Supreme Court Order Indicates Interest in Reviewing Campie, the False Claims Act Outlier of the Ninth Circuit

Robinson+Cole Health Law Diagnosis
Contact

In an order issued on April 16, 2018, the U.S. Supreme Court invited the Solicitor General to file a brief “expressing the views of the United States” concerning the 2017 decision of the U.S. Court of Appeals for the Ninth Circuit in the False Claims Act (FCA) case U.S. ex rel. Campie v. Gilead Sciences, Inc. (see our previous analysis of the case here). The Campie case is noteworthy because it created a split among the circuit courts as to the scope of the “government knowledge” defense to materiality under the FCA following the Supreme Court’s 2016 Escobar decision. In Escobar, the Supreme Court upheld the viability of the “implied false certification” theory of liability under the FCA in certain circumstances, and explained that for FCA liability to attach to a misrepresentation concerning compliance with a statutory, regulatory or contractual requirement, the misrepresentation must be material to the government’s payment decision.

In Campie, a whistleblower alleged that Gilead submitted and caused others to submit false claims for payment to the government by manufacturing key ingredients for certain of its drugs at an unapproved facility (in violation of Food and Drug Administration (FDA) requirements) and then making false statements regarding the source of the drugs. After a district court dismissed the case, the Ninth Circuit reversed, holding that because the relator had alleged “more than the mere possibility that the government would be entitled to refuse payment if it were aware of” the alleged violations, the relator had met the “rigorous” and “demanding” threshold for materiality established under Escobar. The Ninth Circuit reached this decision despite acknowledging that the relator faced “an uphill battle” to sufficiently allege materiality following Escobar because the government had knowledge of the alleged noncompliance for a number of years and yet continued to approve of, and reimburse, the Gilead drugs at issue. In response to arguments against the suit based on the Supreme Court’s statement in Escobar that where “the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material,” the Ninth Circuit maintained that it would be a mistake “to read too much into the FDA’s continued approval” of Gilead’s drugs.

As noted by many commenters at the time of the decision, the Ninth Circuit’s “more than the mere possibility” standard for establishing post-Escobar materiality is unique among circuit courts that have considered the issue. In response, Gilead filed a petition for a writ of certiorari with the U.S. Supreme Court on December 26, 2017. In that petition, Gilead alleged that the Ninth Circuit’s decision to reinstate the case “without any allegations that could overcome the powerful inference of immateriality created by the Government’s knowing decision to pay for the products at issue… is in direct contrast to published decisions of six circuits.” Gilead therefore requested that the Supreme Court “finish the task” initiated in Escobar – and advanced in other circuit courts – by confirming that an FCA complaint is not actionable under the implied false certification theory where the government continues to pay claims in full despite knowledge of alleged misrepresentations.

The Supreme Court’s formal request for the views of the Solicitor General in this case indicates that the Court is considering a grant of certiorari, in which case the Court would be situated to issue a second major decision on the implied false certification theory of FCA liability within the past few years. It will be particularly interesting to see the position that the Solicitor General takes, as the Department of Justice declined to intervene in this suit previously, but did submit a brief to the Ninth Circuit as amicus curiae in support of the relator.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Robinson+Cole Health Law Diagnosis | Attorney Advertising

Written by:

Robinson+Cole Health Law Diagnosis
Contact
more
less

Robinson+Cole Health Law Diagnosis on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.