Aug 302017

District Court Dismisses FCA Claims Based on No Evidence of Falsity

Jaime L.M. Jones and Whitney Nebolisa

On August 18, 2017, the U.S. District Court for the Northern District of Illinois dismissed the FCA claims of the United States and two states based on allegations that Par Pharmaceuticals orchestrated an unlawful prescription-switching scheme, for the governments’ failure to allege the submission of any actually false claims. 

In United States ex rel. Lisitza et al. v. Par Pharmaceutical Companies Inc. et al., the complaint alleged the Company produced widely available generic drugs, but in forms and dosages different than those offered by competitors, then marketed its drugs to pharmacies as a means to obtaining higher Medicaid reimbursements that were not subject to Medicaid’s standard reimbursement caps due to their forms and dosage strengths.  According to the plaintiffs, the claims submitted were fraudulent because the pharmacies dispensed drugs different from those originally prescribed, not due to either medical necessity or cost, but because the drugs were “simply more profitable.”

In granting Par’s motion for summary judgment, the Court rejected the governments’ assertion that the claims were “inherently false” simply because claims for Par’s drugs exceeded the lowest possible rate, holding that such an assertion ignores the FCA requirement that there must be a false or misleading statement.  The federal and state governments also alleged the submitted claims were false by omission because they failed to disclose that the medications were originally prescribed in different forms or strengths that could have been filled at lower cost.  The judge dismissed this argument, holding that “omitting information from the claim form about the course of events that led to the dispensing of a particular drug, or about its relative cost, does not go to the truth or falsity of the representations on the claim form itself.”

While the judge acknowledged that Par may have conspired with pharmacies to increase its own profits, it rejected their claims under the FCA due to their failure to allege the submission of any claims that actually were false, thus joining the long line of cases rejecting attempts to convert the FCA into a general anti-fraud statute.

A copy of the U.S. District Court’s opinion can be found here.

Jaime L.M. Jones

Chicago

jaimejones@sidley.com

Whitney Nebolisa

wnebolisa@sidley.com

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