By Terry Baynes
Feb 27 (Reuters) - A federal court in Massachusetts has
dismissed a whistle-blower suit accusing nearly two dozen
drugmakers of selling unapproved medications on grounds that the
claims were based on publicly disclosed information.
U.S. District Judge Rya Zobel ruled on Monday that
whistle-blower Constance Conrad could not pursue her claims
against drugmakers including Abbott Laboratories Inc and Teva
Pharmaceuticals USA Inc because the facts underlying her lawsuit
could be pieced together from public reports.
The federal government increasingly has relied on the False
Claims Act to combat fraud against the government in the
healthcare and pharmaceutical sectors. Under the act, private
citizens can bring a lawsuit on behalf of the government against
anyone who makes a false claim for payment from the government,
and then share in any monetary recovery.
However, to prevent opportunistic plaintiffs from combing
through public records to find companies to sue, the law bars
whistle-blower claims based on publicly available information
unless the whistle-blower was the original source of that
Conrad, described as having over 30 years of experience in
federal healthcare programs, filed the whistle-blower suit in
2002. She accused the drugmakers of misrepresenting unapproved
drugs as approved outpatient drugs eligible for Medicaid
reimbursement. As a result, the federal government paid state
Medicaid programs over $500 million for purchasing these
products, the suit said.
The drugmakers asked the court to dismiss the case, arguing
that the claims were barred by the public disclosure rule. They
pointed to numerous publicly available sources of the
information, including drug product data published by the
Centers for Medicare and Medicaid Services, state data on drug
reimbursements and the Orange Book, which lists all drugs
approved by the Food and Drug Administration.
The drug product data from the Centers for Medicare and
Medicaid Services would show if any of the companies represented
their products as FDA-approved, and Conrad could have looked the
drugs up in the Orange Book and other sources to see if they
were in fact approved, the companies argued.
The judge agreed that the information could have been
pieced together through public domain sources, though she said
that a plaintiff would need significant expertise in the field
to find any discrepancies.
Nevertheless, a whistle-blower cannot sue "based on publicly
disclosed facts, even if her expertise makes her the first to
understand the alleged fraud," Zobel wrote. Because the public
disclosure bar applied, the court lacked the authority to decide
the case, she found.
Conrad's lawyers, John Roddy and Elizabeth Ryan, did not
immediately respond to requests for comment. Nor did Jay
Lefkowitz, who argued the case on behalf of the drugmakers.
Lawyers for drugmakers have expressed concern that the
Affordable Care Act may have made it more difficult to use the
public disclosure defense in False Claims Act litigation.
The 2010 health reform law narrowed the exception so that
publicly disclosed information now can only include information
from federal information sources and the news media, not state
or local sources. Though the new law also gives the Justice
Department more discretion to support a whistle-blower suit, in
Conrad's case, the agency declined to intervene.
The case is United States ex rel Conrad v. Abbott
Laboratories Inc, U.S. District Court for the District of
Massachusetts, No. 02-11738.
For the plaintiff: John Roddy and Elizabeth Ryan of Bailey &
For the defendants: Jay Lefkowitz of Kirkland & Ellis.
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