Archive for the ‘Pharmaceuticals’ Category

When Is a Kickback Not a Kickback? Third Circuit Says It Must Be Linked to Specific False Claim

Thursday, February 1st, 2018

What Happened?

In affirming the district court’s entry of summary judgment in favor of Accredo Health Group, Inc., and its co-defendants, the U.S. Court of Appeals for the Third Circuit held that a plaintiff alleging a False Claims Act (“FCA”) violation based on an anti-kickback theory must show that (1) a particular patient was exposed to a kickback-tainted referral, and (2) a provider submitted a claim for reimbursement pertaining to that patient.

The Rundown

In United States ex rel. Greenfield v. Medco Health Solutions, Inc., et al., the relator sued Accredo Health Group, a specialty pharmacy that provides home health care for hemophilia patients, and its affiliates (collectively, “Accredo”). Accredo made donations to numerous hemophilia-related charities, two of which, according to the relator’s allegations, recommended Accredo as a provider for hemophilia patients. Relator Greenfield moved for summary judgment before the district court, arguing that Accredo’s donations-for-referrals scheme violated the Anti-Kickback Statute (“AKS)), 42 U.S.C. § 1320a-7b(b), and that the scheme ran afoul of the FCA, 31 U.S.C. § 3729 et seq., because (1) some of the referrals were directed towards Medicare patients, and (2) when submitting Medicare claims for payment, Accredo falsely certified that it had complied with the AKS. Accredo cross-moved for summary judgment on the ground that the record lacked evidence that any Medicare patient had purchased prescriptions because of Accredo’s donations to specific charities.

Without reaching the question whether Greenfield had established a kickback scheme, the district court granted Accredo’s motion for summary judgment, while denying the relator’s motion for the same relief.  It held that an FCA claim based on an anti-kickback theory requires the plaintiff to show that, as a result of the AKS violation, the defendant received payment from the federal government in violation of the FCA. Greenfield could not do that, in the Court’s view, because there was no evidence that any Medicare patient chose Accredo due to its charitable donations.

Greenfield appealed, and the U.S. Court of Appeals for the Third Circuit affirmed the district court’s grant of summary judgment in favor of Accredo. But it rejected the district court’s imposition of a “but-for” causation requirement. The Court analyzed the language of the AKS, amended in 2010 to provide that “a claim that includes items or services resulting from a violation of [the statute] constitutes a false of fraudulent claim for the purposes of [the FCA].”  According to the Court, the “resulting from” language was too broad to require proof that the Medicare patient would not have chosen the provider but for the kickback. Were the district court’s interpretation correct, the both AKS drafters’ intention to strengthen the government’s ability to punish fraudulent activities, and its revisers’ intention to bolster whistleblower actions based on medical care kickbacks would have been thwarted.

However, the Court held that a plaintiff must still provide evidence of the actual submission of a false claim to prevail at trial.  Demonstrating that a kickback scheme exists is not enough; a plaintiff must establish that the underlying medical care is connected to the breach of the AKS.  Because Greenfield could point to no “record evidence that shows a link between the alleged kickbacks and the medical care received by at least one of Accredo’s . . . federally insured patients,” the district court correctly entered summary judgment for Accredo.

The Take Away

The Court rejected both (1) Greenfield’s position that that taint of a kickback scheme is enough to infect all referrals to Medicare patients, and (2) Accredo’s argument – adopted by the district court – that a plaintiff must prove that federal beneficiaries would not have used the relevant services absent the kickback scheme. Its middle-ground position, requiring evidence that shows a “link” between kickbacks and care, is sure to spawn future litigation regarding how strong and of what character that connection must be.

Sanofi Aventis Can’t Invoke the First Amendment to Escape FCA Liability

Monday, January 23rd, 2017

United States ex rel. Gohil v. Aventis, Inc. is a long-running False Claims Act suit filed in the Eastern District of Pennsylvania by an ex-sales specialist against his former employer, behemoth pharmaceutical company, Sanofi Aventis.  Relator Yoash Gohil filed this qui tam suit in 2002 alleging that his former employer engaged in a fraudulent marketing scheme to promote off-label the chemo-therapy drug, Taxotere.

