United States: Where Has This Been Hiding? – First Amendment-Based Dismissal Of FCA Action

Last Updated: June 17 2019
Article by James Beck

This post is about a hidden gem. That brings to mind a hiking trail that's one of the two best in Pennsylvania (along with Ricketts Glen), but isn't found in any of the "Fifty Hikes in [fill in the blank]" books that one finds in outdoorsy stores. The hike is part of the Appalachian Trail, and begins on the west side of the Lehigh Gap, where the Lehigh River cut through Blue Mountain north of Allentown. Rather than in any book, we found it by looking at an AT map, which read "exposed rock, continuous views, dangerous during bad weather." That's the kind of trail we like, and it's a rarity in Pennsylvania, and indeed anywhere on the east coast south of northern New England/New York. Too many trees, but not on Lehigh Gap. Best views in Pennsylvania, and not in any guidebook that we've seen.

Returning to the law, ever since the Department of Justice/FDA got spanked – hard – by the courts in United States v. Caronia, 703 F.3d 149 (2d Cir. 2012), and Amarin Pharma, Inc. v. FDA, 119 F. Supp.3d 196 (S.D.N.Y. 2015), we've noticed (and been told) that the government is being much more careful with its "off-label promotion" prosecutions. A couple of left-over, pre-Caronia prosecutions dragged on, into the post-Caronia world, with inconsistent and at times disconcerting results, but the government takes care these days to go after only off-label communications that it can also portray as "false and misleading" in the First Amendment context.

Thus, we're on record as predicting that, instead of direct challenges to criminal prosecutions, the "most promising spawning ground for future Caronias seems likely to be in False Claims Act ("FCA") litigation." The "why" is relatively simple:

While FCA claims are ostensibly brought in the name of the government, agencies like the FDA have relatively little control over the allegations that FCA plaintiffs (called "relators") make. Also, to increase their own take, such relators have the incentive to make the broadest allegations, which means they would like to avoid having to prove reliance on false information on a one-by-one basis.

Well then, you might ask, where are those decisions? Caronia has been around for over six years and Amarin for four. Surely, some defendant should have tagged some FCA relator with a First Amendment dismissal in the meantime. Heck, we've been wondering the same thing.

Speaking of hidden gems, we just turned up United States ex rel. Sullivan v. Atrium Medical Corp., 2015 WL 13799885, at *1 (Mag. W.D. Tex. Nov. 20, 2015), and our first reaction is "where has this been hiding all this time," since the opinion is 3 ½ years old, but only recently appearing on Westlaw.

Sullivan is just that – a First Amendment based – more specifically an Amarin-based − dismissal of wayward FCA claims for seeking to impose liability for truthful off-label communications.

So how did the First Amendment win in Sullivan?

It helped that the relator's allegations about supposed off-label promotion were, to use the Texas phrase, all hat and no cattle. First, the relator alleged that old saw, fraud on the FDA. But those claims had already been dismissed, because the fraud alleged was too remote – no fraud had been committed against the government payor agencies, as opposed to the FDA, which doesn't pay claims. See > 6/15/15 Order at 19-23. Second, the relator alleged that the defendant handed out "69 reprints of papers and articles" about the off-label use at issue. 2015 WL 13799885, at *7. Third, the complaint contained the usual unsupported boilerplate "false and misleading" allegations that we have come to expect in this type of complaint.

As to off-label use itself, Sullivan held:

Off-label marketing concerns the dissemination of information about "product uses" not approved by the FDA. Although the FDA "generally restricts a manufacturer from marketing for off-label purposes" physicians and hospitals are not prohibited from purchasing, "prescribing, or using a medical device for an off-label purpose." As a result, the "off-label use of many products and drugs is an accepted medical practice. Further, "[c]ourts recognize that off-label use of a drug or medical device is not the same as medically unnecessary use of that drug or device."

Sullivan, 2015 WL 13799885, at *11 (footnotes omitted).

Next, Sullivan addressed the implications of the First Amendment decision in Amarin on FCA cases:

When making its findings on likelihood of success, the Court held that the FDA could not support its claims against Amarin based on truthful and non-misleading speech. The Amarin Pharma court also referenced the FCA, stating Amarin had "separately sought protection from civil claims under the FCA, on the premise that the Government might seek to hold Amarin liable if doctors submitted false claims securing reimbursement in connection with Vascepa prescriptions." The Court granted Amarin the injunctive relief it sought to permit Amarin to promote the off-label use of Vascepa "without exposing itself to liability for misbranding" and "without incurring liability for misbranding."

Id. at *11 (footnotes omitted) (emphasis original). Amarin therefore warranted "a detailed examination of whether relator has sufficiently pleaded false or misleading promotions sufficient to state a claim." Id. at 12. It was a "new, persuasive precedent" that "Caronia . . . a criminal case, also applies in a civil action and that truthful and non-misleading speech cannot be used to state an actionable off-label marketing claim." Id. at *12, n.137 (this judge loves footnotes).

Then, the court TwIqballed the general "false and misleading" allegations.

[G]eneral allegations that [defendant] promoted the [device] for off-label uses . . . do not meet the Twombly/Iqbal plausibility standard because truthful and non-misleading promotions fall within the protection of the First Amendment and cannot render any subsequent claim false. . . . [Relator] has not provided a particularized statement of facts sufficient to meet the Twombly/Iqbal plausibility standard to show why [defendant's] off-label marketing of the [device] was false and misleading.

Id. at *13. The court also threw out relator's "generalized allegations of fraud, including . . . about training," as "not meet[ing] Rule 9(b)'s pleading standard." Id. This is a significant point. Back when we were first developing the First Amendment as a defense, during the Bone Screw litigation, plaintiffs could get away with rote recitals that anything and everything was "false" or "misleading." Back then, we had easier defenses than the First Amendment. But now we have TwIqbal.

Finally, the one specific allegation the relator had made, about the use of scientific articles, could not overcome the First Amendment.

The Amarin Pharma court expressly rejected the allegation, as relator makes here, that sharing reprints of articles about off-label use is impermissible. Instead, Amarin Pharma held that sharing reprints of articles about off-label use is permissible, protected speech.

Id. (footnote omitted).

All told, the Sullivan decision concluded that the "allegations of false and misleading speech, taken as a whole and viewed in the light most favorable to relator, are not sufficient to state a claim" under the First Amendment protection of the defendant device manufacturer's right to say truthful things about off-label uses of its product. Id. (lengthy footnote about various allegations in the complaint omitted). Therefore, "off-label marketing claims under federal or state law should be dismissed with prejudice." Id. at *14.

Boom! That's precisely the kind of First Amendment decision, brought about by an overreaching FCA relator, that we've been expecting to see. And to think that it's been out there, unbeknownst to anyone (or at least by us), for 3 ½ years.

Having read the magistrate's report/recommendation in Sullivan, we immediately wondered whether it had been adopted by the district court – the usual next step. We found nothing to that effect on Westlaw, or Lexis. But we have a PACER account and we're not afraid to use it, so we took a look at the docket. Turns out that the relator in Sullivan never even sought district court review. Instead, after a series of deadline extensions, the case settled in mid-2016 for who-knows-what. So Sullivan wasn't appealed, even to a district court. Still we think it's an important demonstration of the power of a post-TwIqbal First Amendment defense in FCA litigation. So add Sullivan to your First Amendment repertoire.

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

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