By

Megan Coggeshall

26 April 2022

Recently Unsealed Complaint Reinforces Potential Liability of Private Equity Investors in the Healthcare Industry

Recently, a court in the Central District of California unsealed a qui tam complaint against several specialty pharmacies and their private equity fund owners. See United States ex rel. Webster v. BioMatrix Holdings, LLC, 2:18-cv-09333-PSG-PLA (C.D. Cal. Oct. 31, 2018). Relator, a former Vice President for Managed Care at BioMatrix Specialty Pharmacy, alleged that the specialty pharmacy defendants (collectively “BioMatrix”), with the knowledge of their private equity owners, employed a kickback scheme to increase the number and value of prescriptions for hemophilia medications filled through their pharmacies. (more…)

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25 March 2022

District Court Again Dismisses Anti-Kickback Statute Claim Related to Medical Devices Used in Bariatric Surgeries

A court in the District of Maryland again dismissed a declined qui tam action in which the relator, a bariatric surgeon, alleged that two medical device companies violated the AKS by providing surgeons with free advertising in exchange for physicians using the companies’ LAP-BAND medical devices in bariatric surgeries. See United States ex rel. Fitzer v. Allergan, Inc., 17-cv-00668 (D. Md. Mar. 22, 2022).  We reported on the court’s prior dismissal of the relator’s second amended complaint for failure adequately to plead a knowing and willful violation of the AKS here. Relator fared no better on his third attempt; as the court found, he failed to adequately plead presentment and causation. (more…)

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09 February 2022

DOJ Statistics on FCA Recoveries Through FY 2021 Reveal Continued Focus on Healthcare and More Direct Government Enforcement

On February 1, 2022, Acting Assistant Attorney General for the DOJ Civil Division, Brian M. Boynton, announced that the Civil Division recovered over $5.6 billion in settlements and judgments under the False Claims Act (“FCA”) for fiscal year 2021.  This is the second largest annual total in FCA history and a significant increase from the $2.2 billion recovered during fiscal year 2020.  Detailed statistics on FCA recoveries from 1986 through FY 2021 are available here. (more…)

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16 September 2021

District Court Rejects Anti-Kickback Statute Claim Due to “Conclusory” Assertions of Unlawful Intent

A court in the District of Maryland recently dismissed a declined qui tam action in which the relator, a bariatric surgeon, alleged that two medical device companies violated the AKS by providing surgeons with free advertising in exchange for physicians using the companies’ LAP-BAND medical devices in bariatric surgeries.  See United States ex rel. Fitzer v. Allergan, Inc., et al., 1:17-cv-00668-SAG (D. Md. Sept. 10, 2021).  The court’s decision granting defendants’ motions to dismiss is notable in its refusal to allow relator to proceed based on conclusory allegations that the defendants knew they were acting in violation of the AKS. (more…)

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19 May 2021

Eleventh Circuit Rejects Argument That Mathematical Probability Suffices To Allege The Existence of False Claims, Affirming Dismissal For Failure To Satisfy Rule 9(b)

On April 26, 2021, the Eleventh Circuit affirmed the dismissal with prejudice of a qui tam action brought by two former employees of a Georgia hospice provider and associated medical providers.  The Court held that the relators did not plead with sufficient particularity under Rule 9(b) that the defendant had submitted a false claim to the government.  Estate of Debbie Helmly, et al. v. Bethany Hospice and Palliative Care of Coastal Georgia, LLC, et al., No. 20-11624 (11th Cir. Apr. 26, 2021).

(more…)

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02 March 2021

District Court Issues Rare Rebuke Denying DOJ’s Belated Motion to Intervene

A federal district court recently issued a rare order denying the Department of Justice’s (DOJ) motion to intervene in a qui tam suit after the government’s initial declination months earlier.  See United States ex rel. Odom v. Southeast Eye Specialists, PLLC, 3:17-cv-00689 (M.D. Tenn. Feb. 24, 2021).  The False Claims Act allows the government to intervene in a case in which it previously declined to intervene upon “a showing of good cause.”  Although DOJ does so not frequently seek to intervene after previously declining to do so, courts are generally deferential to the government’s shift in position.  This decision provides important precedent for defendants in the position of arguing that a late intervention by DOJ is not appropriate.

(more…)

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23 November 2020

DOJ Settles FCA Claims With Another Private Equity Investor in the Life Sciences Industry

In line with an emerging trend of False Claims Act enforcement against private equity funds for the activities of their portfolio companies, the government and a private equity fund that formerly owned a medical device and pharmaceutical manufacturer recently settled a qui tam suit alleging violations of the False Claims Act.  U.S. ex rel. Johnson v. Therakos, Inc., Case No. 12-cv-1454, E.D. Pa.  The suit resolves allegations that from 2006 to 2015 the manufacturer promoted a cancer treatment for use in pediatric patients—a use that had not been approved by the Food and Drug Administration.  As a result, the government contended, the private equity fund former owner caused the manufacturer to submit false claims to Medicaid, the Federal Employee Health Benefits Program, and Tricare.  The case remains under seal; as a result, it is not yet apparent whether the government has alleged that the private equity fund took an active role in the management of the portfolio company or other facts that would support FCA liability attaching to the investor.  In settlement of the claims, but without admitting liability, the private equity fund agreed to pay the United States and participating states $1.5 million.  The settlement agreements are available here.

We will continue to monitor the docket for this case and for further action by DOJ against private equity investors in the healthcare and life sciences industries.

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