A New Jersey federal judge has allowed a whistleblower’s lawsuit to go forward against Bayer Corp. The lawsuit alleges False Claims Act (FCA) infractions tied to two drugs. But the court’s decision did reject claims for violative off-label marketing. The court ruled for the whistleblower on the claims for breaches of the federal anti-kickback law. U.S. District Judge Jose L. Linares determined that Laurie Simpson, a former Bayer marketing employee, had failed to tie the company’s alleged regulatory violations regarding heart surgery drug Trasylol and antibiotic Avelox to health care providers’ submission of false claims for payment to government programs.
Judge Linares found that government payments were not conditioned on Bayer’s promotion of the drugs for unapproved uses. As a result, the judge said the regulatory violations lacked the connection to false claims that is required to impose liability under the False Claims Act. Judge Linares said in his order:
It remains unclear how defendant’s alleged violations were a condition for payment. This is particularly the case because plaintiff does not dispute that Trayslol was approved by the FDA at all times and that plaintiff does not argue that defendant caused claims to be submitted that were not reimbursable.
The Plaintiff contended that had the government been aware of Trayslol‘s illegality in interstate commerce, its decision to make payments in reimbursement of the drug would have been altered, and that false claims could therefore be imputed to Bayer. Judge Linares rejected that claim, saying: “Plaintiff points to no controlling law in support of that general position.” The good news for the Plaintiff, however, was that the judge did allow her claim to go forward. The allegations that the providers falsely certified that Bayer’s drugs were in compliance with the federal Anti-Kickback Statute, when in reality the company had illegally offered discounts and other benefits to prescribers and health care institutions to encourage drug sales, was sufficient to state a cause of action. The court refused to dismiss the claims that Ms. Simpson was fired in retaliation for complaining about the purportedly illegal practices, saying her allegations of retaliation plausibly stemmed from activities protected under the FCA.
The government declined intervention in the Simpson suit in 2010. Bayer asked Judge Linares to dismiss the suit, asserting that any misrepresentations it may have made were not material because the government reimbursed providers for Trasylol as part of a so-called Diagnosis Related Group used to categorize hospital patients, rather than reimbursing for it individually. The filing by Bayer drew a rebuke from the federal government, which submitted a letter to the court arguing that the core question for “falsity” under the FCA is whether claims were submitted for items not “covered” or “reimbursable” under a federal health care program. The government said in its brief:
In essence, Bayer contends that if [the Centers for Medicare & Medicaid Services] reimburses for a drug as part of a bundled payment, no false claims could ever result from the use of such drug, regardless of whether the drug was unapproved, defective or dangerous. Contrary to Bayer’s argument … a manufacturer’s off-label promotion of prescription drugs can give rise to an actionable claim under the FCA because a manufacturer’s conduct can knowingly cause the submission of prescription drug claims that are ‘false’ under the FCA.
Ms. Simpson, in her suit, painted Trasylol as dangerous and promoted for use in untested situations, but those allegations were “conclusory” and insufficient to show that the off-label uses were “unreasonable and unnecessary” for patient care, Judge Linares said. Absent that determination, the drugs were eligible for reimbursement under federal health care programs even when used off-label, according to the court’s order. According to Judge Linares, Ms. Simpson sufficiently alleged that Bayer provided discounts to purchasers, hosted medical meetings and gave grants to health care institutions that encouraged them to prescribe the drugs. If proved at trial, that activity would violate the Anti-Kickback law. Judge Linares said that a reasonable jury could conclude that providers’ reimbursement payments were “tainted” by the “bribes.”
Judge Linares also ruled that Ms. Simpson was not required to identify a particular false claim at the pleading stage. This followed a trend among several district courts on an issue the Third Circuit has yet to directly address. It should be noted that Bayer, at the U.S. Food and Drug Administration’s (FDA) request, suspended its marketing of Trasylol in 2007 and issued a recall in 2008. But Avelox is still on the market.
The Plaintiff in this case is represented by Jeremy B. Stein, who is in the New Jersey office of Hartmann Doherty Rosa Berman & Bulbulia and Edward J. Normand with Boies Schiller & Flexner in their New York office. The case is Simpson v. Bayer Pharmaceutical Corp. et al. in the U.S. District Court for the District of New Jersey.
Source: Andrew Scurria and Law360.com
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.