Yet Another Court Makes it Harder for Whistleblowers to Bring Qui Tam Actions Alleging Unlawful Off-Label Promotional Practices

By John R. Fleder & Kurt R. Karst –

On December 10, 2008, the United States District Court for the Northern District of Illinois in Chicago dismissed a federal False Clams Act qui tam action in U.S. ex rel. Kennedy v. Aventis Pharmaceuticals, Inc. involving allegations of off-label use sales concerning the drug LOVENOX (enoxaparin sodium).  The plaintiffs (Relators) are former Aventis sales representatives.  The court had earlier allowed the Relators to take discovery in order to develop evidence to identify specific false claims that could be tied to Aventis’ supposed illegal scheme.

First, the court ruled that any claims filed as a result of the alleged off-label use scheme were not “material” to the amount the government paid for treatment of a given patient.  The government’s reimbursement was based on a diagnosis group code that was tied to a patient’s diagnosis and age, and was not dependent on the particular services rendered to a patient.  As a result, the court ruled the claims could not have been “false.”

Second, the court examined whether the Relators’ third amended complaint satisfied the requirement of Fed. R. Civ. P. 9(b) that the fraud be pleaded with particularity.  The court ruled that although it had allowed Relators the opportunity to take discovery, they had failed to identify any specific claim that was actionable.

This decision is yet another example in which a federal court has rejected a False Claims Act qui tam lawsuit against a drug manufacturer alleging unlawful off-label promotional practices.  As we previously reported, in September 2008, the United States District Court for the Middle District of Florida (Tampa Division) dismissed similar claims in United States ex rel Hopper and Hutto v. Solvay Pharmaceuticals, Inc.  The court in that case adopted a report and recommendation from a magistrate judge concluding that the relators had utterly failed to comply with the requirements set forth in Fed. R. Civ. P (9)(b) to include specific allegations of actual false claims that were submitted to the government.  We note, however, that where the government has intervened in qui tam suits alleging off-label promotion, the government has had a greater likelihood of success in extracting a settlement from the defendant than in those cases where the government has declined to intervene.

Hyman, Phelps & McNamara, P.C.’s John Fleder was recently featured in a Washington Legal Foundation YouTube video discussing qui tam actions involving off-label promotion allegations, and wrote an article for the Food and Drug Law Institute’s Update magazine on the same topic.