What follows is a guest post from Joe Metro and Andy Bernasconi of Reed Smith. Andy has some experience with the guest post gig (here and here), and Joe has finally heeded the call to share his fraud and abuse expertise with our readers. That particular expertise is not in abusing the legal process like the plaintiffs discussed below. Joe and Andy deserve any praise or blame for their post.

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The U.S. Department of Justice (DOJ) recently took the relatively unusual step of seeking the dismissal of eleven pending False Claims Act (FCA) cases that had been filed throughout the country by relators under the qui tam provisions of the FCA against 38 pharmaceutical manufacturer defendants. DOJ filed motions to dismiss in each action on December 17, 2018, asserting the government’s investigation revealed that the cases “lack sufficient merit to justify the cost of investigation and prosecution, and otherwise [are] contrary to the public interest.” United States’ Motion to Dismiss at 1-2, 14 (Dec. 17, 2018) (hereafter, “DOJ MTD”). A copy of the motion to dismiss, as filed in a case in Texas, can be found here.

Significant to DOJ’s analysis was the fact that the qui tam relators used “false pretenses” to obtain information from witnesses. DOJ MTD at 6. According to the government, the actions all were filed by a “professional relator” entity that sought to develop contacts and inside information under the guise of conducting a research study of the pharmaceutical industry, id. at 1, 5, and offering to pay individuals for information provided in a purported “qualitative research study,” even though the information was “actually being collected for use in qui tam complaints filed by [the professional relator] through its pseudonymous limited liability companies.” Id. at 5. At no time were witnesses told that the interviewer was acting at the direction of attorneys to collect information for use in lawsuits, or that the interviewees would be named as corroborating witnesses in those lawsuits. Id. at 6.

This alleged scheme of using false pretenses to obtain information to be used as the basis for qui tam FCA suits may sound familiar to you: we previously wrote here and here about a similar case against a pharmaceutical company, involving the same “professional relator” and the same alleged scheme to obtain information as the basis for a qui tam FCA suit. As detailed in our prior discussion, the District of Massachusetts ultimately dismissed that prior case after finding that the means used to obtain information for use in that lawsuit violated ethical rules, and ruling that the remaining allegations of the complaint—when stripped of the information obtained through improper means—could not satisfy the pleading standards to survive a motion to dismiss.

That decision is perhaps one reason why a judge in one of the 11 cases in which DOJ filed motions to dismiss, the same District of Massachusetts, issued an order on December 18, 2018 (i.e., the day after DOJ filed its Motion to Dismiss), directing relators’ counsel to show cause by January 2, 2018, why their pro hac vice status should not be revoked for “prosecuting an action without sufficient factual and legal support, as charged” in DOJ’s Motion to Dismiss and supporting documentation. See U.S. ex rel. SMSF, LLC v. Biogen, Inc., No. 1:16-cv-11379-IT (D. Mass.), Electronic Order, Dkt. No. 55 (Dec. 18, 2018).

Indeed, it would be awkward for DOJ to sit idly by and allow qui tam cases to proceed, in the government’s name—which is how the qui tam system works—when those cases are purportedly premised on a scheme one district court already described as involving ethical violations and “an elaborate series of falsehoods, misrepresentation, and deceptive conduct.”    Some commentators have suggested that DOJ’s efforts to seek dismissal in these cases is a natural consequence of the so-called “Granston Memo,” an internal DOJ memo originally dated January 10, 2018, that has since been incorporated into the Justice Manual  (formerly known as the U.S. Attorneys’ Manual), which provides guidelines for DOJ attorneys to consider in evaluating whether to dismiss qui tam cases for lack of merit. While DOJ’s Motion to Dismiss relies on various factors for seeking dismissal, including the “substantial costs in monitoring the litigation and responding to discovery requests” and the “substantial litigation burdens for the United States,” DOJ MTD at 15, it is at least as likely—if not more so—that DOJ’s decision to seek dismissal of these 11 cases was driven by the relator’s scheme to collect information for use in qui tam cases, as characterized in DOJ’s Motion to Dismiss. Indeed, the litigation burdens for the government have existed since those cases were filed under seal and investigated by the government, 31 U.S.C. § 3730(b)(2), and DOJ easily could have exercised its authority to seek dismissal of the cases long before its December 17 filings. Thus, we are skeptical that DOJ’s exercise of its dismissal authority should be portrayed as a sign that DOJ will readily dismiss burdensome cases, particularly in the absence of other significant (if not egregious) considerations.

