In a December 10 decision, the United States District Court for the Southern District of Texas granted partial summary judgment in favor of a pharmaceutical company in a qui tam action – holding that the Relators’ discovery responses demonstrated that they could not prevail at trial on certain FCA claims.

Among other things, Relators alleged that Solvay Pharmaceutical, Inc. (SPI) violated federal and Texas false claims act statutes predicated on violation of the federal Anti-Kickback Statute (AKS), 42 U.S.C. § 1320a-7b(b). Relators alleged that SPI’s sales team paid physicians in gifts, lavish events, cash, gift cards, speaking engagements, and services, for over a decade, to induce them to write prescriptions for drugs that were reimbursed by the government.

After close of discovery, SPI filed a motion for partial summary judgment. SPI argued that: (1) claims data provided to Relators’ expert could not be authenticated; (2) the scope of the false claims resulting from the kickback scheme must be limited to those claims submitted by providers that were identified in discovery; (3) Relators could not establish that the AKS violation was linked to or induced a prescription for the drugs at issue; and (4) there was insufficient evidence that the programs under which physicians received payment were crafted with the intent that the physicians would write prescriptions for SPI’s drugs.

Judge Gray Miller ultimately granted SPI’s partial summary judgment motion, and addressed each of SPI’s four arguments:

  1. Authentication of the Claims Data.  At the onset, although the federal court was “admitted concerned” that the Relators did not disclose names of witnesses that could authenticate the claims data, Judge Miller granted SPI’s partial summary judgment motion on other grounds.
  2. Scope of the Claims.  The court first narrowed the scope of the litigation to only identified claims. Relators argued that they do not need to provide each claim or each prescriber at the summary judgment stage – rather, they can rely on “examples” of such claims. Although the Court agreed that Relators can at times rely on “examples” of claims, Relators here failed to provide examples of any claims outside of Texas. Thus, the evidence was insufficient to support a multi-state multi-year kickback scheme.
  3. Causation.  On the other hand, the court determined that there was “enough evidence as to some of the physicians” to survive summary judgment on the element of causation. For example, SPI argued that there was no evidence that physicians were actually influenced, and pointed to several physicians that had already proscribed the drugs at issue prior to receiving the alleged kickbacks. In response, Relators argued that payments were made to these “dabblers” as part of SPI’s general strategy to position certain drugs in the physician’s mind and increase the number of claims from these “dabblers.” Therefore, some of the Relators’ claims could survive summary judgment on the issue of causation.
  4. Intent.  The Relators alleged that SPI provided payments through four programs with the intent that the physicians receiving payments under these programs would write prescriptions for SPI’s drugs. After scrutinizing each of piece of evidence that Relators cited, the court concluded that the evidence was insufficient to prove intent.

For instance, SPI’s preceptorship program paid physicians to allow a SPI sales representative to spend part or all of a day at the physician’s office. But, the Court noted that there was no evidence that this program was actually implemented, or that any physicians linked to the improper claims participated in this program.

Another program, the Physician Profile Interview program, paid physicians $100 for a 30 minute interview with SPI’s sales representatives. Relators pointed to evidence that the program was implemented prior to the launch of a particular SPI drug.  But, the materials for the program specifically warned “DO NOT MENTION THE PRODUCT OR THE PRODUCT CLASS….THIS IS CRUCIAL.” Relying on this warning, the Court determined that the evidence was insufficient to show that the Physician Profile Interview program was intended to provide improper remunerations.

The district court similarly concluded that other programs did not establish the issue of material fact as to intent.

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Although this opinion from the Southern District of Texas may provide hope for FCA defendants, it is unclear whether other courts would impose such a strict evidentiary bar for qui tam plaintiffs at the summary judgment phase.

In any event, the case highlights the importance of scrutinizing each element of AKS, and propounding contention discovery that requires Relators to support allegations of broad remuneration schemes. The case also reiterates that regulatory counsel should review fraud and abuse implications of any program that provides payments, in cash or in kind, to prescribers of drugs or other health care services.

Photo of John Brennan John Brennan

John T. Brennan, Jr. is a partner at Crowell & Moring and is chair of the firm’s Health Care Group. His practice primarily focuses on health care fraud and abuse matters. He defends clients in federal litigation, investigations and enforcement actions, especially relating to the federal False Claims Act and the anti-kickback and physician self-referral (Stark Law) statutes. He deals frequently with the Department of Justice and Health & Human Services – Office of the Inspector General. In addition to his litigation practice, John often advises clients on compliance matters, and conducts internal investigations related to potential fraud and abuse issues. John’s practice also includes advising clients on reimbursement, transactional, physician relations, licensure and certification, and other regulatory issues.

John graduated cum laude from Georgetown University Law Center in 1978. He also holds a master’s degree in hospital administration from The George Washington University. He received his undergraduate degree from Union College, where he graduated cum laude and was elected to Phi Beta Kappa. Prior to entering law school, John was employed as a hospital administrator for several years.

John was named an American Health Lawyers Association Fellow in 2007, an honor bestowed on only 70 of the Association’s 10,000 members. He served for three years as Chair of the AHLA’s 1,700-member Fraud and Abuse, Self-Referrals and False Claims Specialty Law Committee, the AHLA’s largest Specialty Committee, and prior to that was vice-chair of that Committee. He has been ranked in Chambers USA as a Top Health Care Attorney (Band 1) in Washington, D.C. every year since 2005 and nationwide since its inception. John has also been named one of the nation’s Top Health Care Attorneys by Best’s each year since 2006, as well as having appeared in multiple editions of The Best Lawyers in America since 2008.

John lectures and writes regularly on health care fraud and abuse topics. He has frequently conducted the Health Care Fraud Primer session at the AHLA’s Annual Conference, as well as presenting at the annual Health Care Fraud Update for Physicians and Hospitals at the AHLA Medicare/Medicaid Conference. He also speaks regularly at the ABA White Collar Health Care Fraud Institute. He has written law journal articles on the False Claims Act and co-edited numerous AHLA Members Briefings on the Stark Law, including the Stark II Phase I, Phase II, and Phase III Final Rules, and also served on the AHLA’s prestigious Stark Law Convener Panel, which Panel in 2010 made specific recommendations for changes in the law that have since been adopted by CMS or Congress.

John is a member of the District of Columbia Bar and has appeared in numerous federal and state courts and in administrative proceedings nationwide.