Appeals Court Affirms Genentech Whistleblower Case Dismissal
The 3rd Circuit Court of Appeals has affirmed a New Jersey federal court’s dismissal of a whistleblower suit against Genentech, although the appeals court ruled that the suit should be dismissed for a reason other than that cited by the lower court. Attorney Armandeep Sidhu (McDermott Will & Emery) says in an online post that the appeals court decision reinforced applicability of a “materiality” standard set forth by the Supreme Court.
The case involved a whistleblower who had been head of healthcare data analytics at Genentech. He alleged that the company suppressed data related to its cancer drug Avastin (bevacizumab) and thus caused doctors to certify incorrectly that it was “reasonable and necessary” for certain Medicare patients. He said the data analyses would have required the company to file adverse event reports with FDA and could have triggered a label change.
The district court approved Genentech’s motion to dismiss based on the failure of the whistleblower to demonstrate that false claims had been submitted. The court reasoned that since FDA had approved the drug as a cancer treatment and the Centers for Medicare and Medicaid Services (CMS) had certified it as reimbursable under Medicare, prescriptions were considered to be reasonable and necessary and thus could not be false.
Sidhu reports that on appeal, the 3rd Circuit said that the whistleblower failed to meet the False Claims Act’s materiality standard based on two conclusions: (1) FDA and CMS are in the best position to make high-level policy decisions about a drug’s approval and coverage determination; and (2) as stated in the Medicare Benefits Policy Manual, doctors are best suited to evaluate each patient and determine whether a particular treatment is reasonable and necessary for that patient.
The court said there were no factual allegations showing that CMS would not have reimbursed the doctors’ claims had the alleged data reporting deficiencies been cured. It stated that a misrepresentation is not material to the government’s payment decision when a whistleblower concedes that the government would have paid the claims with the full knowledge of the alleged non-compliance.
“The 3rd Circuit’s decision underscores what many courts, including the U.S. Supreme Court, have held,” Sidhu writes, “that a nexus to the government’s ultimate payment decision is the linchpin of materiality under the False Claims Act.”