Finally, the government’s motion is atypical, and significant, with respect to its comments on the substantive merits of the relator’s allegations. The relators’ complaints made sweeping allegations that various types of common manufacturer product support programs – ranging from nurse training or hotlines, disease education, and reimbursement support – amounted to violations of the anti-kickback statute. In seeking dismissal, the DOJ not only acknowledged that government enforcement agencies had indicated that the practices in question were not kickbacks, but also emphasized that the practices supported federal policy interests in appropriate product utilization.

The former principle should seem an unremarkable basis for the government to seek dismissal of whistleblower litigation, but the more common approach seems to have been to ignore, dismiss, or distinguish enforcement agencies’ prior guidance to industry. Given the other unusual aspects of the cases discussed above, one would be hard-pressed to declare this approach to the merits to be a “new trend.” But at the least, it is a useful reminder of the potential value of early engagement with the government on the regulatory merits of relators’ theories. Indeed, while the government’s motion cited a recent safe harbor regulation preamble, there is a wealth of other guidance that may prove useful, including the OIG’s Compliance Program Guidance documents, safe harbor regulations, special advisory bulletins, and advisory opinions.

The latter point noted by the government – that manufacturer product support programs are often actually aligned with federal health care programs’ interests – is equally significant. Simply stated, in an age where emerging genetic therapies are more precise and more complicated, and in an age where the government is increasingly focused on outcomes-based health care delivery and payment systems, the government’s acknowledgement that manufacturers have a legitimate role to play in facilitating appropriate product use is important not only from the perspective of False Claims and anti-kickback defense, but also when counseling on such arrangement.

What should not be lost here, particularly for readers of the Blog’s usual fare, is that the economic incentives in place for generating and pursuing litigation against drug manufacturers sometimes lead to egregious conduct by putative plaintiffs and their lawyers. The conduct can be so bad that even DOJ, which is often aligned against the drug manufacturers, cannot stomach it. Whether that dyspepsia affects DOJ’s position on other types of litigation against medical product companies remains to be seen.

 

 

The New Jersey Supreme Court has ruled that once the Attorney General declines to take over a qui tam action, he can no longer use administrative subpoenas to compel testimony and documents from defendants and witnesses. In the Matter of the Enforcement of New Jersey False Claims Act Subpoenas, __ A.3d__, 2017 WL 2458163 (N.J. June 7, 2017).

The background of the case is set out in the Appellate Court’s decision at 134 A.3d 1012 (N.J. Super. App. Div. Mar. 18, 2016). The underlying complaint in federal court is a qui tam action alleging that a pharmacy benefits manager defrauded the state by retaining rebates that were supposed to be passed along to its clients in violation of the federal False Claims Act and the New Jersey False Claims Act (“NJFCA”). Id. at 1013. When a private citizen brings a qui tam action seeking to enforce the NJFCA on behalf of himself and the state, the complaint must be filed under seal and served on the Attorney General. The Attorney General then has 60 days to decide whether to intervene and take over the action. That time can be extended upon the Attorney General’s request and upon a showing of good cause. Id. at 1015.

In this case, that extension provision was liberally and repeatedly applied to afford the Attorney General approximately 600 days to decide whether to intervene, with the “final” intervention deadline set for June 2, 2015. Id. at 1014. The appellate decision mentions in passing that it was both not convinced and need not decide whether defendants engaged in delay tactics as “it neither explains nor excuses the Attorney General’s failure to proceed more expeditiously for such an extraordinary length of time. Id. The final deadline passed and the Attorney General did not exercise his option to take over the case. Id. at 1015. After June 2, however, the Attorney General sought enforcement of a subpoena previously served on the defendant and two subpoenas served after June 2 on additional witnesses. The federal court decided that the issue of the enforceability of the subpoenas was best resolved by the New Jersey state courts. Id.

The Attorney General argued that his right to investigate the claims did not disappear with the passing of the intervention deadline citing his statutorily granted subpoena power. But the court concluded that was not an “additional or separate font of power” once the Attorney General declines to intervene. Id. at 1016. The Attorney General has a duty to investigate possible NJFCA violations and is given tools to do so, but is also given a time period in which to do so. The Attorney General’s broad interpretation would mean that he could investigate “for so long as he cared” and “seek leave to intervene . . . at any time up until the entry of final judgment.” Id. That would render the 60-day deadline meaningless and it is the goal of the court to interpret statutes “in a way that gives meaning to every part.” Id. The court also pointed out that the Attorney General’s repeated requests for extensions of the 60-day deadline contradict his argument that his right to continue his investigation and enforce subpoenas survives that deadline. Id. at 1017. Why else would he need the extensions?

