US Department of Justice Dismiss False Claim Act Lawsuit

What the US Department of Justice’s Decision to Dismiss False Claim Act Lawsuit against Gilead Sciences, Inc. Means

Law 360 reported on December 4, 2018, that the US DOJ had decided not to pursue a False Claims Act case against Giliead Sciences, Inc. (Gilead Sciences Inc. v. U.S. ex rel. Jeffrey Campie et al., case number 17-936, in the Supreme Court of the United States). The whistleblowers in the lawsuit were former staffers of Gilead. They claimed that the company had submitted false results for drug tests, and other wrongs, to obtain payments from Medicare and Medicaid. The lawsuit claim was a multi-billion-dollar claim.

Many questions have been raised about why the DOJ decided not to pursue the False Claims Act lawsuit according to the Law360 article.

An important background consideration was the decision by the Supreme Court in Universal Health Services, Inc. v. United States ex rel. Escobar. In theory, this case should help whistleblowers because it provides an additional basis for False Claims Ac liability. The basis is called the “implied certification theory.” While the decision opened a new avenue, it set standards for proving that there was an implied certification. Some whistleblower cases have been dismissed because the standards haven’t been met. The standards revolve around “material” regulatory violations. A concern in regulatory violation cases is that other agencies, such as the Food and Drug Administration, may be required to give depositions, answer interrogatories, and provide testimony to verify the regulatory violations and their materiality

Questions raised by the Gilead Decision

  1. How much weight does a memorandum prepared by Michael Granston, director of the DOJ’s civil fraud section, have? That memo recommended the dismissal of False Claims Act lawsuits if the dismissal would be in the government’s interest to avoid an adverse outcome and to save on the government’s “limited resources.” The concern is now that some defendants may see an opportunity to obtain a dismissal by refusing to settle – by, using the likelihood of extensive discovery and contests. The DOJ, according to the Law360 story cited “burdensome discovery” as one of its reasons for approving the dismissal in the Gilead case.
  • Why was the case dismissed now, when the government had declined to intervene years ago?  Was it because of the extensive discovery issue or for other reasons? If it was because of discovery, the Law360 article worries that many False Claim Act suits based on violations of regulatory law require extensive discovery. The concern is that the Escobar decision allowing FCA cases for regulatory violations will have little effect because discovery is such a crucial part of proving a material regulatory violation.
  • Why weren’t the whistleblower plaintiffs given advance notice? If concerns about the expense and time of discovery were crucial to the dismissals, shouldn’t the whistleblowers have been given a chance to show discovery wouldn’t be burdensome? Normally, whistleblowers can proceed on their own if the government declines to intervene. Plaintiff’s counsel invests a lot of time and money in whistleblower cases. They should be warned in advance to save time and expenses.
  • Was the dismissal based on a DOJ concern that the Gilead case would be appealed to the Supreme Court? Many times, the issues on appeal can turn on whether the case being appealed is a good or bad case factually. The DOJ may have preferred that a better case be used to clarify any interpretations of the Escobar decision.

Another question raised by Law 360 is what rights do the whistleblowers have to contest the dismissal?

The law on whistleblower claims is evolving. Whistleblowers need experienced qui tam attorneys on their side. Attorneys who keep current with new claims, new regulations, and new court decisions. At Stephen Danz & Associates, we have the experience and resources to help whistleblowers get justice. For help now, please call us at 877-789-9707 to schedule an appointment.