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October 14, 2015

14 October 2015

District Court Holds Industry-Wide Allegations in Prior Qui Tam Can Trigger Public Disclosure Bar as to Other Defendants

A district court recently took a broad view of the public disclosure bar in holding that where previously unsealed qui tam suits take a scattershot approach to broad industry allegations of misconduct, even companies not named in those suits can successfully invoke the public disclosure bar during later litigation.

In United States ex rel. Ambrosecchia v. Paddock Labs., LLC, No. 12-cv-2164 (E.D. Mo. Sept. 23, 2015), the relator alleged that defendants violated the FCA by making fraudulent misrepresentations to CMS about FDA approval dates for drugs and providing false Drug Efficacy Study Implementation (“DESI”) codes indicting defendants’ products were safe and effective, which the federal healthcare programs then relied upon to pay for drugs ineligible for reimbursement.  The defendants moved to dismiss, arguing that the claims were substantially the same as those in a suit filed prior to the relator’s, and therefore the public disclosure bar applied.  The relator attacked the application of the public disclosure bar both procedurally and substantively.

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