Federal Physician Kickbacks Claims Survive Abbott Labs Motion to Dismiss

On August 18, 2022, a District Judge in the United States District Court for the Southern District of California granted in part and denied in part the motion to dismiss the False Claims Act lawsuit against Abbott Laboratories, Inc. a/k/a Abbott Laboratories, Abbott Cardiovascular Systems Inc., and Abbott Vascular Inc., (collectively, “Abbott” or the “Company”), sustaining the federal claims but dismissing the state claims in the action.

The False Claims Act, 31 U.S.C. §§ 3729–3733 (“FCA”), allows private citizens (known as whistleblowers or relators) to bring lawsuits on behalf of the government against entities suspected of misusing government funds. In the healthcare context, FCA cases frequently include claims under the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b (“AKS”), which prohibits the willful provision of anything of value in exchange for patient referrals. In 2010, Congress clarified that violations of the AKS are also FCA violations.

Because FCA actions are filed on behalf of the government, whistleblowers must first allow the Department of Justice (“DOJ”) to investigate their claims. The DOJ may then elect to take over prosecution of the case, do nothing and allow the relator to prosecute the case, or move to dismiss the lawsuit. If an FCA suit is successful, the relator is entitled to a share of the recovered funds.

Relator’s allegations accuse Abbott of paying kickbacks to physicians in exchange for implanting and/or referring patients to the Company’s MitraClip device, which is used to treat mitral regurgitation. Relator claims that these arrangements are kickbacks in violation of the AKS, and any procedure resulting therefrom and paid for through a government healthcare program constitutes a false claim made to the government.

Relator specifically alleges that kickbacks were paid to two groups of physicians: referring physicians and implanting physicians. Abbott targets non-implanting physicians by using free lunches and dinners and other lavish events to bribe them to refer their cardiac patients to specific implanting physicians. Abbott then provides kickbacks to implanting physicians in the form of patient referrals, free marketing and practice building, sham speaker program honoraria, and promises to participate in future clinical trials.

Following investigation, the DOJ declined to intervene in the matter, permitting Relator to continue prosecuting the action independently through its counsel, Miller Shah LLP.

In September 2021, Abbott moved to dismiss the lawsuit, arguing that Relator failed to allege that the kickbacks were the but-for cause of the MitraClip procedure and thus failed to plead the necessary causation element under the FCA. Abbott also argued that Relator did not adequately allege facts supporting the scienter (knowledge) element under both the AKS and the FCA.

In August 2022, the Court denied the motion as to Relator’s federal claims.

Opining on the FCA’s causation element, the Court held that “a claim is false if it seeks reimbursement for a prescription that was not provided in compliance with the Anti-Kickback Statute, regardless of whether the claim was the result of a quid-pro-quo exchange or would have been submitted even absent the kickback.” This finding is significant in light of the recent Eighth Circuit decision in U.S. ex rel. Cairns v. D.S. Medical LLC, et al., which held that the language of the AKS imposes a ‘but-for’ causation requirement and which created a circuit split with the Third Circuit’s holding in United States ex rel. Greenfield v. Medco Health Solutions, Inc.

Ultimately, the Court determined that Relator satisfied the pleading standard and sufficiently established a link between the kickbacks and the resulting claims for reimbursement. The Court also found for Relator on the scienter element, citing Relator’s allegations that Abbott management directed the kickbacks.

The caption for the lawsuit is United States ex rel. Everest Principals, LLC v. Abbott Labs et al., Civil Action No. 3:20-cv-00286-W-AGS, filed in the United States District Court for the Southern District of California.

The legal team at Miller Shah LLP has significant experience representing whistleblower matters. If you have any questions regarding this subject or this post, please contact Stephen Rutkowski (strutkowski@millershah.com) or Anna D’Agostino (akdagostino@millershah.com). The firm can also be reached toll-free at (866) 540-5505.

Miller Shah LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, and Pennsylvania. The firm is an active member of International Advisory Group (IAG Global), which provides clients access to excellent legal and accounting resources across the globe. For more information about the firm, please visit www.millershah.com.

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