FCA Alert : Lawyers & Attorneys for Whistleblower, False Claims Act & Qui Tam Defense : Kelley Drye & Warren LLP

That question may soon be teed up in the Fifth Circuit. A federal court in Louisiana recently unsealed a qui tam complaint filed by New Orleans lawyer Johnny Denenea, Jr. against Allstate Insurance Company. The complaint alleges that Allstate Insurance Company systematically overbilled the National Flood Insurance Program in violation of the federal False Claims Act. To date, the United States has not intervened in the action, which is captioned United States of America ex rel. Denenea v. Allstate Insurance Company, 2:07-cv-02795 (E.D. La.).

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On September 21, 2010, the United States moved to intervene in a qui tam action filed by two former Wyeth sales employees. The relators’ complaint, originally filed on December 16, 2005, and most recently amended on May 24, 2010, alleges that Wyeth engaged in improper off-label marketing and promotion of the immunosuppressant drug Rapamune (generic name sirolimus).  In 1999, the FDA approved Rapamune to prevent organ rejection in patients aged 13 years or older receiving kidney transplants. Wyeth reported $374 million in Rapamune sales in 2008.  Pfizer acquired Wyeth in 2009.  A copy of the relators’ second amended complaint filed in United States et al. ex rel. v. Sandler et al., Civil Action No. 05-6609 (E.D.Pa.), can be found here.

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Can an athlete who has used performance enhancing drugs face FCA liability? A court somewhere in this country may soon face that question, according to the Wall Street Journal and the New York Daily News, which reported last week that 2006 Tour de France winner Floyd Landis has filed a False Claims Act suit against his former teammate and seven time Tour de France winner Lance Armstrong. The suit is currently under seal while the government considers whether to intervene in the action, but the Journal article notes that it likely relates Landis’s recent allegations that Armstrong used performance enhancing drugs and engaged in other prohibited practices during his cycling career.

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Earlier this month, the American Hospital Association sent a letter to U.S. Attorney General Eric Holder and Kathleen Sebelius, Secretary of Health and Human Services, requesting a review of a so-called kyphoplasty initiative being pursued by the Office of the United States Attorney for the Western District of New York. The AHA’s letter, and the concerns that it raises about the U.S. Attorney’s efforts, is further evidence of the federal government’s increasingly aggressive stance in policing potential false claims in the healthcare industry. Indeed, the letter accuses the DOJ of “using the threat of FCA liability as an enforcement tool.”

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On September 13, 2010, the Third Circuit in Lytle v. Capital Area Intermediate Unit, upheld a district court's dismissal of claims brought under the retaliation provision of the False Claims Act, holding that recent amendments to the FCA did not have retroactive effect.

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A qui tam FCA case against Ford Motor Company came to a definitive close last week when the Sixth Circuit affirmed, for a second time, the dismissal of the relator’s first amended complaint and agreed with the lower court that the relator should not be allowed to file a second amended complaint.  See United States ex rel. SNAPP, Inc. v. Ford Motor Co., 2010 WL 3419433 (6th Cir. Sept. 1, 2010).  The first amended complaint alleged that Ford had misrepresented the extent of its dealings with small, minority-owned business to obtain government contracts, but contained no allegations concerning specific claims for payment submitted to the government.  The Sixth Circuit held that its recent decisions requiring that an FCA complaint must allege the details of at least some representative claims submitted to the government was not so novel as to warrant giving the relator another opportunity to amend its complaint.

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In United States ex rel. Poteet v. Bahler Medical, Inc., No. 09-1728, 2010 WL 3491159 (1st Cir. Sept. 8, 2010), the First Circuit affirmed the dismissal of a relator’s qui tam action.  The relator brought the action against 120 spine surgeons and 18 medical device distributors, making allegations surrounding the promotion of a medical device manufactured by Medtronic to third-party doctors allegedly knowing that the third-party doctors would submit false claims for reimbursement.  The First Circuit affirmed the District Court’s holding that the claims against the doctors were jurisdictionally barred by the FCA’s “public disclosure bar” because the alleged fraud was publicly disclosed in civil complaints against Medtronic and various doctors and in the related media coverage.

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On September 1, 2010, Allergan announced that it reached a resolution with the United States Department of Justice (DOJ) regarding the DOJ’s criminal and civil investigation into Allergan’s past U.S. sales and marketing practices relating to certain therapeutic uses of BOTOX® (onabotulinumtoxinA). 

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