Indeed the landscape changes once the Attorney General decides not to proceed. From that point forward, the person who initiated the action has the right to conduct the action and the Attorney General’s decision to opt out is final and not reviewable. Id. In other words, “there is no turning back.” Id. The Attorney General then becomes a bystander. He can request copies of the pleadings, motions and depositions only at his own cost. And finally, he remains on the sidelines unless he can convince the court that he has “good cause” to intervene at a later date. Id. The Attorney General urged a broad reading of that final provision, but the court said it had to be construed with the other three provisions, all of which heavily favor a legislative intent that the relator be allowed to control the qui tam action uninhibited. Id.

The appellate court also found that the Attorney General should not be allowed to proceed with a separate investigation that might interfere with the federal judge’s management of the qui tam action to which the Attorney General is not a party. Id. at 1018.

The New Jersey Supreme Court adopted the reasoning of the appellate decision, but elaborated on an additional argument advanced by the Attorney General that NJFCA does not contain the same provision as the federal False Claims Act which expressly bars U.S. Attorney Generals from enforcing subpoenas after electing not to intervene. In the Matter of the Enforcement of New Jersey False Claims Act Subpoenas, __ A.3d__, 2017 WL 2458163 at *4. Because the NJFCA does not contain the same provision, the Attorney General argued that the New Jersey legislature must have intended to allow the issuance of administrative subpoenas after opting out.

But the FCA and the NJFCA differ in many ways. The NJFCA was not modeled on the FCA such that deletion of a specific provision would be evidence of a specific legislative intent to diverge from the federal approach. Id. The NJFCA tracks neither the structure nor the text of the FCA. So instead the court must look to the provisions of the NJFCA. As set out above, those provisions all support that the Attorney General’s right to enforce subpoenas ends with the decision not to take over the action. Id. at *5. So defendants don’t have to defend NJFCA violation allegations on competing fronts, thankfully.

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

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

Occasionally, a qui tam action grabs our attention.  Usually because it would seek to penalize off-label use.  Anything that shuts that down deserves a mention here.

Qui tam plaintiffs seek damages under the False Claims Act based on allegations that a defendant caused the submission of false claims to the government.  In some cases, plaintiffs have tried to turn allegations of off-label promotion into false claims cases, such as United States ex rel. Colquitt v. Abbott Labs, 2016 U.S. Dist. LEXIS 1556 (N.D. Tex. Jan. 7, 2016).  The case involves vascular stenting procedures in which biliary stents were used – off-label.  Id. at *4.

Plaintiffs’ off-label use argument goes like this.  Under the Medicare Act, to be reimbursed, the device must be “reasonable and necessary” for diagnosis or treatment.  Id. at *9.  To qualify as “reasonable and necessary” the device “must be affirmatively determined by the [FDA] to be safe and effective.”  Id. at *9-10.  Because the FDA has not determined the safety and effectiveness of the off-label use to which the device was put, the device is not eligible for Medicare coverage.  Id. at *10.  So essentially, plaintiffs’ theory is a ban on off-label use where government health insurance is involved.  Plaintiffs want the court to say that off-label use is across the board “not reasonable,” “unnecessary,” and/or “experimental.”  As we’ve seen time and time again, however, off-label use is often the standard of care.  Medicine leads, regulations follow.

Fortunately, the court rejected plaintiffs’ extreme position that FDA safety and effectiveness determinations are dispositive on Medicare eligibility.  The FDA’s review of a device is a not a “substitute” for an insurance eligibility determination.  Of more significance, “lack of FDA approval or clearance for a specific use does not categorically disqualify a device from Medicare coverage.”  Id. at *13.  Maybe it was plaintiffs’ complete overreaching that made this such an easy call for the court.  Maybe it was the growing precedent for this proposition (cited in Colquitt).  Either way, it’s an important holding from the case.

The rest of the case is more nuanced about Medicare claims and ultimately the court denied both parties’ summary judgment motions finding disputed facts on both sides.  So, if you’re a qui tam person, you might want to take a peek at the whole decision.  If you’re not, the take away is yet another attempt to criminalize off-label use is thwarted.

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

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

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

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

Almost exactly a year ago we did our Halloween post, “Qui Tam Off-label Trick or Treat,” on a creepy qui tam case brought by one doctor against another for prescribing a drug off label.  The case was called United States ex rel. v. King-Vassel et al., 2012 U.S. Dist. LEXIS 152496 (E.D. Wisc. Oct. 23, 2012). The relator was named Dr. Watson and he put his case together in a manner that was by no means elementary.  He procured medical records for the patient via a release stating that the information was “for the purpose of providing psychological services and for no other purpose whatsoever.”  That was not quite true.  (One of the commenters on our original post tried to excuse this little bit of prevarication by saying that the doctor was merely fulfilling the Hippocratic oath to avoid further harm, but another commenter rejoined that such reasoning might also excuse arson or sabotage under the ‘right’ circumstances.)  The court imposed sanctions for this deceptive maneuver, but what was more important to us was whether the court would erect a stop sign, or at least a speed bump, against the chronic overuse of the False Claims Act to reap financial windfalls from appropriate off label prescriptions involving federal payors.  We thought that the case should have been thrown out on the general principle that off label prescriptions are not false claims.  We were disappointed when the court went off on the narrower ground that  the relator had not come forward with adequate proof that the defendant doctor “knowingly caused” a false claim.  More specifically, the court concluded that the relator needed an expert witness to explain how Medicare reimbursement worked and to testify that the use of the medicine was off-label or not recognized in the drug compendia.

