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From Health Law Daily, June 1, 2017

Relator loses ‘qui tam war’ in battle against stent maker

By Sheila Lynch-Afryl, J.D., M.A.

A former employee "lost the qui tam war" against stent manufacturers when the Fifth Circuit affirmed the dismissal of two False Claims Act (FCA) (31 U.S.C. §3729 et seq.) counts and sustained the jury’s verdict in the manufacturers’ favor on the third count. He claimed that the manufacturers defrauded Medicare by seeking FDA approval for biliary stents but then encouraged and bribed providers to use them in vascular procedures. The district court, however, properly dismissed the two counts and limited the scope of the third, and it did not abuse its discretion by rejecting evidence and two proposed jury instructions (U.S. ex rel. Colquitt v. Abbott Laboratories, May 31, 2017, Costa, G.).

District court proceedings. The relator was a salesman for Guidant Endovascular Solutions, which Abbott Laboratories later bought. He filed a qui tam complaint alleging three FCA violations: (1) fraudulent inducement through misrepresentations in obtaining FDA approval for the stents; (2) violation of the Anti-Kickback Statute (42 U.S.C. §1320a-7b); and (3) false presentment through promotions that caused hospitals to present Medicare claims that were not eligible for payment because off-label use was unsafe. The district court dismissed the first two counts and limited the scope of the false presentment theory to the time the salesman was employed by Abbott and restricted it to Guidant’s conduct (see Questions of claim falsity, intent to defraud too fact-based for summary judgment, January 8, 2016). At trial, the jury found in favor of the manufacturers.

False presentment. The employee argued that the district court erred in limiting his false presentment claims to the time he was employed by Abbott; however, he stated that he only had the "impression" that off-label promotion was taking place before he was hired, and after he quit he heard about Abbott’s activities secondhand. In addition, the court did not abuse its discretion by ruling that an FDA letter rebuking Abbott for off-label promotion was irrelevant—the letter could have confused the jury because it involved the FDA, not Medicare coverage, the key issue at trial. Two instructions were also properly denied, as they misstated the law.

False inducement and anti-kickback. The district court properly dismissed the anti-kickback allegations because the employee did not allege the details of the scheme with sufficient particularity. It also correctly dismissed the false inducement claim based on the public disclosure bar because Abbott’s 510(k) summaries demonstrated on their face that the information was publicly available.

The case is No. 16-10814.

Attorneys: Christopher S. Hamilton (Standly Hamilton) for Kevin N. Colquitt. John Caviness O'Quinn (Kirkland & Ellis LLP) and George W. Bramblett, Jr. (Haynes and Boone, LLP) for Abbott Laboratories and Abbott Vascular Solutions, Inc. f/k/a Guidant Endovascular Solutions, Inc.

Companies: Abbott Laboratories; Abbott Vascular Solutions, Inc. f/k/a Guidant Endovascular Solutions, Inc.

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