Company suing UCB, CVS for violating False Claim Act responds to DOJ's motion to dismiss

By Heather Isringhausen Gvillo | Jan 30, 2019

The company suing drug maker UCB and retailer CVS over alleged Cimzia kickbacks filed a response to a U.S. attorney's motion to dismiss the suit for allegedly wasting the government’s time, urging the court to prevent the government from overstepping its authority. 

“Far from absolute, the power of the Executive Branch is subject to the system of checks and balances spelled out in the Constitution. Relator respectfully requests that the court scrutinize the government’s representations to ensure that the government’s motion does not reflect an overreach by the Executive Branch – or the biases, whims, or inertia of government officials or government lawyers. Relator respectfully requests a hearing with respect to the government’s motion,” the Jan. 22 response states. 

CIMZNHCA, or NHCA, filed the response after U.S. attorney Nathan Stump moved to dismiss the suit on Dec. 17, arguing that the allegations conflicted with important policy and enforcement prerogatives of federal healthcare programs.

NHCA is represented by Richard Burke of Highland Park, who is a former class action lawyer at Tom Lakin’s Wood River firm, and Lance Gould of Beasley Allen Crow Methvin Portis & Miles PC in Montgomery, Ala.

NHCA, a holding company of Venari Partners and doing business as National Health Care Analysis Group, argues that the motion fails to meet its burden and offers no evidence to support its claim. 

NHCA argues that in the motion to dismiss, the government “oversimplified and mischaracterized the Relator’s allegations” when it asserted that the support service activities amounted to “nothing more than ‘assisting physicians with the completion of insurance documents such as benefit verifications and prior authorization forms.’”

NHCA instead argues that UCB offered support services that go beyond merely providing information on Cimzia, a drug that works to prevent inflammation that may result from an overactive immune system. . 

“Rather, defendants underwrote all time-consuming and unprofitable tasks prescribers and their staff are duty-bound to complete to obtain insurance coverage for Cimzia. 

“For every patient that was prescribed Cimzia, a prescriber saved tens and perhaps hundreds of dollars. That is tangible compensation that UCB paid to induce the writing of prescriptions – and thus amounts to an Anti-Kickback Statute violation,” the response states.

Further, by providing free nursing care, UCB saved physicians the costs of answering patients’ questions and instructing the patient on the proper way to administer the drug.

“UCB could not pay the physicians’ staff directly (a clear kickback), so it supplies the staff instead,” the response states.

“Rather than promoting and marketing its drug based on patient outcomes and efficacy, UCB introduced additional incentives to providers to recommend its drug to patients. UCB knew that free nurse services and free reimbursement support services would present a tangible value to the providers,” it continues. 

Allowing the government the right to dismiss the suit “directly contradicts the plain language of the False Claims Act,” NHCA argues. 

“The Senate Committee on the judiciary explained its desire to provide qui tam plaintiffs with a more direct role not only in keeping abreast of the government’s efforts and protecting his financial stake, but also in acting as a ‘check that the government does not neglect evidence, cause unduly (sic) delay, or drop the false claims case without legitimate reason,’”the response states.

NHCA further argues that the False Claims Act does not give the government an absolute and unreviewable right to dismiss lawsuits with merit brought in the name of the United States.

NHCA also claims the DOJ has failed to submit any evidence to suggest that its concerns have merit and provides no meaningful cost-benefit analysis to support its concerns. 

“In fact, the government’s own words demonstrate that pursuing this litigation could have immense benefit for the government – Cimzia was prescribed more than 240,000 times in this period for Medicare Part D alone, which demonstrates that the recovery and benefit to the government could be substantial.

“The government failed to identify and demonstrate any rational relationship between accomplishment of a valid government purpose and dismissal of this action,” the response states.

While the DOJ argues that NHCA’s claims conflict with federal healthcare policy and enforcement prerogatives, NHCA argues that the alleged schemes provide more than a toll-free information line for patients.

“Rather, Relator is alleging that free reimbursement support and nursing services paid for by the pharmaceutical company is a subtler way to reimburse doctors for expenses related to prescribing its medication,” the response states.

NHCA further argues that the government’s indication that the allegations should be questioned because NHCA is a party to more than one qui tam action “is both inappropriate and irrelevant.”

NHCA filed the suit through Burke under seal in the U.S. District Court for the Southern District of Illinois on June 20, 2017. The United States allegedly chose not to intervene in the case on Dec. 14, 2017, the response states. 

To date, the defendants have not answered the complaint and have not filed any motions to dismiss. 

Burke sought to recover treble damages from alleged unlawful marketing schemes, plus civil penalties and restitution to the U.S. and 27 states. 

Burke wrote that UCB provided free services to providers to induce them to recommend Cimzia.

He argued pharmacies continued to submit claims to Medicare and Medicaid that were tainted by kickbacks, and providers didn’t necessarily prescribe Cimzia because they believed it would help their patients.

Stump moved to dismiss the action against UCB and CVS along with 10 other false claim suits filed in eight districts. 

The claims “would undermine common industry practices the federal government has determined are, in this particular case, appropriate and beneficial to federal health care programs and their beneficiaries,” Stump wrote. 

Stump alleges that attorneys in the fraud section of the civil division of the Department of Justice spent 1,500 hours investigating claims implicating more than 73 million prescriptions written by hundreds of thousands of physicians for millions of beneficiaries. The hours spent investigating the claims didn’t include the time of other government attorneys, law enforcement agents, investigators and auditors. 

In its response, NHCA states that it was initially conceived as a small boutique consulting firm to provide forensic consulting services for investment firms seeking to avoid investing in entities whose revenue stream could be tainted by Medicare fraud.

NHCA employed a former IRS Special Agent with expertise in forensic accounting, a registered nurse with more than 30 years of experience, a Duke graduate with an MBA in Finance and Healthcare Sector Management and a lawyer with experience in pursuing home healthcare fraud. 

In order to gain experience “in the manner in which fraud was perpetuated,” NHCA began researching areas of potential healthcare fraud in 2013. 

NHCA alleges it worked with “countless individuals in the healthcare industry, all with a common goal to ‘build a better mousetrap’ to catch the systemic fraud.”

“Because the group found that Medicare fraud was so rampant in the healthcare industry, its focus was modified to compile evidence of fraudulent conduct,” the response states. 

NHCA argues that its research resulted in legal actions that led to the government recouping millions of dollars in healthcare fraud damages, including $7.5 million against Home Bound Healthcare, $9 million against Galena Pharmaceuticals, $40 million against Novo Nordisk and $150 million against Insys, which has not yet been finalized. 

“This practice is not a ‘false pretense’ but instead consistent with qualitative research norms and the NHCA Group’s goals to obtain accurate and correct information that it can then share with the government, ”the response states.

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