Anti-Kickback and Stark Law Violations Form Basis for Unfair Competition Claims

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On June 16, 2014, a federal district court jury in Florida awarded $14.755 million to plaintiff Ameritox, Ltd., a Maryland-based clinical lab, for state law claims alleging tortious interference with business relationships and unfair competition by its competitor, Millennium Laboratories, Inc., a California-based clinical laboratory.  Ameritox based these state law claims on violations of the federal anti-kickback statute and the Stark Law, which themselves do not provide a private right of action. 

Ameritox claimed that Millennium engaged in unfair competition and tortuously interfered with Ameritox’s business relationships when Millennium violated the federal anti-kickback statute and the Stark Law by providing free point-of-care testing cups to doctors.  The testing cups contained test strips that detected the presence of certain drugs in a patient’s urine and provided the doctor immediate preliminary testing results.  The doctors who received the free cups from Millennium (1) agreed not to bill for the point-of-care testing that was performed using the free cups and (2) agreed to return the point-of-care testing cups to Millennium for confirmatory testing.  Millennium could then bill for the confirmatory testing. 

The court had previously denied Millennium’s motion for summary judgment on the issue of whether violations of the anti-kickback statute and the Stark Law could form the basis for liability under state law claims for tortious interference and unfair competition.  The jury’s verdict included responses to several special interrogatories.  The jury concluded that providing free point-of-care testing cups to the doctors, who could bill for the point-of-care testing using a point-of-care test cup but agreed not do to so, was “remuneration” under the federal anti-kickback statute and the Stark Law and that because Millennium was providing the remuneration in exchange for referrals, it had violated both of these laws.  The jury ruled in favor of Millennium regarding several other grounds for recovery claimed by Ameritox, including claims under the laws of several states.  The jury ruled in favor of Ameritox and awarded Ameritox actual damages totaling $2.755 million and punitive damages totaling an additional $12 million based on its unfair competition claims under Florida, Tennessee, and Texas state laws and its tortious interference claim under Florida law.  The verdict is available here.

Reporter, Kristin Roshelli, Houston, +1 713 751 3263, kroshelli@kslaw.com.

 

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