Appeals Court Backs Greer Labs Win in Whistleblower Case
The 4th Circuit Court of Appeals has affirmed a federal district court’s summary judgment in favor of Greer Laboratories in a case in which whistleblowers said the company had sold custom mixes of allergenic extracts to doctors under an FDA general license rather than a required separate license for custom mixes. Jones Day attorneys write in an online analysis that the appeals court said the whistleblowers, who were former Greer employees, could not establish scienter (knowledge of wrongdoing) under the False Claims Act (FCA) and also had not engaged in a protected activity under that act.
“The conventional wisdom that the scienter requirement is not ripe for summary judgment because intent is traditionally an issue to be decided by the trier of fact is appropriately turned on its head in this case,” the attorneys write. “Scienter, like materiality, remains subject to a rigorous inquiry and should be considered as the focus of any summary judgment motion in an FCA case.”
After reviewing the history of the case and the courts’ holdings, the attorneys offer three takeaways:
- the FCA’s scienter requirement remains rigorous and should not be overlooked as a basis for summary judgment, particularly with ambiguous statutes or regulations;
- industry practice can be a useful avenue for compelling evidence on whether a defendant acted with requisite scienter and might be an appropriate area for expert testimony; and
- FDA inspections or audits that do not result in any adverse findings can negate any claim that a defendant knowingly misled the government about the conduct at issue.