By David Yucht, J.D.
A federal judge in New York found that a False Claims Act (FCA) suit filed against Siemens by a competitor’s employee that alleged irregularities in hormone level testing was barred by the FCA’s public disclosure bar. Under this bar, courts must assess whether the allegations in an FCA complaint are "substantially the same" as or "substantially similar" to the allegations of fraud contained in public disclosures in question. In arguing for dismissal, Siemens asserted that nearly the exact average differential figure between the Siemens and competitor’s test was disclosed in the public record. Accordingly, the court granted Siemens’ motion to dismiss (U.S. ex rel. Patriarca v. Siemens Healthcare Diagnostics, Inc., March 14, 2018, Cogan, B.).
Parathyroid hormone testing. Patients with Chronic Kidney Disease (CKD) may have high levels of parathyroid hormone (PTH), which can lead to bone disease. Vitamin D analogs are used to treat high levels of PTH, but overdosing of these analogs can lead to serious health consequences. If levels are high enough, physicians will perform surgeries. Accurate diagnosis of PTH levels is therefore critical. Many patients receive care at kidney dialysis centers, and Medicare covers 75 percent of those patients. Siemens Healthcare Diagnostics, Inc. (Siemens) markets a test used to measure PTH levels. Siemens’ test is a "Second Generation" PTH test that measures both the whole PTH molecule and large fragments of the molecule. "Third Generation Tests" report only the level of whole PTH molecules and omit the fragments. For this reason, Second Generation Tests report PTH levels roughly twice that of Third Generation Tests. Scantibodies, a competitor of Siemens in PTH testing, produces a Third Generation Test.
FCA lawsuit. An employee of Scantibodies filed suit against Siemens under the FCA claiming that (1) Siemens’ test was initially aligned with the IRMA test, a former standard PTH test, and remained aligned through roughly 2005; (2) after 2005, Siemens’ test shifted upward from the IRMA test by approximately 40%; (3) Siemens knew of this upward shift; (4) despite the upward shift, Siemens continued to manufacture and sell millions of PTH tests; and (5) had its test’s upward shift been acknowledged, the FDA would have recalled the test and Medicare would not have paid for medically unnecessary treatments based on its findings.
Accordingly, the employee of Scantibodies brought claims under the FCA under a number of theories: a lack of medical necessity; provision of defective and/or non-conforming goods; and the interstate transport and sale of misbranded devices that measured PTH more than 40 percent higher than actual PTH levels. The Scantibodies employee also pleaded conspiracy based on a claim that Siemens’ manipulated the testing and calibration of one of its lots of PTH test, and its communicated regarding the same. Siemens filed a motion to dismiss.
Public disclosure bar. The court granted Siemens’ motion and dismissed the lawsuit. The court noted that FCA claims are subject to a public disclosure bar that prohibits law suits based on conduct that has already been made public. Under this bar, courts must assess whether the allegations in an FCA complaint are ‘substantially the same’ as or ‘substantially similar’ to the allegations of fraud contained in public disclosures in question. In arguing for dismissal, Siemens asserted that nearly the exact average differential figure between the Siemens and Scantibodies test was disclosed in the public record. It also claimed that the fact of significant differentials between PTH tests was widely known. Siemens pointed to studies released before the complaint was filed that show deviation between the Siemens test and the Scantibodies test within a narrow range. Second, Siemens pointed to publically available findings urging practitioners to incorporate the fact of different readings across and within studies. Moreover, Second Generation tests, such as the Siemens test, were widely known to yield higher results than Third Generation tests, such as the Scantibodies test; and the average difference between the Siemens and Scantibodies tests had been published in several studies. The court found that the results of these public disclosures compelled the application of a bar against the present claims. Moreover, the employee of Scantibodies was not an original source of the public disclosures because he was not an individual who had independent knowledge and materially added to the publicly disclosed allegations before filing his complaint.
Conspiracy. The court found that the conduct alleged in the complaint, i.e. Siemens’ manipulated the testing and calibration of Lot 143 of its PTH test, and it made communications regarding the same, was consistent with a description of Siemens innocently and routinely working to carry out presumably frequent adjustments of its tests’ parameters. Especially in light of the variability within PTH tests, the Scantibodies’ employee failed to plead plausible allegations of conspiracy.
The case is No. 1:11-cv-00181-BMC.
Attorneys: Daniel R. Miller (Berger & Montague, PC) for the United States and The State of California. Erik Haas (Patterson, Belknap, Webb & Tyler LLP) for Siemens Medical Solutions Diagnostics Siemens Medical Solutions USA, Inc.
Companies: The State of California; Bayer Diagnostics Corp. n/k/a Siemens Medical Solutions Diagnostics; Siemens Medical Solutions Diagnostics Siemens Medical Solutions USA, Inc.
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