Companies once again face FCA suit requiring new look at employee as ‘original source’
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Tuesday, March 20, 2018

Companies once again face FCA suit requiring new look at employee as ‘original source’

By Victoria Moran, J.D., M.H.A.

The Ninth Circuit vacated the dismissal of a sales representative’s False Claims Act (FCA) action involving claims related to the cardiovascular drug Integrilin®, remanding to the district court to determine whether the employee qualifies as an “original source” under new case law decided after the original district court decision. In addition, the Ninth Circuit affirmed the dismissal of the employee’s claims involving kickbacks related to the antibiotic Avelox® on the ground that the employee failed to plead with the requisite particularity. On remand, the district court is to consider whether he should be granted leave to amend the Avelox claims (U.S. ex rel. Solis v. Millennium Pharmaceuticals, Inc., March 15, 2018, Wallace, W.).

Background. The employee, a former sales representative for three firms (Millennium Pharmaceuticals, Schering-Plough, and Merck), filed the original action in 2009, alleging violations of state law and the FCA for promoting off-label uses of Integrilin, and paying kickbacks to physicians for prescribing Integrilin and Avelox. The district court dismissed the FCA claims, finding they were foreclosed by the public disclosure bar. The district court also declined to exercise supplemental jurisdiction over the state law claims (see Drug makers’ off-label marketing, payments to docs may cause side effect of FCA liability, March 15, 2018). Solis appealed.

Integrilin claims. The appellate court noted three categories of the employee’s Integrilin claims: combination use claims, other off-label claims, and kickback claims. The district court found, and the Ninth Circuit agreed, that the employee’s 2009 combination use claims were substantially similar to publicly disclosed allegations from a 2006 complaint. Similarly, the appellate court was not persuaded by the employee’s arguments concerning his off-label and kickback claims; it found that these were substantially similar to prior public disclosures from complaints in 2007.

“Original source.” Despite agreeing with the district court’s finding that the Integrilin claims were foreclosed by the public disclosure bar, the Ninth Circuit reversed the dismissal based on changes to case law concerning whether the employee was an “original source.” At the time of the district court’s decision, the test to determine whether a relator was an original source was a three-part test: (1) the individual must have “direct and independent knowledge” of the information the allegations are based; (2) must have “voluntarily provided the information to the Government before filing” the action; and (3) “must have a hand in the public disclosure of allegations that are a part of [his] suit.”

However, after the decision in U.S. ex rel. Hartpence v. Kinetic Concepts, Inc., 792 F.3d 1121 (9th Cir. 2015), the third part of the test was removed. The district court concluded the employee did not qualify as an original source on the sole ground that he did not show he had a hand in the public disclosure; it did not consider whether the employee satisfied the other two requirements. Therefore, the Ninth Circuit remanded the Integrilin claims so the district court can consider the remaining two requirements of the original source test.

Avelox claims. The Ninth Circuit affirmed the dismissal of the Avelox claims on alternative grounds. Despite finding that the district court erred in ruling the Avelox claims were publicly disclosed, the appellate court concluded that the claims should still be dismissed because the employee failed to plead with the requisite particularity under Rule 9(b). On remand, the district court must consider whether the employee should be granted leave to amend the Avelox claims.

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