Cir. 2013), trial court decision at 2012 U.S. Dist. LEXIS 152496 (E.D. Wisc. Oct. 23, 2012).  It is an eerie tale in which one doctor tries to hold another doctor liable under the False Claims Act for prescribing a drug off-label.  The trial court dismissed the case but on narrow grounds – leaving the door open to resurrection.  Think Glenn Close springing out of the tub at the end of Fatal Attraction.  The district court only drowned the claims and instead of putting a bullet through the heart of the complaint, the Seventh Circuit administered CPR.    While there were a lot of weird and frightening things going on in that case, what was more important to us was why the case wasn’t thrown out on the general principle that off label prescriptions are not false claims.

Well if the last two years were all Freddy and Jason and Chucky — this year is more like It’s the Great Pumpkin, Charlie Brown or Monsters, Inc., or even Casper, The Friendly Ghost.  No zombies, demons or ghouls this year.  This year we’re celebrating the treat of a judge who gets it.

The claim in United States v. DJO Global, Inc., __ F. Supp.2d __, 2014 WL 4783575 (C.D. Cal, Sep. 2, 2014) reads like a sequel – actually more like the 20th installment in a franchise.   The recurring plot being use of the False Claims Act to reap financial windfalls from appropriate off-label prescriptions involving federal payors.  Plaintiffs allege that the defendants, manufacturers of spinal stimulators (PMA, Class III medical devices), submitted false claims to Medicare seeking reimbursement for devices that were used off-label.  To be covered under Medicare, a medical device needs to be “reasonable and necessary” to diagnosis or treatment.  Part of the determination of whether something is reasonable and necessary is whether the device is safe and effective.  Id. at *3-4.  Because the FDA determines safety and efficacy as part of the pre-market approval process, the Department of Health and Human Services (HHS) has determined that PMA devices generally may be covered under Medicare.  Id. at *4.Continue Reading Qui Tam Off-Label Treat

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For so many reasons, we don’t usually blog about insurance coverage issues.  First, it’s not really our area of expertise.  Second, because of point number 1 we tend to find the issue a little dull.  Third, most tort litigators – on both sides of the v. – aren’t all that fond of insurance companies.  On the defense side, it is our clients who are often pitted against insurers who deny coverage.  And as our client’s advocates, from time to time we have concerns with insurance company’s micromanagement which can lead to conflicts regarding the best way to defend cases.  This is certainly an over-generalization and we don’t mean to lump all insurers in the same boat.  But, the disputes are what make it to the courtroom.

Disputes such as an insurer who declines to cover, under a “wrongful employment acts” policy, a qui tam False Claims Act action alleging off-label promotion.  If you’re thinking we couldn’t have just plucked that example out of thin air, you are correct.  It was the disputed issue in Eisai, Inc. v. Zurich American Insurance Co., 2014 U.S. Dist. LEXIS 90305 (D.N.J. Jul. 1, 2014).  And, with a favorable result for the insured pharmaceutical manufacturer from a fairly significant jurisdiction, we decided to make an exception today and talk insurance.Continue Reading And Now for Something a Little Different – Insurance

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Over the years, more than a few colleagues have told us that the Godfather movies contain every bit of wisdom needed to conduct business or practice law.  Whenever we are involved in tough negotiations (with our clients, with our adversaries, with our teen-aged children), we cannot help but think of that moment in Godfather 2 when a U.S. Senator is trying to shake down Michael Corleone.  The Senator agrees to pull a few strings to get a Nevada casino gaming license for the Family, but his price is way, way above the standard $20,000 license fee. Why is the Senator asking for so much more?  Because he can.  And because he makes no bones about how much he despises Corleone for his criminality and, perhaps even more, for his ethnicity.  The Senator wants a response to his extortionate offer by noon the next day.  Before the Senator can walk out the door, Michael Corleone (Pacino at his most chilling – so much better than the hoo-haa-ing bellower he later became),  calmly tells the Senator that he can have the answer right now:  “My offer is this: nothing.  Not even the fee for the gaming license, which I would appreciate if you would put up personally.”  The Senator ends up complying. But only after Corleone sets him up in a scenario reminiscent of that boast by Edwin Edwards that the only way he wouldn’t be re-elected as Governor of Louisiana was if he was found in bed with a “dead girl or a live boy.”

We do not usually have that sort of leverage available in our negotiations.  But when we prosecuted cases we often had decent ammo.  Fingerprints, recordings, and FBI agents knocking on doors at 6 am can all be very persuasive.  Sometimes our hand was strengthened in more unusual ways.  Once we secured a guilty plea by threatening to dismiss the case.  The defense lawyer knew that if we dismissed the case, the matter would go stateside, where California’s three-strikes rule would likely produce a much longer sentence.  Plus, state prisons are nastier than the federal ones.

We wonder how much fun the feds had in their negotiations with the whistleblowers in the qui tam case of U.S. ex. rel. Piacentile v. Amgen Inc., et al., 2013 U.S. Dist. LEXIS  141073 (E.D.N.Y. Sept. 30, 2013).  That case involved ten qui tam actions alleging claims under the False Claims Act against a pharmaceutical company.  Two of the relators were Piacentile and Kilcoyne.  They claimed to be whistleblowers and they wanted a big part of the settlement of the matter.  What’s that phrase about pigs getting fat and hogs getting slaughtered?  Piacentile and Kilcoyne wanted to get very, very fat off the qui tam settlement, but they ended up getting … er, disappointed.  The Piacentile case offers a little window into the ugly side of the qui tam business.
Continue Reading Strictly Business: The Ugly Side of Qui Tam Actions