Pennsylvania court continues recent trend toward FCA liability for indirect illegality

Pennsylvania court continues recent trend toward FCA liability for indirect illegality

June 1, 2015

A Pennsylvania federal court recently ruled that a drugmaker may be held liable under the False Claims Act (FCA) even though it was not the one that submitted claims to the government. 

In Nevyas, et al. v. Allergan Inc., the relators allege that the drug maker was giving illegal kickbacks – in the form of consulting and billing services – to doctors that prescribed its products.  As a result of these improper inducements, the doctors prescribed the products, patients filled them, and pharmacists eventually submitted claims to Medicare.  The relators argued that this scheme tainted the claims and that the drugmaker therefore “caused” false claims to be presented to the government in violation of the FCA.  The Court agreed and denied the drugmaker’s motion to dismiss.

This continues a recent trend in FCA caselaw, allowing relators to bring claims based on indirect involvement in the claims process.  Indeed, to support its decision, the Allergan Court cited two recent cases – Cairns v. D.S. Medical LLC and Brown v. Celgene Corp. – that subscribed to this approach.  In both Cairns and Celgene, the relators alleged that certain companies bribed physicians to use their products, and the companies promptly moved for dismissal. 

In Cairns, the Missouri federal judge held that “a non-submitting party may be liable for causing the submission of such a false claim by another party ….”  And for its part, the California-based Celgene Court applied tort law principles and held that “Celgene may be liable for false claims submitted by others if its conduct was a substantial factor in bringing about the false claims and such claims were a foreseeable and natural consequence of its conduct.” 

In light of this line of cases, companies must be ever-more conscious of the effects of their self-promotional efforts and ensure that they do not cross the line between sales and the claims lifecycle.  

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