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…)
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.
Court Dismisses DOJ’s Complaint against Pharmacy and Private Equity Fund, But Permits Re-Pleading
As we previously reported here and here, DOJ is pursuing a compounding pharmacy and its private equity fund owner alleging the pharmacy filed claims with Tricare that were rendered false by alleged kickbacks.
In November, the Magistrate Judge filed an opinion recommending the FCA claims be dismissed for DOJ’s failure adequately to plead its claims on either an implied or express certification theory of liability. However, the Magistrate went on to hold that the allegations that the private equity fund and its principals knew of some of the alleged misconduct and caused the submission of false claims by the portfolio company were otherwise sufficient to state a claim against those defendants under the False Claims Act. (more…)
AKS Safe Harbor Defeats FCA Claim in Eleventh Circuit
In Carrel v. AIDS Healthcare Foundation, No. 17-13185 (August 7, 2018) the Eleventh Circuit affirmed summary judgment for the defendant on Anti-Kickback Statute-based FCA claims, holding that incentives to employees for referring patients for its services were covered by the employee safe harbor to the Anti-Kickback Statute, and that these payments in particular served the congressional intent of the Ryan White Act to provide AIDS patients with ease of access to services. The Court also upheld the prior dismissal of all other allegations for a lack of particularity, noting that the only instances that relators alleged with particularity were actually covered “services” under the Ryan White Act and that they would not “infer fraud from instances of lawful conduct.” (more…)
Court Holds That Negotiated Settlement of A Contractual Dispute Implicated The Anti-Kickback Statute
On June 7, 2018, a federal judge in Chicago denied motions to dismiss filed by defendants Roche Diagnostics Corporation (“Roche”) and Humana, Inc. (“Humana”) in a qui tam lawsuit alleging that the defendants’ settlement for allegedly overpaid contractual rebates constituted unlawful remuneration under Anti-Kickback Statute. (more…)
Sidley Lawyers Publish Article On Third Circuit Decision Regarding The Necessary Link Between Alleged Anti-Kickback Statute Violations And Actual Claims for Payment
Sidley lawyers Kristin Graham Koehler and Josh Fougere have authored an article as a part of the Washington Legal Foundation’s Legal Opinion Letter series, entitled “Third Circuit Confirms that False Claims Act Liability Requires Actual Evidence of a False Claim.” The article examines the Third Circuit’s recent ruling in United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89 (3d Cir. 2018), an FCA suit premised on alleged violations of the Anti-Kickback Statute that was previously covered on this blog here. Reaffirming the importance of showing an actual false claim for government payment, the Third Circuit held that, to prevail at summary judgment, relators must “point to at least one claim” rendered false or fraudulent by the alleged kickback scheme. In doing so, moreover, the Third Circuit roundly rejected the relator’s arguments that a defendant “necessarily” violates the FCA by certifying that it did not pay illegal kickbacks, or that “the taint of a kickback renders every reimbursement claim false.” Instead, the relator needed evidence of at least one “particular patient [who was] exposed to an illegal recommendation or referral and a provider [who] submits a claim for reimbursement pertaining to that patient.” This decision should prove particularly significant for pharmaceutical manufacturers as more relators gravitate towards Anti-Kickback Statute allegations rather than off-label contentions.
The article is available for download on the Washington Legal Foundation’s website: http://www.wlf.org/publishing/publication_detail.asp?id=2706.
Third Circuit Clarifies Required Link Between AKS Violations and the False Claims Act
The Third Circuit’s recent decision in Greenfield ex rel v. Medco Health Systems, Inc. recently clarified the “link” that plaintiffs must show to connect the alleged kickback scheme to the submitted claim. Greenfield, No. 17-1152 (3d Cir. Jan. 19, 2018). In affirming summary judgment for the defendant, the Third Circuit held that to create an issue for trial, a plaintiff alleging a violation of the Anti-Kickback Statute (AKS) must present evidence of a claim submitted to the federal healthcare government that was actually exposed to the alleged kickback scheme. (more…)
Fifth Circuit Rules In Favor Of Pharmaceutical Manufacturer Based on Relators’ Failure to Establish Causation
Last week, the Fifth Circuit affirmed summary judgment for Solvay Pharmaceuticals Inc. on allegations that the company violated the False Claims Act as a result of off-label marketing efforts and kickbacks to physicians, emphasizing the relator’s failure to demonstrate a causal link between the alleged improper conduct and any false claims. (more…)
Fifth Circuit Affirms Defense Verdict and Dismissals of Off-Label FCA Claims
Last week, the Fifth Circuit affirmed a defense verdict and the earlier dismissal of several False Claims Act claims related to the alleged off-label use and Medicare reimbursement of medical stents. The decision includes several significant rulings for FCA defendants, particularly in the Fifth Circuit. First, the court affirmed the dismissal of an anti-kickback claim because the relator had “[n]o particulars [to] show that the unidentified doctors who received the ill-defined benefits caused the hospital to use Abbott stents” and thus “never link[ed] the alleged carrots to the purchase and use of the stents at either of the hospitals.” Slip op. 6. The need to plead details showing such a “link[]” – or causation – is important. (more…)
Fifth Circuit Rejects FCA Claims Challenging Prompt Pay Discounts
The Fifth Circuit recently affirmed summary judgment in favor of Omnicare—the nation’s largest provider of pharmacy services to skilling nursing facilities (“SNFs”) and other long-term care institutions—alleging that Omnicare made, or caused SNFs to make, false certifications of compliance with the Anti-Kickback Statute based on Omnicare’s debt collection activities and practice of offering prompt payment discounts (“PPDs”) to SNFs. United States ex rel. Ruscher v. Omnicare, Inc., No. 15-20629 (5th Cir. Oct. 28, 2016).