Court Defends “Professional” Relator Against Government Overreach

In U.S. ex rel. CIMZNHCA v. UCB, Inc., 2019 WL 1598109 (S.D. Ill. Apr. 15, 2019), the court denied the Government’s motion to dismiss a facially valid case alleging illegal kickbacks. The relator is a limited liability holding company of an entity called the National Health Care Analysis Group, which is an entity formed for filing cases under the False Claims Act (“FCA”).

The National Health Care Analysis Group is the relator in almost a dozen FCA cases around the country, all alleging violations of the Anti-Kickback Statute, 42 U.S.C. §1320a-7b(b). Violations of the Anti-Kickback Statute that impact claims submitted to federal healthcare programs are actionable under the FCA.

The complaint alleges a multi-pronged scheme to provide remuneration to physicians and other healthcare providers to induce them to use Cimzia, defendant’s drug, for patients. Cimzia is administered by injection for treatment of Crohn’s disease, rheumatoid arthritis, psoriatic arthritis and ankylosing spondylitis.

The alleged remuneration includes free nursing and reimbursement support services for the prescribers. Relator alleges that the impermissible inducements “undermine the independent decision making of providers,” influencing them to use Cimzia for their own financial interests rather than the health interests of their patients. 2019 WL 1598109 at *1.

What Happens When the Government Seeks to Dismiss a False Claims Act Case Filed by a Relator?

Under the FCA, the Government has the option to intervene in a case and actively prosecute it; decline to intervene and allow the relator to prosecute the case on the Government’s behalf; or move to dismiss the litigation in its entirety.

The FCA provision for dismissal provides as follows:

“The government may dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.” 31 U.S.C.§ 3730(c)(2)(A).

Judicial Review of a Motion to Dismiss Filed by the Government

There is considerable disagreement among the courts as to the standard that must be satisfied when the Government seeks dismissal of an action. Some courts have determined that the lack of an articulated standard in the statute gives the Government a virtually unfettered and unreviewable right to dismiss a case. See Swift v. U.S., 318 F.3d 250, 253 (D.C. Cir. 2003).  Accord: U.S. ex rel. Rodgers v. Arkansas, 154 F.3d 865, 868 (8th Cir. 1998);  Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749, 753–54 (5th Cir. 2001)(en banc).

Other courts have rejected that notion, holding instead that the Government must both identify a valid governmental purpose for dismissal (such as avoiding waste of resources or interference with valid government policy interests) and demonstrate a rational relationship between dismissal and satisfying that purpose. E.g., United States ex rel. Sequoia Orange Co. v. Baird–Neece Packing Corp., 151 F.3d 1139, 1145 (9th Cir. 1998); Ridenour v. Kaiser–Hill Co., L.L.C., 397 F.3d 925, 940 (10th Cir. 2005).

The Court’s Decision in U.S. ex rel. CIMZNHCA v. UCB, Inc.

In CIMZNHCA, the Government moved to dismiss, claiming that the allegations lacked merit and that even the Government’s limited involvement in a case prosecuted by Relator would be costly and against the Government’s interests. 2019 WL 1598109 at *1.

Since the federal appeals court for Illinois had not decided between the two approaches for the scope of judicial review, the CIMZNHCA court considered both options. The court readily determined that some limited review by the courts was, indeed, appropriate:

In providing the relator an opportunity for a hearing on the Government’s motion to dismiss, did Congress intend for courts to be relegated to simple providing a venue, hosting the parties, and sitting idly by while the relator pleads its case to the Government (something the relator can do outside the courtroom and without the expenditure of judicial resources)? Surely not.

Id. at *3.

In reviewing the Government’s motion, the court determined that avoidance of litigation costs or interference with Governmental policies could be legitimate bases for dismissal, but the Government had not adequately shown that either was the true basis for its motion in this case.

The court found that the Government had not appropriately investigated the allegations, instead just broadly reviewing all of this relator’s cases as a whole. For example, the Government did not review any materials provided by relator other than the complaint and initial disclosure materials. Id.

Additionally, particularly considering the Government’s acknowledgement that the complaint asserted straightforward violations of the Anti-Kickback Statute, the court was skeptical of the Government’s claim that the litigation would “conflict with important policy and enforcement prerogatives of the Government’s healthcare programs.” Id. at *4.

The Court’s Concern About Animus Towards Relator

Notably, the court was particularly concerned that the Government’s motion was largely driven by animus towards the professional relator. The court observed that the Government spent a considerable portion of its briefing “deriding the relator’s business model and litigation activities.” Id.

Further, when Government counsel was asked whether disapproval of the relator was a valid basis for dismissal, counsel answered in the affirmative. Id. On balance, the court found that the Government’s true motivation was animus towards the relator, rendering its motion to dismiss arbitrary and capricious and thus “not rationally related to a valid governmental purpose.” Id.

The court’s decision is noteworthy both for its adoption of the standard requiring actual judicial review of a governmental motion to dismiss and for its rejection of the government’s right to dismiss a case based on disapproval of the relator. Clearly, relators selecting counsel must ensure that their counsel are experienced in False Claims Act litigation and capable of defending against attacks from defendants or even the Government.

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