The Eastern District of Pennsylvania recently ruled on a summary judgment motion in a case that has been pending in the federal courts since 2002, involving alleged conduct by the defendant drug manufacturer from 1996-2004, when the pharmaceutical industry and compliance programs were vastly different than they are in 2020. U.S. ex rel. Gohil v. Sanofi U.S. Services Inc’s, No. 02-cv-02964 (E.D. Pa. Nov. 12, 2020). In its ruling, the court adopted an expansive definition of remuneration and a low bar to satisfy the causation element of FCA claims premised on underlying alleged violations of the Anti-Kickback Statute. On this basis, the court is allowing the relator to proceed to trial on allegations that his former employer caused the submission of false claims by paying kickbacks in the form of fees to physicians to participate in advisory boards and speaker programs, educational grants, and meals and gift baskets, while granting summary judgment for the defendant based on allegations related to preceptorships and other alleged kickbacks.
In examining whether prohibited remuneration was provided to physicians, the court focused on whether the manufacturer defendant’s payments varied based on the value or volume of referrals, relying heavily on OIG’s 1994 Special Fraud Alert: Prescription Drug Marketing Schemes guidance that warned that any “prize, gift or cash payment, coupon or bonus….[is] particularly suspect if based on value or volume of business generated for the drug company.” 59 Fed. Reg. at 65,376. The court found that the Relator had put forth compelling evidence to at least establish a question of material fact whether prohibited remuneration was provided, pointing to evidence that defendant’s employees viewed educational grants as a “thank you” for sales and that other opportunities were extended to physicians based on factors including the volume of prescriptions of the defendant’s products they generated.
With respect to causation, the court held that evidence that physicians were paid alleged kickbacks and prescribed the manufacturer’s drug to patients during a two year window following their receipt of the payments was similarly sufficient to create a genuine dispute of material fact. The court based the two year window on an expert report citing empirical literature that prescribing behavior may be influenced up to two years after a physician receives an “incentive” from a manufacturer. In reaching this conclusion, the court relied on the causation standard set forth in United States ex rel. Greenfield v. Medco, (previously discussed here and here.) that a relator must present evidence of a claim that was exposed to an unlawful kickback scheme. Under that standard it is not enough for a relator to show a mere temporal connection between a kickback scheme and the submission of claims to the government, but a relator also is not required to show that a kickback in fact caused a patient to use a particular drug or provider. 880 F.3d 89, 94 (3d Cir. 2018). The Gohil court distinguished the facts in Greenfield, notably a lack of evidence that patients had been exposed to the illegal recommendation of “preferred” vendors that were listed on a patient-facing website, from those in the case before it, finding the relator had identified “ample evidence” that patients were exposed to the doctors’ recommendation and received prescriptions for the defendant’s drug – the “illegal recommendation” – during the period when alleged kickbacks were paid.
In analyzing the scienter element of the underlying AKS violation, the court pointed to numerous examples of the defendant ignoring its own internal compliance policies and failing meaningfully to discipline employees for violations of those policies. The court reasoned that this failure to follow guidelines and discipline employees could allow a reasonable jury to find that the defendant possessed AKS scienter– i.e., that it knowingly and willfully violated the law. This highlights the importance of ensuring appropriate and documented disciplinary action against employees who fail to comply with compliance policies.