The Relator alleges that Aventis trained and directed its sales force to misrepresent the safety and effectiveness of the chemotherapy agent in order to expand the market share for Taxotere beyond its FDA approval as a “second line treatment.”  A second line treatment is one that is approved for limited use only after the failure of a prior treatment.  Relator also alleges that Aventis had engaged in a kickback scheme that included sham grants, exorbitant speaking fees, and excessive preceptorship fees paid to physicians in order to incentivize them to prescribe Taxotere.

Aventis moved for a partial judgment on the pleadings and raised two grounds for dismissal.  First, Aventis argued that some of the claims (those from 1996 to 2000) were barred by the statute of limitations.  Federal District Court Judge Lawrence Stengel rejected this argument finding that the pharmaceutical company was given fair notice of the claims when the First and Second Amended Complaints were filed.  The Court accepted Relator’s argument that all of the new claims “related back” to the claims laid out in his original complaint.

Second, Aventis argued that some of Relator’s claims were precluded by the First Amendment.  This argument has been made with increasing frequency by the pharmaceutical industry in trial and appellate courts throughout the United States.  Aventis argued that First Amendment protections extend to commercial speech and that parts of Relator’s claims were based on truthful, non-misleading speech regarding Taxotere.  Judge Stengel rejected this argument as well, finding that Relator’s Complaint had asserted that the off-label promotion was false and/or misleading.  Ultimately, the dispute over the whether the speech was false or misleading is material to the outcome of the case.  Judge Stengel held that the First Amendment issue was not ripe for disposition and denied the motion for partial summary judgment.  He wrote, “This question is better answered by a jury.”

United States ex rel. Gohil v. Aventis, Inc., No. 02-2964, 2017 U.S. Dist. LEXIS 3236 (E.D. Pa. Jan. 9, 2017)


Major Drug Company Not Immune From FCA Liability For False Claims Submitted by Pharmacists

Monday, June 1st, 2015

On Tuesday, in United States ex rel. Nevyas v. Allergan, Inc., an Eastern District of Pennsylvania district court denied pharmaceutical giant Allergan’s motion to dismiss False Claims Act (“FCA”) allegations brought against it by Relator eye doctors in the Philadelphia area. In so doing, the Court rejected Allergan’s novel argument that, since the allegedly false claims were submitted by unknowing third-party pharmacists, Allergan could not be liable under the FCA.

Relators allege that Allergan engaged in an elaborate kickback scheme to increase prescriptions for its eye care products. Allergan would allegedly target large eye care practices and provide eye care providers with a suite of professional and financial advisory services, access to a valuable Internet site, and admittance to its Speakers Bureau – all with the explicit quid pro quo that the providers would reciprocate by writing prescriptions for Allergan’s drugs.

Among its arguments in its Motion to Dismiss, Allergan claimed that under the framework for evaluating FCA claims adopted by the Third Circuit in United States ex rel. Wilkins v. United Health Care Group, Inc., 659 F.3d 295 (3d Cir. 2011), it could not be liable for the false claims its alleged kickbacks generated because those claims were not submitted by the company but rather by pharmacists unaware of the underlying scheme. While the plain language of the FCA encompasses those who knowingly “cause” the submission of false claims, Allergan argued that the statute’s scienter requirement applied to both the individual causing the submission as well as the submitter. In rejecting this argument, the Court pointed to recent cases in several circuits holding that non-submitting entities that cause the submission of false claims can be liable under the FCA.

PharMerica Agrees to Pay $31.5M Over False Claims Act Violations

Thursday, May 28th, 2015

On May 14, 2015, PharMerica Corp. agreed to pay $31.5 million to resolve a False Claims Act and Controlled Substances Act lawsuit alleging that the company had dispensed Schedule II controlled drugs without valid prescriptions and then billed Medicare for the improperly dispensed drugs.

PharMerica, a long-term care pharmacy that dispenses medications to residents of long-term care facilities, often fills prescriptions for controlled substances listed in Schedule II under the Controlled Substances Act. The lawsuit alleged that PharMercia pharmacies throughout the country routinely dispensed these Schedule II controlled drugs in non-emergency situations without first obtaining a written prescription. According to the complaint, PharMerica violated the Controlled Substances Act by enabling nursing home staff to order narcotics, and pharmacists to dispense them, without confirming that a physician had determined whether the narcotics were medically necessary. PharMerica agreed to pay $8 million to resolve those allegations.