As we said at the time, that rationale seems unnecessarily crabbed and easily circumvented.  We were reminded of how in horror movies there is almost always a hint that the ghouls might return, and we feared that, “[a]s with Freddie or Jason, we might not have seen the last of this nasty apparition.”

We were right.  To begin with, we were right about how all horror movie villains, not just Dracula, are permanently undead.  Maybe it’s nothing but a profit grab, but a successfully scary antagonist inevitably plays an encore.  There are at least 60 Frankenstein movies, counting the classic Universal series, the almost as classical Hammer series, and a lot of pretentious or insane outings, to say nothing of Frankenweenie, The Rocky Horror Picture Show, and versions from Japan, Spain, and Mel Brooks.  There at least 30 Godzilla movies, with another due to come out soon (with Bryan Cranston!).  There have been twelve Friday the 13th movies (the fourth was called “The Final Chapter” and the ninth was called “The Final Friday” – so much for the meaning of “Final”).  How can there not be a thirteenth?  Monsters are built to return.  And for those of you who favor eek-fests of a more subtle nature, this Halloween night will see the premier on the Sundance channel of a show from France called The Returned.  It is set in a small mountain town where scads of dead people reappear, apparently alive and normal, try to resume their life as if nothing significant (such as their demise) had happened.  Savoir faire and ennui reign.  A child killed in an accident comes home.  A young man who committed suicide a decade before tracks down his former fiancée.  Also returning is a young nurse, who had been attacked by a cannibalistic serial killer.  And, of course, the serial killer is also back. Maybe nothing says horror like a do-over.

None of this is as frightening as what recently occurred in the King-Vassel case.  In United States v. King-Vassel, 728 F.3d 708 (7th Cir. 2013), the Seventh Circuit brought this misbegotten case back to
life.  The problem, as we predicted, was that the district court had
focused on the need for expert testimony.  The Seventh Circuit held that no expert testimony was required because the relator had marshalled enough facts to suggest that the prescribing doctor had reason to know she was causing the submission of a false claim or that she failed to make a reasonable and prudent inquiry into that possibility.  What were those facts?  The patient’s mother had provided the doctor with the patient’s Medicaid information, the mother had never paid out of pocket for the doctor appointments, the doctor had never “suggested that she had not billed Medicaid for her services,” that a medical assistance card was used to pay for the
medications, and there was some paperwork “that seemed to indicate” that the doctor had been compensated by the Medicaid program for her prescriptions.   The court also did not “think a jury needs expert
testimony to understand that writing a prescription to a person insured by Medicare will likely cause a claim to be filed with Medicaid” or that “an expert was necessarily required to explain the compendia. King-Vassel, 728 F.3d at 713.

Trick or treat?  Certainly not a treat.  After we finished reading all those ‘facts,’ we adopted the pose from Munch’s “The Scream.”  Or Roy Scheider when he calls for a bigger boat.  Or Jamie Lee Curtis getting a glimpse of a guy in a hockey mask.  Or Bexis when he peruses the latest decision out of Missouri.  Nowhere in the King-Vassel court’s litany is there anything approximating a genuine falsehood.  The abuse of the False Claims Act continues apace.  Zombie reasoning keeps trudging along.

The appellate court does feel “compelled to note that nothing in this opinion should be read to countenance the pre-suit actions of either Watson or his trial counsel:  they dragged blameless parties into court unnecessarily and sought a medical release by representing that Watson was going to treat N.B. – ‘a total falsity.’  Despite ruling in Watson’s favor today, we hope that the district court’s sanctions will dissuade professionals from stooping to such unsavory tactics in the future.”  Id. at 717-18.  Talk about whistling past the graveyard.  Sanctions/shmanctions.  By letting this Franken-qui tam case live, the Seventh Circuit is practicing bad medicine and worse law.    What about the fact that, as we have explained before, off label use is not only legal, it can be the standard of care?

By the way, that lawyer who represented the relator has made an appearance on this blog before.  As we discussed here, he was the attorney in the Zyprexa litigation when there was an issue regarding violation of a court confidentiality order. Insert your own horror movie sequel joke here.

Happy Halloween.

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