By Paige Arnold, J.D.
A pharmaceutical company was not liable for retaliation under the False Claims Act (FCA) (31 U.S.C. §3729 et seq.) when no evidence of protected activity or notice to employer was found a federal district court in New York ruled. The court found that there was insufficient evidence to show that the employee’s complaints about the employer’s practices were directed at exposing or avoiding a fraud against the government (Dhaliwal v. Salix Pharmaceuticals, September 14, 2017, Cote, D.).
Background. The relator brought a cause of action against her former employer, Salix Pharmaceuticals (Salix), alleging violations under the FCA, including retaliation claims. The claims involved Salix’s sales practices related to prescription drugs and devices to treat gastrointestinal disorders. The employee worked as a sales and marketing manager for the pharmaceutical company for over eight years. During her employment she observed sales and marketing practices she deemed inappropriate. These practices included the promotion and marketing of a certain drug, the characterization of social gatherings as educational programs, disparate discounts given to certain group for a specific drug, and budgeting for continuing medical education programs. The employee alleged that the pharmaceutical company provided kickbacks to healthcare providers and she was retaliated against for her actions related to these claims. The government intervened in the FCA action as to the allegations of kickbacks to healthcare providers by the pharmaceutical company, and the matter was settled. The pharmaceutical company filed a motion for summary judgment of the remaining retaliation claims under the FCA and state law.
Retaliation claims under the FCA. There was insufficient evidence to show that the employee engaged in protected activity, the employer had notice of any activity and that the employer took adverse action against the employee. While the employee alleged she complained to her supervisors that certain marketing practices were inappropriate, there was not evidence that such complaints were aimed at disclosing or avoiding a fraud against the government. The court reasoned that mere complaints to an employer regarding possible violations of a regulation were not protected activity under the FCA. Consequently, because there was no evidence of protected activity, there also lacked evidence the employer was aware of any alleged activity. To show notice, there must be evidence that the employer was aware that the employee was investigating fraud. Furthermore, to prove notice, where an employee’s job duties included investigating fraud, then the employee must go beyond his or her job responsibility. The court found that while the employee showed concern regarding specific marketing practices, she did not provide evidence she articulated these concerns accordingly. Salix’s motion for summary judgment was granted.
The case is No. 15cv706 (DLC).
Attorneys: Janice I. Goldberg (Herrick, Feinstein LLP) for Rasvinder Dhaliwal. Andrew Leff (Hogan Lovells US LLP) and Benjamin John Razi (Covington & Burling LLP) for Salix Pharmaceuticals, Ltd.
Companies: Salix Pharmaceuticals, Ltd.
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