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October 22, 2013

22 October 2013

Whistleblower Complaint Dismissed For Failure To Identify Actual False Claims

Posted by Jaime Jones and Brenna Jenny

An Eastern District of New York judge recently declined to apply a relaxed pleading standard to qui tam claims, dismissing an FCA suit based on alleged violations of the Anti-Kickback Statute for relator’s failure to plead facts sufficient to identify false claims that were actually submitted to the government. In United States ex rel. Moore v. GlaxoSmithKline PLC, No. 1:06-cv-06047 (E.D.N.Y. Oct. 18, 2013), a former employee of GlaxoSmithKline (“GSK”) alleged that GSK induced doctors to prescribe its HIV drugs by offering honoraria and educational grants. The relator urged the district court to relax the Rule 9(b) pleading standard and require merely “an adequate basis for the Court to reasonably infer that false claims were submitted.” Slip op. at 7. The relator alleged the submission of false claims could be inferred from the fact that many patients who use GSK’s HIV products are federal healthcare program beneficiaries and allegations of one doctor’s supposed awareness of the alleged scheme.

In declining to relax the requirements of Rule 9(b), the District Court noted that the Second Circuit Court of Appeals has not yet weighed in on the issue, which has led to a Circuit split. However, the district court observed that the majority of lower courts in the circuit have rejected relators’ attempts to utilize a lower pleading standard. Siding with those courts, the Moore court required both the underlying scheme and the submission of a false claim to be pled with the particularity required by Rule 9(b). With respect to the latter, the court noted that it is not enough to portray the submission of a false claim as “merely conceivable or even likely.” Id. at 8. Instead, relators must allege with particularity “details of either a specific claim for payment that was submitted to the Government by either a medical provider or a pharmacist, or the specific details of an actual Medicaid/Medicare provider certification form signed by a particular physician.” Id. The court dismissed the claims because the relator failed to establish a connection between any alleged kickback and any actual claims for reimbursement.

As we recently reported, the Supreme Court recently expressed an interest (see related post here) in the government’s view of the pleading requirements for FCA claims. The Moore decision emphasizes not only the significance of the ongoing Circuit split on the issue, but the critical importance of Rule 9(b)—at least in some Circuits—to the pleading and defense of whistleblower FCA actions.

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22 October 2013

Medical Device Manufacturer Pays $30 Million to Resolve FCA Claims

DOJ has announced a settlement agreement with medical device manufacturer Boston Scientific, alleging that its Guidant division caused the submission of false claims for two of its implantable cardiac defibrillators. The agreement, pursuant to which Boston Scientific will pay $30 million, resolves qui tam claims brought by a relator who was implanted with one of the devices. The government and relator alleged that the defendant knew of defects in the devices but failed to disclose the issues to physicians, patients, or the FDA. The case is one of an increasing enforcement trend in which the government pursues FCA claims based on allegations that the failure accurately to disclose safety or risk information regarding drugs or devices renders claims for reimbursement false.

This settlement follows the resolution in 2010 of criminal charges stemming from Guidant’s alleged failure to disclose information related to its implantable defibrillators. At that time Guidant pled guilty to two misdemeanor charges for filing a false report with FDA and failing to notify FDA about a safety correction made to one device, and agreed to pay $296 million.

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