March 5, 2019 / 9:55 PM / 9 months ago

‘Vilified’ whistleblower firm claims DOJ mislead court about ‘fictitious’ investigation

(Reuters) - Facing Justice Department dismissal motions in seven False Claims Act cases against pharmaceutical companies, the whistleblower firm National Health Care Analysis Group lashed out at the government on Monday, accusing DOJ of misrepresenting its rationale for ditching claims brought in the name of the United States.

In a brief filed in federal court in Texarkana, Texas, NHCA lawyers Mark Lanier of the Lanier Law Firm and Samuel Baxter of McKool Smith asserted that the Justice Department never really investigated NHCA’s allegations before deciding to seek the dismissal of NHCA’s case against Bayer. According to the brief, DOJ seems to have spent more time investigating NHCA – which Justice has described as a Wall-Street-backed “professional” FCA plaintiff that uses deceptive interview tactics to procure whistleblowers – than Bayer and the other defendants NHCA accuses of violating the Anti-Kickback Statute.

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“The record here compels the conclusion that, in moving to dismiss this case, the government has sought to mislead the court by misrepresenting the nature and scope of its supposed ‘investigation’ into (NHCA’s) allegations,” the new brief said. “Standing by itself, this malfeasance warrants denial of the government’s motion. There can be no doubt that the October 2017 declination decision was preceded by no meaningful investigation, and that the government’s contrary representations were designed to deceive the court and the public.”

Justice Department spokesperson Kelly Laco declined to comment.

DOJ’s showdown with NHCA, as I’ve told you, is the splashiest manifestation of a recently adopted Justice Department policy of moving to dismiss some FCA suits after the government declines to intervene in the cases. FCA litigation is quirky. Many FCA cases are initiated by private whistleblowers, known as relators, who file suits under seal on behalf of the government. DOJ investigates the claims and, if it considers them promising, takes over the litigation. Private whistleblowers receive a portion of the government’s recovery if DOJ eventually prevails in the case.

In the past, DOJ allowed whistleblowers to continue litigating FCA cases even when the Justice Department, after investigating their claims, opted not to intervene in their suits. But in 2018, DOJ’s civil fraud chief, Michael Granston, issued a memo instructing Justice lawyers to be more aggressive about policing dubious FCA suits brought in the name of the United States. In September, an updated manual for U.S. attorneys incorporated Granston’s instructions. Granston has since said that the Justice Department will allow most FCA claims to proceed even after declining to intervene, according to the National Law Journal, and will seek dismissal only in exceptional cases.

DOJ contends that NHCA’s cases are just such an exception. In 11 FCA suits against 38 defendants, the company alleged that pharmaceutical companies provided purportedly free nursing and reimbursement support services that were really designed to promote their products. DOJ moved to dismiss all of the suits last December. (Some of the cases have already been tossed, but seven dismissal motions are pending, including the motion in the Texas case against Bayer.) The government asserted not only that NHCA’s claims have no merit but also that the firm itself is a dubious FCA plaintiff that, among other questionable tactics, uses a byzantine corporate structure to mask its opportunistic intentions. DOJ’s filings documented how Justice lawyers became increasingly skeptical about the whistleblower firm in the fall of 2018, leading up to the blitzkrieg dismissal motions.

NHCA’s strategy has been to turn the tables on the Justice Department, arguing that DOJ chose to vilify the firm rather than focusing on its explosive allegations about pharma defendants. In Monday’s brief, as in a previous response to DOJ in the Texas case, NHCA pointed out that it has worked with the government in several previous FCA cases – and its methods and corporate structure have never before prompted questions from DOJ lawyers. (Firm founder John Mininno, a onetime small-town New Jersey lawyer, told me last month that NHCA-initiated FCA suits have netted the government about $50 million in settlements.) According to NHCA’s new brief, the Justice Department is being arbitrary and capricious in its abrupt reassessment of the whistleblower firm – in accusations NHCA considers to be “a smokescreen.”

The real story, NHCA asserts, is that the Justice Department didn’t conduct a meaningful investigation before deciding to dismiss the Bayer case and NHCA’s other suits, despite DOJ’s representations to the contrary. The new brief asserts, for instance, that DOJ could not have collected and reviewed “tens of thousands” of documents from Bayer, as DOJ said in its dismissal motion, because Bayer and its codefendants have produced only about 9,000 documents in the underlying litigation.

Even DOJ’s own filings, NHCA said, provide no support for its claim to have investigated NHCA’s allegations exhaustively. The government’s exhibits show that it investigated NHCA, the brief said, and that it requested documents from Bayer after deciding to move to dismiss the whistleblower case. But it is “telling,” according to NHCA, that DOJ has provided no additional evidence of its purported investigation of the whistleblower assertions.

“The fact that government collected these materials after it had already decided that it would move to dismiss this action speaks volumes about the nature of the government’s investigation,” the new brief said. “No amount of misdirection and deflection can change the record. By touting a fictitious ‘extensive investigation’ … and a non-existent collection of ‘tens of thousands of documents from the defendants,’ the government has sought to mislead the court.”

One thing has become clear to me from DOJ’s fight with NHCA: There’s a lot going on beneath the surface of FCA cases. The whistleblower firm’s new brief, for example, said that even after DOJ moved to dismiss NHCA’s cases, the government settled two FCA suits “that were investigated and brought to the attention of DOJ attorneys by NHCA and individual relators.” The two suits, according to an accompanying declaration from NHCA founder Mininno, were a $17 million FCA settlement with Pentech, a specialized pharmacy compounder; and a $1.25 million FCA settlement with the hospital operator Prime Healthcare and its CEO.

Here’s the thing, though: Neither Justice Department press release mentions NHCA. Both refer to (and praise) individual whistleblowers who were employees or former employees for the defendants. But according to NHCA, it worked closely behind the scenes with the Pentech and Prime whistleblowers before they filed their suits.

NHCA contends DOJ has long known of its occasionally under-the-radar role in FCA litigation. That may very well be. But the dismissal litigation has shown the rest of us that public dockets don’t always tell the whole story of FCA cases.

NHCA will get its first chance to present oral argument against DOJ’s dismissal motions next week on Mininno’s home turf, federal district court in Philadelphia, in a case against Teva that parallels its Texas suit against Bayer. Should be interesting.

The views expressed in this article are not those of Reuters News.

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