The lawsuit also alleged that PharMerica violated the False Claims Act by knowingly causing the submission of false claims to Medicare Part D for improperly dispensed Schedule II drugs, including oxycodone and fentanyl. PharMerica agreed to pay $23.5 million to resolve those allegations. The whistleblower who brought these allegations to the attention of the government, Jennifer Buth, will receive $4.3 million for her efforts. As part of the settlement, PharMerica also agreed to enter into a corporate integrity agreement with the HHS-OIG, which obligates the company to undertake substantial internal compliance reforms and to submit federal health care program claims for an independent review for the next five years.

PharMerica to Pay $31.5 Million to Settle False Claims Act and Controlled Substances Act Lawsuit

Tuesday, May 26th, 2015

The United States Department of Justice (“DOJ”) recently announced that PharMerica Corp. will pay $31.5 million, including more than $4 million to a whistleblower, to settle alleged violations of the Controlled Substances Act (“CSA”) and False Claims Act (“FCA”) related to the company’s improper dispensing of narcotics and submission of false claims to Medicare Part D.

PharMerica is a long-term care pharmacy that dispenses drugs to residents in nursing homes and other long-term care facilities.  The government alleged that PharMerica dispensed controlled substances listed in Schedule II of the CSA, including oxycodone and morphine, in non-emergency situations based solely on requests from the long-term facility rather than a valid prescription from a practitioner.  Schedule II narcotics were thus allegedly dispensed without physician confirmation that they were necessary and should be administered to the resident.  Under the settlement, PharMerica has agreed to pay $8 million to resolve these allegations.

The complaint also alleged that PharMerica violated the FCA by knowingly causing the submission of false claims to Medicare Part D for these improperly dispensed Schedule II drugs.  The FCA imposes treble damages and penalties for the knowing submission of false claims for federal funds.  PharMerica has agreed to pay $23.5 million to resolve its alleged FCA violations.

The FCA claims resolved by Thursday’s settlement were originally brought by Jennifer Denk, a pharmacist formerly employed by PharMerica, under the whistleblower provisions of the act, which authorize private parties to sue on behalf of the United States and to receive a portion of any recovery.  The act permits the United States to intervene and take over the lawsuit, as it did in this case with respect to some of Ms. Denk’s allegations.  Ms. Denk will receive $4.3 million as her share of the settlement.

PharMerica’s agreement with the United States includes not only a settlement with DOJ but a five-year Corporate Integrity Agreement with the Department of Health and Human Services – Office of the Inspector General as well.  The Corporate Integrity Agreement calls for the appointment of an official compliance officer, the establishment of a compliance committee, and the submission of federal health care program claims for independent review for the next five years, among other reforms.

Prescriptions for Controlled Substances to Medicare Patients is on the Rise

Tuesday, January 6th, 2015

Even as the abuse of prescription drugs has escalated and the national crackdown on it has occurred, new data suggests that doctors are prescribing even larger numbers of prescriptions for the most potent controlled substances to Medicare patients.

And, along with the increase in the number of prescriptions written, physicians are under increased scrutiny, as well as facing disciplinary action. Twelve of Medicare’s top 20 prescribers of Schedule 2 drugs (those that include powerful narcotic painkillers and stimulants with the highest potential for abuse and dependence) have faced disciplinary actions by their state medical boards or criminal charges related to their medical practices.

The most recent year for which data is available, 2012, Medicare covered nearly 27 million prescriptions for Schedule 2 controlled substances. Within the past year, Medicare has started to use prescribing data to identify potentially problematic doctors, as have some state medical boards as well. Beginning in mid-2015, Medicare will have the authority to kick doctors out of the program if they prescribe in abusive ways.

Whistleblower Suit Against Abbott Laboratories Survives Motion To Dismiss

Wednesday, February 5th, 2014

A whistleblower lawsuit against Abbott Laboratories was given the green light to continue in federal court, surging Abbott’s motion to dismiss in the Eastern District of Pennsylvania.

According to the lawsuit, which was brought under the qui tam provisions of the False Claims Act in 2009 by former Abbott sales representative Amy Bergman, Abbott unlawfully marketed its cholesterol drug TriCor for the off-label treatment of diabetic patients.

Abbott Laboratories filed a motion to dismiss alleging that Bergman’s suit failed to plead the alleged off-label marketing scheme with particularity as required by Rule 9(b). Judge C. Darnell Jones rejected the motion, finding that Bergman’s complaint contained “myriad details” of Abbott’s off-label marketing statements that contradicted its FDA approved label.

