The Qui Tam Blog

By: Joel Androphy, Rachel Grier, and Scott Braden

The Texas FCA does not contain an express limitations period on Medicaid fraud claims. However, under Texas law, if a cause of action does not contain an express limitations period, it is subject to a default four-year limitations period unless the cause of action is one that belongs to the state. The whistleblower argued that a qui tam lawsuit is a right of action belonging to the government and is therefore exempt from the four year limitations period. Relying on Fifth Circuit case law, the court held that if the state has not intervened, the right of action belongs to the whistleblower and is subject to the four year default statute of limitations. The case is United States ex rel. Foster v. Bristol-Myers Squibb Co., a court in the Eastern District of Texas, Lufkin.

By: Joel Androphy, Rachel Grier, and Scott Braden

Medicaid can only reimburse drugs that are used for a medically accepted indication, meaning an indication that is either approved by the FDA or supported by one of three drug compendia. In Rost, the whistleblower, a former Pfizer marketing executive, brought a qui tam suit alleging that Pfizer unlawfully promoted the off-label use of Genotropin (human growth hormone) for treatment of short stature in children. Pfizer argued that one of the compendia, DRUGDEX, cited Genotropin as “possibly effective” for short stature in children.  Citing to a recent statement by the Center for Medicaid and State Operations, the court pointed out that to be reimbursable, an off-label use must be supported by the compendia as opposed to merely listed.  It was unclear from the record whether being cited by DRUGDEX as “possibly effective” could be read to “support” an off-label use. 

The court stated that Pfizer’s stronger argument was that the off-label claims were not false because they were approved by Indiana Drug Utilization Review (“DUR”) Board.  For example, if a state knowingly reimburses for the off-label use of a drug “after a prior authorization review,” the government knowledge could “negate the intent requirement under the FCA.”  This argument, however, was trumped by the allegations (and potential proof) that the false qui tam claims were caused by unlawful kickbacks.

 By: Joel Androphy, Rachel Grier, and Scott Braden

In August 2006, Peter Rost, a former Pfizer marketing executive, was dealt a crushing blow by the U.S. District Court in Boston when it dismissed his ­qui tam action for failing to plead his fraud claims with specific particularity as required by Rule 9(b).  On appeal, the First Circuit agreed that Rost failed to plead specific enough details, but vacated the dismissal and remanded Rost’s claims because the district court never ruled on Rost’s motion to amend his complaint. Last month, Rost’s second trip to the district court proved to be much more successful when it concluded that the amended complaint satisfied the heightened pleading requirement.

Rost’s original complaint detailed the mechanics of an alleged fraudulent scheme that Pfizer implemented to market its drug Genotropin to physicians for off-label anti-aging and body improvement purposes, but it failed to specify any specific claims that were sent to Medicaid.  The amended complaint corrected these deficiencies by alleging over 200 false claims, each of which listed the Medicaid reimbursement codes, the medical diagnosis accompanying the claim, the dates of the diagnosis and the dispensation of the drugs, and the prescription dosage.  

A federal judge in Brooklyn rejected a pharmaceutical sales representative’s defense of commercial free speech in responding to charges of criminal misbranding.   The Court found that the prohibition of off-label promotion of drugs is essential to maintaining the integrity of the FDA’s drug approval process,  The government used informants in investigating the case.   The case is United States v. Caronia, a court in Brooklyn, the Eastern District of N.Y.

In a whistleblower case, a Magistrate Judge, following the law from the Eleventh Federal Circuit Court of Appeals, decided that in order for a whistleblower to properly plead a qui tam case, he must plead with particularity the actual submission of false or fraudulent claims to the government. In other words, it was not enough for the whistleblower to allege that there were illegal off-label marketing campaigns causing the submission of hundreds of thousands of false claims for prescriptions. The whistleblower was also required to include specific allegations of an actual false claim that was submitted to the government. The obvious inference was insufficient. The message from the 11th Circuit Court is simple. If you are going to prevail in our circuit, you must be prepared to have as clients or witnesses everyone in the chain of alleged misconduct, especially people in the billing department to prove that the time and effort devoted toward a scheme culminated in an actual billing. The message is clear.  Do not file off-label marketing cases in this federal circuit, or for that matter any other claims that require specific billing information.  The case is USA ex rel. Hopper v. Solvay Pharmaceuticals, a court in the Middle District of Florida (Tampa).

In a whistleblower cases against Caremark, Inc., a US District Judge in San Antonio, Texas, relying on a federal case in the Second Federal Circuit Court of Appeals, decided that the statute of limitations is not tolled for the government while it decides whether to intervene.  In other words, if the government takes several years to decide to join a case, it’s complaint in intervention does not relate back to the date of the original complaint filed by the whistleblower.  Why should the whistleblower and the government be penalized? The Court stated that the government should not have taken long to decide whether to intervene, and that Congress did not intend investigations to be protracted. The clear implication: several months is all that is required for a government investigation and evaluation. That is simply contrary to logic and Congressional intent. Congress did not impose any time limits on intervention.  Further, if a Court decides that the government has taken too long, it can deny further extensions of the seal. Do not penalize the whistleblower and the public. The message is clear. At least in the Western District of Texas, if the government is going to investigate and take several years, the whistleblower should implore the government to stay on the sidelines and not intervene.   The case is USA ex rel. Ramadoss v. Caremark, a court in the Western District of Texas, San Antonio.

The False Claims - Mens Rea section of this blog is currently being developed.  For more information, visit the Qui Tam section of the Berg & Androphy web site.

The False Claims - Types section of this blog is currently being developed.  For more information, visit the Qui Tam section of the Berg & Androphy web site.

The Healthcare Fraud - Upcoding section of this blog is currently being developed.  For more information, visit the Qui Tam section of the Berg & Androphy web site.

The Healthcare Fraud - Unbundling section of this blog is currently being developed.  For more information, visit the Qui Tam section of the Berg & Androphy web site.