United States: The DOJ Lashes Out At Qui Tam Abuse

Last Updated: January 7 2019
Article by Eric Alexander

What follows is a guest post from Joe Metro and Andy Bernasconi of Reed Smith. Andy has some experience with the guest post gig ( here and here), and Joe has finally heeded the call to share his fraud and abuse expertise with our readers. That particular expertise is not in abusing the legal process like the plaintiffs discussed below. Joe and Andy deserve any praise or blame for their post.


The U.S. Department of Justice (DOJ) recently took the relatively unusual step of seeking the dismissal of eleven pending False Claims Act (FCA) cases that had been filed throughout the country by relators under the qui tam provisions of the FCA against 38 pharmaceutical manufacturer defendants. DOJ filed motions to dismiss in each action on December 17, 2018, asserting the government's investigation revealed that the cases "lack sufficient merit to justify the cost of investigation and prosecution, and otherwise [are] contrary to the public interest." United States' Motion to Dismiss at 1-2, 14 (Dec. 17, 2018) (hereafter, "DOJ MTD"). A copy of the motion to dismiss, as filed in a case in Texas, can be found here.

Significant to DOJ's analysis was the fact that the qui tam relators used "false pretenses" to obtain information from witnesses. DOJ MTD at 6. According to the government, the actions all were filed by a "professional relator" entity that sought to develop contacts and inside information under the guise of conducting a research study of the pharmaceutical industry, id. at 1, 5, and offering to pay individuals for information provided in a purported "qualitative research study," even though the information was "actually being collected for use in qui tam complaints filed by [the professional relator] through its pseudonymous limited liability companies." Id. at 5. At no time were witnesses told that the interviewer was acting at the direction of attorneys to collect information for use in lawsuits, or that the interviewees would be named as corroborating witnesses in those lawsuits. Id.at 6.

This alleged scheme of using false pretenses to obtain information to be used as the basis for qui tam FCA suits may sound familiar to you: we previously wrote here and here about a similar case against a pharmaceutical company, involving the same "professional relator" and the same alleged scheme to obtain information as the basis for a qui tam FCA suit. As detailed in our prior discussion, the District of Massachusetts ultimately dismissed that prior case after finding that the means used to obtain information for use in that lawsuit violated ethical rules, and ruling that the remaining allegations of the complaint—when stripped of the information obtained through improper means—could not satisfy the pleading standards to survive a motion to dismiss.

That decision is perhaps one reason why a judge in one of the 11 cases in which DOJ filed motions to dismiss, the same District of Massachusetts, issued an order on December 18, 2018 (i.e., the day after DOJ filed its Motion to Dismiss), directing relators' counsel to show cause by January 2, 2018, why their pro hac vice status should not be revoked for "prosecuting an action without sufficient factual and legal support, as charged" in DOJ's Motion to Dismiss and supporting documentation. See U.S. ex rel. SMSF, LLC v. Biogen, Inc., No. 1:16-cv-11379-IT (D. Mass.), Electronic Order, Dkt. No. 55 (Dec. 18, 2018).

Indeed, it would be awkward for DOJ to sit idly by and allow qui tam cases to proceed, in the government's name—which is how the qui tam system works—when those cases are purportedly premised on a scheme one district court already described as involving ethical violations and "an elaborate series of falsehoods, misrepresentation, and deceptive conduct." Some commentators have suggested that DOJ's efforts to seek dismissal in these cases is a natural consequence of the so-called "Granston Memo," an internal DOJ memo originally dated January 10, 2018, that has since been incorporated into the Justice Manual (formerly known as the U.S. Attorneys' Manual), which provides guidelines for DOJ attorneys to consider in evaluating whether to dismiss qui tam cases for lack of merit. While DOJ's Motion to Dismiss relies on various factors for seeking dismissal, including the "substantial costs in monitoring the litigation and responding to discovery requests" and the "substantial litigation burdens for the United States," DOJ MTD at 15, it is at least as likely—if not more so—that DOJ's decision to seek dismissal of these 11 cases was driven by the relator's scheme to collect information for use in qui tam cases, as characterized in DOJ's Motion to Dismiss. Indeed, the litigation burdens for the government have existed since those cases were filed under seal and investigated by the government, 31 U.S.C. § 3730(b)(2), and DOJ easily could have exercised its authority to seek dismissal of the cases long before its December 17 filings. Thus, we are skeptical that DOJ's exercise of its dismissal authority should be portrayed as a sign that DOJ will readily dismiss burdensome cases, particularly in the absence of other significant (if not egregious) considerations.

Finally, the government's motion is atypical, and significant, with respect to its comments on the substantive merits of the relator's allegations. The relators' complaints made sweeping allegations that various types of common manufacturer product support programs – ranging from nurse training or hotlines, disease education, and reimbursement support – amounted to violations of the anti-kickback statute. In seeking dismissal, the DOJ not only acknowledged that government enforcement agencies had indicated that the practices in question were not kickbacks, but also emphasized that the practices supported federal policy interests in appropriate product utilization.

The former principle should seem an unremarkable basis for the government to seek dismissal of whistleblower litigation, but the more common approach seems to have been to ignore, dismiss, or distinguish enforcement agencies' prior guidance to industry. Given the other unusual aspects of the cases discussed above, one would be hard-pressed to declare this approach to the merits to be a "new trend." But at the least, it is a useful reminder of the potential value of early engagement with the government on the regulatory merits of relators' theories. Indeed, while the government's motion cited a recent safe harbor regulation preamble, there is a wealth of other guidance that may prove useful, including the OIG's Compliance Program Guidance documents, safe harbor regulations, special advisory bulletins, and advisory opinions.

The latter point noted by the government – that manufacturer product support programs are often actually aligned with federal health care programs' interests – is equally significant. Simply stated, in an age where emerging genetic therapies are more precise and more complicated, and in an age where the government is increasingly focused on outcomes-based health care delivery and payment systems, the government's acknowledgement that manufacturers have a legitimate role to play in facilitating appropriate product use is important not only from the perspective of False Claims and anti-kickback defense, but also when counseling on such arrangement.

What should not be lost here, particularly for readers of the Blog's usual fare, is that the economic incentives in place for generating and pursuing litigation against drug manufacturers sometimes lead to egregious conduct by putative plaintiffs and their lawyers. The conduct can be so bad that even DOJ, which is often aligned against the drug manufacturers, cannot stomach it. Whether that dyspepsia affects DOJ's position on other types of litigation against medical product companies remains to be seen.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions