District Court Concludes Accurate PDE Data Can be “False Claims” Under the FCA

A district court in the District of New Jersey recently amended its dismissal of a qui tam suit to allow the relator to file a fourth amended complaint against a pharmacy asserting a new theory of liability that prescription drug event (“PDE”) data are “claims” under the FCA and accurate PDE data can be “false claims” under the FCA where a pharmacy pays kickbacks to its customers.  United States ex rel. Silver v. Omnicare Inc., No. 11-cv-01326, (D.N.J. Apr. 13, 2021).

When a pharmacy dispenses drugs to a Medicare beneficiary, it submits an electronic claim to the beneficiary’s plan sponsor, which periodically submits PDE data to CMS reflecting the pharmacy claims it has paid.  The FCA defines “claim” to include “any request or demand under a contract or otherwise for money or property presented to an officer, employee or agent of the United States or made to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government’s behalf to advance a Government program or interest.”  The defendant pharmacy argued that PDE data that plan sponsors submit to CMS are not claims, because these data do not “request or demand” payment.  DOJ filed a Statement of Interest urging the court to conclude that PDE data are “claims” under the FCA, because they are used to determine payment.  The court agreed with DOJ, citing to other courts that have reached the same conclusion, including a district court last month in the Southern District of New York.

The court then held that PDE data “tainted by kickbacks may constitute false claims under the FCA,” even where the PDE data are accurate.  The court was not clear about whether the theory is viable as an express or implied certification theory.  DOJ in its Statement of Interest maintains that the theory could proceed as either.  According to DOJ, CMS regulations require plan sponsors to include in their contracts with downstream entities like pharmacies a requirement that the downstream entity comply with all applicable federal laws.  This contractual obligation, according to DOJ, constitutes an express certification of compliance to the government.

The contemplated implied certification theory is difficult to discern.  The court did not explain precisely how pharmacy claims data submitted to plan sponsors—even if “tainted” by some underlying violation of the AKS—could, in turn, “taint” or render completely separate data submitted by those plan sponsors to CMS legally “false.”  DOJ’s Statement of Interest further muddies the water by incorrectly asserting that the pharmacy submitted the PDE data at issue: “in submitting PDEs, PharMerica impliedly certified its compliance with the AKS, among other federal statutes.”  The court’s scant reasoning has troubling implications.  If taken to its logical conclusion, seemingly any statutory or regulatory violation by a pharmacy relating to the drugs it dispenses “taints” a plan sponsor’s PDE data and creates a false claim under the FCA.

A copy of the opinion can be found here and a copy of DOJ’s Statement of Interest can be found here.

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