Fifth Circuit Affirms Defense Verdict and Dismissals of Off-Label FCA Claims

Last week, the Fifth Circuit affirmed a defense verdict and the earlier dismissal of several False Claims Act claims related to the alleged off-label use and Medicare reimbursement of medical stents.  The decision includes several significant rulings for FCA defendants, particularly in the Fifth Circuit.  First, the court affirmed the dismissal of an anti-kickback claim because the relator had “[n]o particulars [to] show that the unidentified doctors who received the ill-defined benefits caused the hospital to use Abbott stents” and thus “never link[ed] the alleged carrots to the purchase and use of the stents at either of the hospitals.”  Slip op. 6.  The need to plead details showing such a “link[]” – or causation – is important. 

Second, under the public disclosure bar, the court affirmed both the dismissal of a false inducement claim and a decision “limiting the time frame of” a false presentment theory.  Id. at 7-15.  Those holdings reiterated the public disclosure bar’s reach and focus:  when “the government … either has notice of the wrongdoing or gains nothing from a relator with indirect knowledge of the same facts[, a]llowing private individuals to sue … would provide an unnecessary windfall.”  Id. at 8.  As for whether allegations were publicly disclosed, therefore, the Court held that “contributing more of the same does not change the public character of a relator’s allegations,” even if the relator claims to “‘unearth[] additional instances of fraudulent conduct.’”  As for the original source inquiry, the relator was not an original source for claims premised on “alleged misrepresentations to the FDA in the approval process” when he “had no involvement in, and thus no original information about, the FDA approval process.”  Id. at 11.  Nor was the relator an original source for the time periods before or after his employment at the defendant company.  Id. at 14-15.

Finally, the court affirmed the decision rejecting two of the relator’s proposed jury instructions.  The first was based on language in the Medicare Program Integrity Manual, but Court found no issue with its rejection because the manual does not have “the force of law” and is non-binding.  Id. at 18-19.  The second concerned a government knowledge defense, and the Court confirmed that “government knowledge can negate liability when the defendant knew not only that the statements at issue were false, but that the government knew it as well.”  Id. at 20.

The case is United States ex rel. Colquitt v. Abbott Labs., No. 16-10814, – F.3d –, 2017 WL 2347091 (5th Cir. May 31, 2017), and the slip opinion is available here.