After the United States unsuccessfully urged U.S. District Judge Staci Yandle to alter her order denying dismissal in an opioid false claim suit, several drug makers and retailer CVS now seek dismissal arguing that the False Claims Act precludes the action.
The suit was filed by CIMZNHCA, or NHCA, which is a holding company of Veneri Partners, doing business as National Health Care Analysis Group. NHCA asserts violations of the Anti-Kickback Scheme.
On Dec. 17, U.S. Attorney Nathan Stump moved to dismiss the case, arguing that the allegations lack merit and prosecuting the case would be costly and contrary to governmental prerogatives.
Stump had argued that 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.”
Yandle denied the motion on April 15, concluding 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 government responded by filing a motion to alter judgment, arguing that Yandle erred in evaluating the government’s stated reasons for dismissal rather than accepting them.
Yandle denied the motion on June 7, stating that “’manifest error’ is not demonstrated merely by the disappointment of the losing party.”
She wrote that “courts do not blindly accept the government’s stated reasons for dismissal, but instead, conduct a judicial a limited judicial (sic) review to ensure the government’s decision to dismiss is not fraudulent, arbitrary or an abuse of power.”
Yandle added that the parties’ briefing and the evidence presented during the evidentiary hearing showed that the government’s investigation into the claims asserted in the complaint was minimal and that it failed to conduct a meaningful cost-benefit analysis.
After Yandle first denied the government’s request for dismissal, CIMZNHCA filed an amended complaint on May 14 through attorney Richard Burke of Highland Park and 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.
CIMZNHCA filed the original suit under seal in the U.S. District Court for the Southern District of Illinois on June 20, 2017.
CIMZNHCA seeks 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.
RXC filed a motion to dismiss on June 25 through attorney Neil G. Nandi of Sidley Austin LLP in Chicago.
The defendant argues that Congress established the public disclosure bar and the first-to-file rule as threshold restrictions of False Claims Act actions and instructed the courts to “act as gatekeepers of the public fisc.”
The public disclosure bar “prevents suits by relators that are based on conduct that has been publicly disclosed,” the motion states.
The first-to-file bar “prevents a relator from bringing an action that is related to another pending FCA suit.”
“These restrictions exist to bar opportunistic and copycat relators where the government is already on notice of the alleged fraud. If either bar is triggered, Congress directed district courts to dismiss the qui tam action, irrespective of the merits of the relator’s allegations,” the motion states.
The defendant argues that CIMZNHCA is a for-profit LLC created solely for the purpose of bringing the lawsuit at issue and is an affiliate of National Healthcare Analysis Group. NHCA allegedly orchestrated to have specifically created LLCs file a dozen similar qui tam suits across the country.
“This qui tam action is the precise type of suit that Congress intended to foreclose when it erected the public disclosure and first-to-file bars,” the motion states.
The defendant further argues that services including reimbursement support and nurse education for a particular medication are not part of the Federal anti-kickback statute.
UCB filed a motion to dismiss the amended complaint on June 25 through attorney W. Jason Rankin of HeplerBroom in Edwardsville.
The defendant argues that CIMZNHCA relies on vague allegations and recycled public material to attack the pharmaceutical manufacturer for its “nurse educator” and “reimbursement support” programs.
“Relator asserts that these two programs somehow constitute schemes that violate the False Claims Act (FCA) and related state laws, purportedly based on underlying violations of the Anti-Kickback Statute.
“But the FCA alleges no specific facts that would establish such schemes. Rather, it mounts a generalized challenge to programs that have already been targeted in prior qui tam filings against UCB, RXC Acquisition Company, and others, and that were disclosed in various other public materials,” the motion states.
The defendant argues that the complaint was “statutorily barred” as soon as it was filed according to the FCA’s “first-to-file” rule, which compels dismissal when a related suit is pending. CIMZNHCA filed 10 other related suits before filing the Southern District of Illinois action.
“These prior actions against RXC and others barred relator’s filing of the instant action, as they were enough to alert the government to UCB’s use of RXC’s program,” the motion states.
The defendant further argues that the case should be dismissed according to the FCA’s public disclosure rule because “critical elements of the alleged fraud in this case were long ago publicly disclosed in numerous sources.”
CVS and Omnicare also filed a motion to dismiss on June 25 through attorney Julie Fix Meyer of Armstrong Teasdale in St. Louis.
The defendants argue that NHCA fails to state a claim for relief and that its claims are precluded by the False Claims Act’s public-disclosure bar and the first-to-file rule.
CIMZNHCA filed an opposition to the defendants’ motions to dismiss on July 29 through attorney Leslie Pescia of Beasley, Allen, Crow, Methvin, Portis & Miles PC in Montgomery, Ala.
The plaintiff argues that the defendants’ assertions that the public disclosure bar and the first-to-file rule preclude this action “fail because relator conducted an independent investigation into these claims, has independent knowledge of the violations, and laid out the violations in more than sufficient detail.”
CIMZNHCA argues that the prior lawsuits involve different drugs and relationships with drug manufacturers.
“The allegations in this case concerning how these defendants implemented, marketed, and profited from providing illegal kickbacks to prescribers in exchange for prescriptions of Cimzia are not part of any prior lawsuit,” the opposition states.
CIMZNHCA further argues that the defendants cherry-picked certain portions of the FCA's public disclosure rule.
“Relator’s use of certain publicly available information to provide background and substance to the allegations of fraud does not equate to public disclosure of the specific violations alleged against defendants,” the response states.