In Pfizer off-label qui tam, Massachusetts District Court rejects broad implied certification theory

by Ben Vernia | September 20th, 2010

In a September 14 decision in U.S. ex rel. Rost v. Pfizer Inc, Judge Patty Saris of the District of Massachusetts granted summary judgment to the company in the long-fought case. The qui tam was brought by Peter Rost, a former Pharmacia and Pfizer marketing executive, who alleged that the companies’ sold and marketed Genotropin (a form of human growth hormone) for off-label uses andpaid kickbacks to physicians, in violation of the False Claims Act.

After one round through the First Circuit, the relator’s allegations were substantially narrowed to Medicaid claims in Kentucky and Indiana. In fact, his sole remaining off-label claims related to prescriptions written by one Indiana physician, and his kickback claims to junket conference trips and participation in two company-sponsored programs by that physician and a few others.

After limited discovery in those two states, Pfizer moved for summary judgment.

Judge Saris first rejected the relator’s off-label allegation, that prescriptions for Genotropin written without performing two tests, were off-label. She found no evidence that two tests were required, and no evidence that even if they were, the pharmaceutical companies encouraged physicians to prescribe after only performing one.

Judge Saris then surveyed the relator’s kickback allegations, but rejected them as a basis for False Claims Act liability. At issue were Medicaid claims submitted by specialty pharmacies which had unwittingly filled prescriptions allegedly tainted by kickbacks. The government and relator argued that the kickbacks rendered these claims false. After surveying the caselaw on implied certification liability under the FCA, Judge Saris wrote:

The government argues that when you bill Medicaid you are impliedly certifying that no kickbacks have been paid in any of the underlying transactions. However, there are no statutes, regulations, or express certifications by pharmacists cited to support this argument.
The two courts which have directly addressed this issue have rejected an argument that a person who pays a kickback to induce a factually truthful claim can be held liable under the FCA through an implied certification theory.

[Citations omitted.] She continued that under that approach, “the pharmacies that submitted the claims implicitly certified compliance with applicable statutes and regulations only with respect to themselves and those persons they control (e.g., employees).”

The Court likewise rejected the government’s alternative argument that “the payment of a kickback renders subsequent claims factually false under the FCA, without regard to who submits the claim or whether there is a certification that no such kickback was accepted.” She found the government’s authority for this argument unsound, noting that the FCA attaches liability to claims for payment, not underlying fraudulent activity.

Judge Saris observed that the Antikickback Statute was amended in the health care reform bill to adopt the government’s position that subsequent claims are false, but she held that this provision did not apply at the time the claims in question were submitted.

The Court, therefore, granted the company summary judgment on the kickback claims as well, which obviated the need to determine whether the trips to “nice” venues which one physician had accepted from the company constituted kickbacks. (In a footnote, Judge Saris concluded that neither the company’s research study – in which institutions and physicians were paid for enrolling patients and updating their data – nor a practice-support program, “functioned as illegal kickbacks.”)

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