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From Health Law Daily, June 10, 2013

Relator did not breach the seal in action against Omnicare

By Michelle L. Oxman, JD, LLM

The motion of Omnicare, Inc. (Omnicare) to disqualify Donald Gale as the relator in a qui tam action was denied because: (1) the relator’s alleged statements that he was meeting with attorneys about Omnicare’s practices did not breach the nondisclosure requirements of 31 USC sec. 3730(b)(2); and (2) Omnicare’s motion was untimely (United States ex rel. Gale v Omnicare, Inc., June 7, 2013, Gwin, J). Omnicare was served with the complaint in 2011 and filed its motion to dismiss for failure to state a claim in January 2012. It did not file the motion to disqualify Gale as the relator until May 2013.

The alleged kickbacks. Gale alleged that Omnicare gave discounts to nursing facilities on the prices of its drugs covered under Part A in return for referrals of additional patients with coverage for the drugs. Some of the discounts put the price below Omnicare’s cost.

The alleged disclosures. The relator’s qui tam action was filed in January 2010. Omnicare alleged that in August 2010, in an email to a former colleague relating to a lunch appointment, Gale wrote that he did not wish to talk about “death, dying, taxes,

whistles, or odd diseases” and that he was meeting with lawyers at the courthouse that morning. At the lunch, Gale mentioned his meeting in passing, but the colleague did not specifically recall whether Gale mentioned the lawsuit. In addition, Omnicare stated, Gale told his wife about the lawsuit and mentioned the meeting with attorneys to another former colleague.

The purpose of the requirement. The court ruled that Gale did not breach the confidentiality requirement. The purposes of the requirement to file the lawsuit under seal and serve only the government are to allow the government at least 60 days to investigate the allegations and to avoid the possibility that a lawsuit might inadvertently warn the defendant of a criminal investigation. The relator is barred from discussing the lawsuit publicly but may discuss the alleged fraud. The court distinguished United States ex rel. Summers v LHC Group, Inc., in which the Sixth Circuit ruled that a relator was properly disqualified because she had not filed her complaint under seal and she discussed it with the press before the 60-day minimum period had passed. Gale had filed his suit under seal. Any discussions with his wife did not constitute public disclosure, and neither of his former colleagues was certain that Gale told them he had sued Omnicare; mention of a meeting with attorneys was not equivalent to public discussion of the litigation. Even if Gale’s statements were considered disclosure of the litigation, the breach did not affect the court’s jurisdiction.

Omnicare’s untimely motion. Omnicare alleged that Gale told it about the lawsuit in 2010, but its conduct of the litigation belied that position. After it was served in 2011, Omnicare requested multiple extensions of time to respond. Its motion to dismiss, filed in January 2012, did not mention any public disclosure of the litigation. If it knew of the statements in 2010, as it claimed, by waiting until May 2013 to bring the disclosures to the attention of the court, Omnicare waived the claim.

The case number is 1:10-CV-127.

Attorneys: Stephen G. Sozio (Jones Day – Cleveland) for Omnicare, Inc.

Companies: Omnicare, Inc.

MainStory: TopStory QuiTamNews FCANews AntikickbackNews OhioNews

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