FDA Policy/General

Attorneys See Renewed DoJ Interest in Fraud-on-FDA

David McFarland

— 1 min read
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A Duane Morris Legal Alert says a Department of Justice (DoJ) Statement of Interest filed in a Florida federal court in a Trividia Health whistleblower case makes clear the department’s decision to reawaken a theory of liability thought to be dead. The alert says the fraud-on-FDA theory stems from the well-established legal doctrine of fraudulent inducement. Under the theory, it says, fraudulent inducement occurs when a company’s violations of the Federal Food, Drug, and Cosmetic Act (FFDCA) or FDA regulations materially and wrongfully induce FDA to approve a product or medical device that, in turn, causes payments to be made by the Centers for Medicare and Medicaid Services for the products.

The alert says the 1st and 9th Circuit Courts of Appeals have split on the theory. In its Statement of Interest, the DoJ argues:

  • FFDCA violations may, in certain circumstances, be material to the government’s decision whether to pay for the affected product, and thus relevant in a False Claims Act (FCA) case;
  • violations of the FFDCA may be relevant in FCA cases where the violations are significant, substantial, and give rise to actual discrepancies in the composition, functioning, safety, or efficacy of the affected product;
  • a regulatory violation is relevant, for example, when the product’s quality, safety, and efficacy falls below FDA specified levels but is still cleared through its approval process;
  • manufacturing deficiencies are relevant when they “affect the quality, safety, and efficacy of the affected products such that FDA never would have approved or cleared the affected product, or allowed them to remain on the market, if it had known the truth, claims involving those devices never would have been eligible for federal healthcare program reimbursement”; and
  • examples of relevant manufacturing deficiencies include when a medical device manufacturer obtains FDA approval or clearance for a device and then “palms off a defective version of that device both directly on the government itself and on the unsuspecting government payors.”

The attorneys say the Statement of Interest is a sign that fraud-on-FDA-based FCA claims are and have been on the DoJ’s mind. While the split between the two appeals courts makes the outcome of the Florida case unpredictable, the alert says companies should “be prepared for an uptick of DoJ-driven and whistleblower investigations and actions based on fraud-on-FDA FCA claims, or even fraud on any federal agency FCA claims.”

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