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

The Senate Finance Committee recently released a report describing the Committee’s findings based on an investigation into Amedisys, LHC Group, Gentiva, and Almost Family, four of the largest publicly-traded home health care companies.  See Report part I and part II.  The Committee alleges that home health care companies “gamed” the Medicare reimbursement system for therapy visits to the homes of eligible Medicare beneficiaries.

• Email This
• Print
• Trackbacks

Par filed a Complaint for Declaratory and Injunctive Relief against the United States, the U.S. Food & Drug Administration (FDA), the Commissioner of the FDA, and the Secretary of the Department of Health & Human Services seeking a declaratory judgment that the application of FDA off-label marketing regulations to Par’s marketing of Magace® ES violates the First Amendment.  Par believes that those regulations unlawfully prevent it from engaging in truthful speech regarding approved uses of Magace® ES with healthcare providers that may prescribe the drug for off-label uses.  There is no dispute that physicians are legally permitted to prescribe a drug for off-label uses.  Moreover, Par alleges that Magace® ES is prescribed more often for off-label uses.  However, as Par notes, the Government has prosecuted manufacturers under the federal False Claims Act for marketing a drug in settings where it was likely to be prescribed for off-label uses.  For example, the Government brought actions against Eli Lilly in connection with its marketing of Zyprexa and Pharmacia regarding its marketing of Bextra.  Presently, Par believes it is under investigation for its sales and marketing practices of Magace® ES as it received a subpoena in March 2009.  (Click here for our prior post regarding potential FCA exposure based on allegations of off-label marketing.)  Par alleges:  “The ongoing threat of prosecution for alleged ‘off-label promotion’ based on Par’s truthful and non-misleading speech to healthcare professionals concerning the FDA-approved use of Par’s FDA-approved prescription drug currently chills Par’s speech.” 

• Email This
• Print
• Trackbacks

Earlier this week we reported on a case in the U.S. District Court for the District of Columbia in which the court unsealed a relator's complaint after the relator voluntarily dismissed it, holding that "the rationale behind sealing FCA cases is to allow the United States ample time to investigate the allegations, and the FCA does not contain any language that suggests the purpose of sealing a case is to protect the relator’s identity.”  See United States ex rel. Durham Prospect Waterproofing, Inc., Civil Action No. 10-1946, 2011 WL 4793236 (D.D.C. Oct. 4, 2011).  Click here for our post on the Durham case.  A few days ago, the District of Kansas similarly denied a relator's request to seal the complaint, holding that the "public's strong interest in access to court documents outweighed the relator's interest in keeping her identity secret.  See United States ex rel. Danner v. Quality Health Care Inc., No. 11-4026, 2011 WL 4971453 (D. Kan. Oct. 18, 2011).

• Email This
• Print
• Trackbacks

The False Claims Act provides that private persons who bring actions on behalf of the U.S. Government, called relators, file their complaints under seal.  This means that a defendant, which is frequently a present or former employer of the relator, will not have access to the complaint or even know that a complaint has been filed, unless the Government chooses to disclose the lawsuit or the court unseals the complaint.  However, the FCA does not contemplate that a complaint will remain under seal forever.  In United States ex rel. Durham Prospect Waterproofing, Inc., Civil Action No. 10-1946, 2011 WL 4793236 (D.D.C. Oct. 4, 2011), the relator, Thomas Durham, filed a qui tam complaint under seal against his present employer, Prospect Waterproofing, Inc.  The Government investigated the allegations and chose not to intervene in the lawsuit.  Subsequently, the relator voluntarily dismissed his complaint.  Fearing retaliation from his employer, the relator asked the court to maintain the seal permanently.  The Government, by contrast, requested that the complaint, the relator’s voluntary dismissal and the Government’s consent to the voluntary dismissal be unsealed.  The U.S. District Court for the District of Columbia agreed with the Government and ordered that the pleadings be unsealed.

• Email This
• Print
• Trackbacks

The New Jersey Appellate Division for the Superior Court, Mercer County, recently held that the New Jersey False Claims Act, N.J.S.A. 2A:32C–1 to –15 and N.J.S.A. 2A:32C–17 to –18, which was enacted on January 1, 2008 and made effective on March 13, 2008, does not apply retroactively to allegedly false claims submitted prior to the statute’s effective date.  See State of New Jersey ex rel. State ex rel. Hayling v. Correctional Medical Services, Inc., --- A.3d ----, Case No. A-5575-09T2, 2011 WL 4770453 (N.J.Super.A.D., Oct 11, 2011).

• Email This
• Print
• Trackbacks

The U.S. Courts of Appeals have been wrestling with the reach of the False Claims Act when the actual claim submitted to the government is not “factually false.”  Some courts have adopted a framework in which a claim that is true on its face can be considered “legally false” where a party somehow involved in the goods and services provided failed to comply with certain statutory, regulatory or contractual obligations, despite never expressly certifying that it did comply with these obligations.  This is called the “implied certification” theory of liability.  In its Petition for a Writ of Certiorari to the U.S. Supreme Court, Amgen contends that “[t]he Circuits have applied a dizzying array of different tests in deciding whether claims like this qualify as ‘false or fraudulent’ within the meaning of the FCA.”

• Email This
• Print
• Trackbacks