Yandle denies DOJ's motion to dismiss opioid 'false claim' suit alleging drug makers, CVS participated in kickback scheme

By Heather Isringhausen Gvillo | Apr 17, 2019

District Judge Staci Yandle denied the United States’ motion to dismiss an opioid suit for wasting the government’s time, which alleges drug makers and retailer CVS participated in a kickback scheme by providing free nursing and reimbursement support services.

In her April 15 order denying the motion filed by U.S. Attorney Nathan Stump, Yandle concluded that “one could reasonably conclude that the proffered reasons for the decision to dismiss are pretextual and the government’s true motivation is animus towards the relator.”

The suit was filed by CIMZNHCA, or NHCA, which is a holding company of Veneri Partners, doing business as National Health Care Analysis Group. NCHA asserts violations of the Anti-Kickback Statute.

The government originally declined to intervene, but then moved to dismiss the case on Dec. 17, arguing that the allegations lack merit and prosecuting the case would be costly and contrary to governmental prerogatives.

In her order, Yandle wrote that the government “retains significant control over a qui tam action even where it declines to intervene.”

Stump argued in the motion to dismiss that the allegations conflicted with important policy.

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 to the motion, NHCA argued that the move to dismiss is arbitrary.

“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 response states.

NHCA further argued that the government failed to thoroughly investigate the kickback allegations.

Yandle agreed.

Yandle wrote that while the government has a valid interest in avoiding litigation costs, “its decision to dismiss must have been based on a minimally adequate investigation, including a meaningful cost-benefit analysis.

The government acknowledged that it collectively investigated all eleven false claim cases filed by NHCA in eight districts.

“As it relates to this specific case, the government reviewed the complaint and disclosure materials attached to the complaint,” Yandle wrote. “It did not review any additional materials from the relator relevant to this case. Nor did the government effort a cost-benefit analysis; it did not assess or analyze the costs it would likely incur versus the potential recovery that would follow to the government if this case were to proceed.

“This falls short of a minimally adequate investigation to support the claimed governmental purpose.”

Yandle noted that the government devoted “a significant portion of its briefing” to “deriding” NHCA’s business model and litigation activities.

“And, during the hearing, while asserting the government’s decision to dismiss was not based on its disapproval of the relator, its counsel maintained that disapproval of ‘professional relators’ is a valid governmental purpose for dismissal,” she wrote.

Yandle further held that there is no rational relationship between the government’s policy interest in enforcing its healthcare programs and the dismissal of this case.

During the March 29 hearing, Yandle asked if the government has a valid purpose in dismissing false claim cases that take issue or disapprove of the relator.

The government responded, “Yes. Yes, I do.”

“For the foregoing reasons, this court finds that the government’s decision to dismiss this action is arbitrary and capricious, and as such, not rationally related to a valid governmental purpose. The government’s motion is therefore denied,” Yandle concluded.

NHCA filed the suit under seal in the U.S. District Court for the Southern District of Illinois on June 20, 2017.

NCHA’s attorney Richard Burke of Highland Park 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 since 2011, UCB provided free services to providers to induce them to recommend Cimzia – a drug that works to prevent inflammation that may result from an overactive immune system.

He argued pharmacies continued to submit claims to Medicare and Medicaid that were tainted by kickbacks, causing the programs to allegedly pay tens of millions of dollars in improper reimbursements. He also argued that providers didn’t necessarily prescribe Cimzia because they believed it would help their patients, but because the defendants entice them.

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

UCB is represented by W. Jason Rankin of HeplerBroom LLC in Edwardsville.

RXC is represented by Luke G. Maher of Norton Rose Fulbright in St. Louis.

CVS and Omnicare are represented by Julie Fix Meyer of Armstrong Teasdale in St. Louis.

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Armstrong Teasdale HeplerBroom Norton Rose Fulbright

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