Posted June 8th, 2018.
Case Against Medical Device Manufacturer Advances to Discovery; Court Affirms Relator’s Liability Theories
NEW YORK, June 8, 2018 /PRNewswire/ — A federal court in the Northern District of Illinois late on Thursday denied two motions to dismiss in United States of America ex rel. Derrick v. Hoffman-La Roche LTD et al., a False Claims Act lawsuit against Humana, Humana Pharmacy, Roche Diagnostics, and Roche Diabetes Corp. (“Humana” and “Roche”, respectively). The case was filed in June 2014.
On Thursday, United States District Court Judge Elaine E. Bucklo found that the Plaintiff-Relator Crystal Derrick had properly alleged fraudulent conduct and retaliation under the False Claims Act and that her claims of fraud were alleged with the level of detail required by the law.
The Relator’s Complaint alleges that in 2013, Roche paid Humana a kickback in exchange for Humana placing Roche’s diabetes testing products on its Medicare Advantage formularies. Access to these formularies is very valuable for Roche as it allows the Company to sell its products to patients with Government-funded healthcare. The Relator further alleged that Roche terminated her after she complained about the fraudulent conduct.
“We are very pleased with the Court’s decision to allow this case to go forward,” said Inayat Ali Hemani, an attorney at Sanford Heisler Sharp. “We expect that the discovery process will further document the back-room dealing between Roche and Humana.”
The False Claims Act is one of the federal government’s most important anti-fraud tools. Under the Act, whistleblowers (called relators), may bring a lawsuit on behalf of the government to recover money that the government has wrongfully paid to private parties. The Act imposes treble damages (three times the amount of the fraud), civil penalties, and attorneys’ fees on defendants. In addition, the Act grants relators a share of the government’s recovery—a reward for information leading to the government’s repayment.
“The Court affirms the important principle that financial arrangements between Managed Care Organizations and pharmaceutical companies are not immune from the False Claims Act and Anti-Kickback Statute,” said Ross Brooks, co-Chair of the whistleblower practice at Sanford Heisler Sharp. “This decision is critical as watchdog groups scrutinize secretive financial arrangements among pharmaceutical companies, pharmacy benefit managers, and insurance companies.”
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