Supreme Court Unanimously Extends FCA Statute of Limitations to 10 Years for Non-Intervened Cases
On May 13, 2019, the United States Supreme Court unanimously held that the False Claims Act’s (“FCA”) alternative 10-year statute of limitations applies to non-intervened actions. As previously reported here, Cochise Consultancy, Inc. v. United States ex rel. Hunt, presented two main issues: whether relators are entitled to invoke the FCA’s 10-year statute of limitations set forth in 31 U.S.C. § 3731(b)(2), and whether relators are considered “official[s] of the United States” whose knowledge is relevant for determining when the 10-year limitations period applies. Writing for the unanimous Court, Justice Thomas ruled favorably for relators on both questions.
District Court Held that Government Must Produce Factual Basis For Allegations of Below-Fair-Market-Value Transfers
Earlier this month, in a FCA case in which the Government intervened, the United States District Court for the District of Minnesota held that the Government was obligated to produce evidence that supported its allegation that amounts that physicians paid for social trips and other benefits provided by Defendants were below fair market value. In United States v. Cameron-Ehlen Grp., Inc., No. 13-CV-3003 (WMW/DTS), 2019 WL 1453063, at *1 (D. Minn. Apr. 2, 2019), the Government’s Complaint-In-Intervention alleged that Defendants, Precision Lens and Paul Ehlen, schemed to pay kickbacks—in the form of “lavish hunting, fishing and golf trips, private plane flights, frequent-flyer miles and other items of value”—to physicians to induce them to use products supplied by Defendants. The Complaint-In-Intervention includes several specific examples where physicians “were remunerated by not paying the full fair market value for trips and other benefits provided by Defendants.” (more…)
Court Allows Off-Label Marketing Claims Against Individual Pharmaceutical Executives
Following a recent Florida case allowing an FCA suit to proceed against an individual pharmacy owner (on which we reported here), last week a judge in the District of Massachusetts ruled on a motion to dismiss an FCA action pending against nine individual defendants relating to allegations of off-label marketing of the Aegerion drug Juxtapid, which was approved to treat Homozygous Familial Hypercholesterolemia (“HoFH”). See United States ex rel. Clarke v. Aegerion Pharms., Inc., Case No. 1:13-cv-11785. The individuals filed a joint motion to dismiss, making arguments that applied to the complaint as a whole – such as causation and materiality – and also attacking the claims specific to the individuals. The court denied the motion as to the broadly applicable arguments. Most notable, however, is the Court’s discussion of whether the relators could pursue claims against individual defendants, including board members and executives of the manufacturer.
Recent Summary Judgment Decision Highlights Potential AKS Concerns Associated with Promotional Speakers Programs
A recent decision from the Southern District of New York denying defendants’ motion for summary judgment identified a number of characteristics of a pharmaceutical company’s promotional speakers program that may raise concerns under the Anti-Kickback Statute. The opinion highlights the features of the promotional speaker program at issue that persuaded the court that it ran afoul of the AKS.
Supreme Court Appears Poised To Extend FCA Statute of Limitations to 10 Years In Non-Intervened Cases
On March 19, 2019, the Supreme Court heard oral argument in Cochise Consultancy v. United States ex rel. Hunt, a case that appears likely to resolve a circuit split on an issue of critical importance: in non-intervened FCA cases – which comprise the vast majority of FCA cases – are relators entitled to invoke the FCA’s alternative 10 year statute of limitations set forth in 31 U.S.C. § 3731(b)(2)? That provision provides for a ten year statute of limitations if the action is brought no more than three years after “the official of the United States charged with responsibility to act” knows, or should know, the material facts of the violation. While an opinion is not expected until later this year, the tenor and content of the Justices’ questions suggest that the Court’s answer to that question is likely to be yes.
Deputy Associate Attorney General Stephen Cox Delivers Remarks on Key FCA Issues
On January 28, 2019, in remarks to the Advanced Forum on False Claims and Qui Tam Enforcement, Deputy Associate Attorney General Stephen Cox discussed current Department of Justice policy on key False Claims Act enforcement topics, including the Granston Memo, cooperation credit, FCA liability for individuals, and the Brand Memo (which, as noted here, has now been formalized in the Department of Justice’s Manual). A copy of his remarks can be found here.
DOJ Nominee Barr Walks Back FCA Stand, But Not Entirely
Scott Stein (Chicago), Doreen Rachal (Boston), and Naomi Igra (San Francisco) authored an article for Bloomberg Law about Attorney General nominee William Barr’s testimony on the qui tam provisions of the False Claims Act. As discussed in the article, Barr questioned the constitutionality of the qui tam provisions earlier in his career but took a softer stance at his confirmation hearing. The article, a copy of which can be accessed here, explains how Barr acknowledged a Supreme Court decision upholding the qui tam provisions but left open the possibility that a Barr-led DOJ would continue moving to dismiss whistleblower actions that do not advance the federal government’s interests.
DOJ Announces Over $2.5 Billion in FY 2018 FCA Recoveries From Healthcare Industry
DOJ recently announced that it recovered over $2.8 billion from FCA cases in FY 2018. Although this number continues a multi-year downtrend in overall FCA recoveries, healthcare fraud remains a major DOJ focus, with $2.5 billion of the recoveries – 87.25%, the highest proportion in at least the past decade – coming from healthcare cases: (more…)
Trump Pick for AG to Be Scrutinized for Views on False Claims Act Enforcement
Scott Stein (Chicago), Doreen Rachal (Boston), and Naomi Igra (San Francisco) have authored an article for Bloomberg Law regarding Attorney General nominee William Barr’s views on the qui tam provisions of the False Claims Act. As discussed in the article, Barr has previously called the qui tam provisions “patently unconstitutional.” The article, a copy of which can be accessed here, discusses the basis for Barr’s views and how his confirmation may amplify DOJ’s recent efforts to move for dismissal of qui tam cases that do not serve the federal government’s interests.
Flexing Its Granston Muscle, DOJ Seeks Dismissal of Patient Support Services FCA Litigation
For the second time in three weeks, the Department of Justice has stepped in to seek the dismissal of high-profile FCA litigation being pursued by relators after the government initially declined to intervene. DOJ’s recent action pertains to approximately a dozen lawsuits filed primarily in 2016 and 2017, which were unsealed over the last year as DOJ declined to intervene. Each of the cases was filed by an LLC relator formed for the purpose of pursuing the litigation and alleging that pharmaceutical manufacturers, and third-party service providers who contracted with them, violated the Anti-Kickback Statute (and thus the FCA) by providing various support services for the manufacturers’ drugs. The cases focused on three types of activity. First, defendants deployed nurse educators who allegedly promoted the manufacturers’ drugs to physicians and patients through a “white coat marketing” scheme. Second, the nurse educators allegedly instructed patients on proper use of medication. Third, the defendants allegedly communicated with insurance companies to determine whether the plans would reimburse the manufacturers’ drugs for specific patients and what process was required to ensure such reimbursement. The relators allege that the second and third categories of conduct violated the AKS because they provided physician practices with expense relief. (more…)