Fifth Circuit Court of Appeals Allows Government to Dismiss FCA Cases Against Eli Lilly and Bayer

Earlier this summer, a three-judge panel of the the United States Court of Appeals for the Fifth Circuit found in favor of the government and dismissed qui tam cases brought by Health Choice Alliance and Health Choice Group against Eli Lilly (and four other defendants) and Bayer (and four other defendants).

Health Choice Group is a shell company established by National Health Care Analysis Group (NHCA). In the lawsuits against Eli Lilly and Bayer, Health Choice alleged that the pharmaceutical companies violated the Anti-Kickback Statute by offering perks to providers for prescribing their drugs, including help with insurance billing and free nurse visits to patients to teach them how to use the medications.

In these cases, the government declined to intervene and even moved to dismiss them. In December 2018, the government alerted Health Choice that it planned to move forward with its motions to dismiss, citing its own two year investigation and supplemental information provide by Health Choice as the basis of its decision to seek dismissal.

Health Choice responded to the motions to dismiss by asserting that the government “supports its motions primarily with ‘ad hominem attacks’ against Health Choice” and argued that the government should not be given “unfettered discretion to dismiss and instead should [have to make a] ‘proper showing’ to warrant dismissal.”

While the Fifth Circuit did not adopt a standard for government dismissals in the case, it concluded that the dismissals did serve legitimate government purposes. More specifically, the Fifth Circuit stated that the government had properly concluded that the costs of continued litigation outweighed the potential benefit from the lawsuits and also approved of the government’s finding that the practices Health Choice took issue with were not only “beneficial, but also lawful.” The government argued that providing patients with “greater access to product education and support” worked to serve federal healthcare programs, not harm them.

While the circuit courts are split on what the government’s burden of proof is to dismiss a case, often if the government wants a case dismissed, the courts will agree to dismiss. In the D.C. Circuit, the government has an “unfettered right” to dismiss cases, the Ninth and Tenth Circuits require the government to show a valid government purpose, and the Seventh Circuit is generous and near an unfettered discretion standard.

Conclusion

This case is another example of the government using its dismissal power after the 2018 Granston Memo, and also highlights the government’s skepticism of “professional” whistleblowers. The Granston Memo outlines guidelines for when the government should move to dismiss a relator’s case and specifically references cases that lack merit or otherwise interfere with federal policies.

The government also seemed a bit perturbed by the NHCA, a “professional relator” that had filed eleven different qui tam actions in courts across the country, each one with nearly identical allegations against different pharmaceutical companies.

However, the government’s frustration with the NHCA may not be a projection onto how it feels about other corporate whistleblowers, as it recently intervened in a lawsuit brought by Integra Med Analytics against a group of nursing homes in New York alleging improper inflation of Resource Utilization Groups.