Judge Jones’ opinion in Bergman v. Abbott is the latest in a line of cases in several circuits, including the Third Circuit, that allows a more relaxed pleading standard for off-label marketing claims under 9(b). Robert Nicholson of Nicholson & Eastin in Florida and Marc S. Raspanti of Pietragallo Gordon Alfano Bosick & Raspanti are the attorneys for Relator Bergman.

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Allergan Faces Whistleblower Lawsuit Alleging Payment Of Kickbacks To Induce Prescriptions For Lucrative Eye Care Drugs

Tuesday, January 7th, 2014

Allergan Inc. paid kickbacks to induce prescriptions of the pharmaceutical company’s eye care drugs, according to allegations raised in a lawsuit unsealed on December 17, 2013 in federal court in Philadelphia. The lawsuit alleges that Allergan provided illegal inducements to eye care professionals throughout the United States, including business consulting services through its team of Eye Care Business Advisors, and that Allergan explicitly requested that in exchange for those benefits, eye doctors and optometrists prescribe Allergan’s drugs.

According to the complaint, Allergan touted that its free consulting services would boost the profitability of eye care professionals’ practices by, among other things, advising practices on how to target patients with “dry eye” and prescribe Allergan’s blockbuster drug RESTASIS®, as opposed to significantly less expensive treatment alternatives. According to the complaint, the Eye Care Business Advisors were part of an array of valuable services that Allergan provided to eye care professionals in order to persuade them to prescribe a host of eye care products. These products were paid for by the Medicare and Medicaid health insurance programs.

The complaint was filed under the qui tam, or whistleblower provisions of the False Claims Act. This Act encourages private citizens to come forward and report fraud against the government by allowing them to sue on behalf of the government and receive a share of any government recovery. Under the law, 70 percent of any recovery goes back to federal and state treasuries.

“Patients deserve to know that their medical professional is making decisions based on their best interests and not because a drug company is offering incentives to steer patients to specific drugs,” said Pietragallo Gordon attorney Marc S. Raspanti. “We look forward to prosecuting this case to a successful conclusion for federal and state taxpayers and for all of us who are concerned about the integrity of medical decision-making in this country,” said David Chizewer of Goldberg Kohn. “It is rare for successful, well-respected physicians to blow the whistle on the health care industry,” says Raspanti’s partner, Michael Morse.

“We are proud to represent our clients who not only run one of the most prestigious eye care practices in the Philadelphia area, but had the rare courage and integrity to come forward and report Allergan’s practices,” said Pietragallo Gordon’s Pamela Brecht. “The False Claims Act provides private law firms with the unique opportunity to litigate and vindicate the interests of federal and state governments, and we intend to do just that,” commented Chizewer’s partner, Matthew Organ.

The lawsuit is captioned United States ex rel. Nevyas, et al. v. Allergan, Inc., No. 09-0432 (E.D. Pa.). The claims asserted against the defendants are allegations only; there has been no determination of liability.

J & J Settlement Pays Off For Nation’s Capital

Monday, November 18th, 2013

The government’s recent massive settlement with Johnson & Johnson is paying dividends for the residents of Washington, D.C.

The District of Columbia’s Medicaid program will receive more than $3 million out of the $1.2 billion settlement, which resolved four qui tam cases filed in federal court in the Eastern District of Pennsylvania. 

The suits contended that Johnson & Johnson and subsidiary Janssen Pharmaceuticals, Inc., engaged in off-label promotion of antipsychotic drugs Risperdal and Invega.

Supreme Court Asks Solicitor General About Whistleblower Cases

Friday, October 11th, 2013

In a case that could have enormous implications for the federal government and the pharmaceutical industry, the United States Supreme Court has asked the Solicitor General to provide its position.  The issue involves Rule 9(b) of the False Claims Act, which requires a whistleblower to allege claims of fraud with specificity.  The Fourth Circuit Court of Appeals held that a whistleblower must “allege with particularity that specific false claims were presented to the government for payment.” In short, the appeals court wanted detailed and verifiable evidence of individual instances where the government was defrauded, even while acknowledging the difficulties that can be encountered in obtaining specific prescription invoices and the barriers posed by privacy laws.  The whistleblower has asked the Supreme Court to review the case, and the Supreme Court’s request for the position of the Solicitor General is being viewed as a positive sign by the whistleblower that the high court will accept review.

For more information, please see: