Lanier Law Firm: U.S. doesn’t have an ‘absolute’ right to dismiss ‘meritorious’ FCA complaints

By David Yates | Jan 24, 2019

TEXARKANA – The U.S. government does not have an absolute, unreviewable right to dismiss meritorious lawsuits brought under the False Claims Act – that’s the argument Lanier Law Firm lawyers are making to keep their whistleblower complaints alive.

Last Month, The U.S. Department of Justice filed motions requesting federal judges around the country dismiss “meritless” lawsuits it says were brought by shell companies against health care companies.

In Texas, a qui tam (whistleblower) suit was brought against Bayer, Amgen, Onyx and other companies in June 2017, alleging they enriched themselves at the expense of the government.

Once a whistleblower files suit, the federal government and eligible states have the option to join the plaintiff in prosecuting the action. The whistleblower, for its efforts, is entitled to a substantial percentage of any recovery.


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The DOJ says the plaintiff companies, like Health Choice Group for example, were created for the sole purpose of filing suit under the FCA and maintains that it spent hundreds of hours (around 1,500) investigating the kickback allegations only to find no merit to them.

On Jan. 22, the relators (Health Choice) filed a response, requesting a federal court in Texas deny the government’s motion to dismiss.

“Not a day goes by without headlines that pharmaceutical companies are placing profits ahead of patients and driving up the costs of healthcare,” the response states.

“Yet, in the 18 months that have passed since this litigation began, two of the longstanding tools Congress created to allow taxpayers to combat fraud and keep government contractors honest — the FCA and AKS (Anti-Kickback Statute) — have come under attack.”

The response was authored by several high-profile attorneys, including Mark Lanier, Ken Starr and Sam Baxter of McKool Smith.

The relators argue the defendant pharmaceutical companies engaged in “unlawful marketing schemes,” deploying “nurse educators,” who were “in reality acting as undercover sales reps,” to push two types of drugs – Betaseron, which is used to treat multiple sclerosis, and Nexavar, a cancer treatment medication.

They claim the companies provided “in-kind remuneration” to prescribers in the form of reimbursement support services, saving prescribers thousands of dollars in administrative expenses – an alleged violation of the federal Anti-Kickback Statute.

The relator, Health Choice Group, was established by the National Health Care Analysis Group, which is itself a pseudonym for a partnership comprised of limited liability companies set up by investors and former Wall Street investment bankers.

The partnership, acting through other company relators, filed 11 separate qui tam complaints in seven jurisdictions against a total of 38 different defendants for essentially the same alleged conduct.

The government maintains that in order to obtain information for its qui tam business, NHCA Group created a database of resumes, “scraped and extracted from publicly-available sources,” which the organization used to identify “potential informants,” the motion states.

NHCA Group then contacted the individuals under the guise of conducting a “research study” of the pharmaceutical industry, offering to pay them to participate in what it called a “qualitative research study."

However, the information was actually being collected for use in qui tam complaints filed by the NHCA Group through its pseudonymous limited liability companies.

The relators assert the government’s “attacks” on its investigation “are a sideshow,” and that the “fact that interviewees were not told” that the information conveyed during interviews may eventually be used in litigation “did not taint Relator’s fact-finding.”

The relators also question the assertion that the government spent 1,500 hours investigating the suits and maintain that cases should not be dismissed until that effort is verified.

“The government has lost track of the essential facts and, regrettably, has created an alternate universe where good is bad; the innocent are guilty; and the perpetrators of fraud suddenly become the victim,” the response states.

 “Whether the government likes it or not, this is a meritorious action. Before it may dismiss it, the government must first show that it has done its due diligence and actually understands the merits of the (complaint).”

The managing agent for NHCA Group, John Mininno, filed a declaration in support of the response, in which he says the group aimed to partner with the government “to reduce and eliminate all forms of fraud, waste and abuse in healthcare.”

Mininno also says the LLCs used by the NHCA Group “were not nefarious nor shell companies” and were lawfully formed and registered with the state of Delaware.

According to the response, the NHCA “has routinely partnered” with the government in the past, resulting in the return of “tens of millions of dollars of ill-gotten government funds.”

In Pennsylvania, the Philadelphia law firm Anapol Weiss is representing an entity known as NHCA-Teva, which was also created by National Health Care Analysis Group. Its response was filed Jan. 21 in its case against Teva Pharmaceuticals.

Two other similar cases are pending in Philadelphia federal court.

"(T)he Government must establish a legitimate governmental interest in order for a dismissal to occur," the response says.

"Here, the United States cannot meet this burden as the two grounds it asserts for the legitimate governmental interest, costs and policy considerations, are unfounded. The discovery requests and resulting costs that the Government fears are not present at this time and may be substantially different at a future date."

The government is represented by Assistant U.S. Attorney James Gillingham, along with DOJ attorneys Michael Granston, Edward Crooke and Brian McCabe.

Texas law firms representing the plaintiffs include Patton Tidwell of Texarkana and Howry Breen of Austin.

In Pennsylvania, there are also Joseph Trautwein of Blue Bell and Youman & Caputo in Newtown Square.

The suit against Bayer was filed June 19, 2017 in the U.S. District Court for the Eastern District of Texas, Texarkana Division, cause No. 5:17-00126

The other 10 lawsuits are:

• U.S. ex rel. SAPF, LLC, v. Amgen, Inc., No. 16-cv-5203 (E.D. Pa.);

• U.S. ex rel. SMSPF, LLC v. EMD Serono, Inc., No. 16-cv-5594 (E.D. Pa.);

• U.S. ex rel. SMSF, LLC v. Biogen, Inc., No 1:16-cv-11379-IT (D. Mass.);

• U.S. ex rel. NHCA-TEV, LLC v. Teva Pharms., No. 17-cv-2040 (E.D. Pa.);

• U.S. ex rel. SCEF, LLC v. Astra Zeneca PLC, No. 17-cv-1328 (W.D. Wash.);

• U.S. ex rel. Miller, v. AbbVie, Inc., No. 3:16-cv-2111 (N.D. Tex.);

• U.S. ex rel. Carle, v. Otsuka Holdings Co., No. 17-cv-966 (N.D. Ill.);

• U.S. ex rel. CIMZNHCA v. UCB, Inc., No. 3:17-cv-00765 (S.D. Ill.);

• U.S. ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., No. 5:17-cv-123 (E.D. Tex.); and

• U.S. ex rel. Health Choice Advocates, LLC v. Gilead, et al., No. 5:17-cv-121 (E.D. Tex.).

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Lanier Law Firm McKool Smith U.S. District Court for the Eastern District of Texas

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