FCA Suit Requires Specific False Claim: Court
The 3rd Circuit Court of Appeals has reiterated the notion that evidence of an actual false claim is necessary for a False Claims Act suit to succeed. Attorneys Kristin Koehler and Joshua Fougere (Sidley Austin) write in a Washington Legal Foundation Legal Opinion Letter that the 3rd Circuit ruling “should prove particularly significant for pharmaceutical manufacturers. The decision is now another arrow in the quiver of any defendant confronted with a False Claims Act claim premised on alleged anti-kickback statute violations. For pharmaceutical manufacturer defendants, as relators (whistleblowers) continue to steer clear of off-label promotion allegations (due to First Amendment hurdles) and to gravitate toward anti-kickback statute allegations, this decision should be very helpful in restraining those relators and in curbing the litigation trend.”
The case involved a whistleblower suit against Accredo Health, a specialty pharmacy that delivers home care and blood-clotting medications to hemophilia patients. The whistleblower alleged that Accredo violated the False Claims Act by falsely certifying compliance with the anti-kickback law. The suit claimed that Accredo made annual donations to at least two local hemophilia charities, and that these charities then recommended Accredo as an approved provider and vendor.
“The central issue on appeal was ‘what link is sufficient to connect an alleged kickback scheme to a subsequent claim for reimbursement: a direct causal link, no link at all, or something in between,’” the attorneys write. The whistleblower argued for no link at all, because it should be enough that Accredo certified compliance with the anti-kickback law whenever it billed Medicare. The district court that dismissed the case originally and Accredo argued for requiring a causal relationship. The appeals court took a middle ground, holding that to prevail at summary judgment, whistleblowers need not necessarily prove that the alleged kickback violations were a but-for cause of every federally insured patient’s decision to use the defendant’s services, though they must provide evidence of at least one such patient and claim.
The court said “[a] kickback does not morph into a false claim unless a particular patient is exposed to an illegal recommendation or referral and a provider submits a claim for reimbursement pertaining to that patient.”
“The 3d Circuit’s holding reiterates the fundamental importance of requiring qui tam plaintiffs to provide that there was an actual false or fraudulent claim for payment submitted to the federal government,” the attorneys conclude. “The 3rd Circuit’s holding also confirms that summary judgment should be an absolute backstop against relators who lack proof of actual false claims.”