Sunday, November 26, 2017
Actions by Attorneys and Their Investigators Trigger Sanctions Affecting the Underlying False Claims Act Suit
A decision earlier this year in a qui tam suit, alleging the submission of false claims to Medicare for the off-label prescription of a drug for dementia, seems especially interesting in light of recent high profile allegations involving Harvey Weinstein's alleged use of private investigators to befriend his victims in order gather information.
In the qui tam suit the drug in question was Namenda, described in the opinion as "approved by the FDA for treatment of moderate to severe Alzheimer's disease," but allegedly also promoted illegally by the companies for prescription to individuals with milder stages of dementia. In Leysock v. Forest Laboratories, et al, the United States District Court in Massachusetts dismissed the complaint as a sanction for conduct by the plaintiff's attorneys and the investigator hired by those attorneys:
The present dispute arises out of the conduct of counsel for relator, the Milberg law firm, in investigating the case. As set forth below, Milberg attorneys engaged in an elaborate scheme of deceptive conduct in order to obtain information from physicians about their prescribing practices, and in some instances about their patients. In essence, Milberg retained a physician and medical researcher, Dr. Mark Godec, to conduct a survey of physicians concerning their prescription of Namenda to Medicare patients. In order to obtain the cooperation of the physicians, Dr. Godec falsely represented that he was conducting a medical research study. Dr. Godec, at Milberg's direction, conducted two internet-based surveys as well as follow-up telephone interviews. Among other things, the physicians were induced to provide patient medical charts and other confidential medical information to Dr. Godec. Information derived from those surveys was then set out in the Second Amended Complaint in this action, and was relied on by the Court in denying defendant's motion to dismiss in 2014.
Defendants have now moved to dismiss the Second Amended Complaint as a sanction for alleged violations of attorney ethical rules. For the reasons stated below, that motion will be granted.
The decision analyzes the conduct as violations of Massachusetts Rule of Professional Conduct, which are modeled on the ABA Rules, including Rule 4.1 providing that in "the course of representing a client, a lawyer shall not knowingly . . . make a false statement of material fact or law to a third person." The court rejected the law firm's arguments about exceptions to the general rule.
[N]otwithstanding the broad facial sweep of Rules 4.1(a) and 8.4(c), courts in Massachusetts and elsewhere have permitted attorneys to engage in certain limited types of deception for investigative purposes.. . . It is true that there is no bright line between permissible and impermissible conduct, and to some extent the question is one of degree. Nonetheless, for the reasons that follow, the Court concludes that the conduct of the attorneys far exceeded the boundaries of any investigative exception to the ethical rules.
There is a certain irony to the history of this long-running case, as the court had earlier required the plaintiffs to amend their complaint to allege specific facts of illegal promotion of the drug in order to satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) for allegations of fraud. The information collected by the investigator was used to amend the complaint. Judge Dennis Saylor observed:
Courts should normally deploy "the least extreme sanction reasonably calculated to achieve the appropriate punitive and deterrent purposes."[Citation omitted].
To be sure, whatever sanction is imposed must be sufficient to prohibit the use of evidence obtained unethically and deter others from engaging in such behavior in the future. However, that consideration must also be balanced against the purposes of the FCA and broader interests in pursuing valid allegations of false claims against the government.
That balance can be best achieved by applying a Franks-type remedy: that is, by removing from the complaint all information derived by means of the unethical investigation. If what remains is sufficient to pass muster under Rule 9(b), then the case may proceed. However, if what remains is insufficient—if, in other words, the case survived the motion to dismiss only because of the improperly obtained information—then the case will be dismissed. Here, what survives after removing the improperly obtained information is clearly insufficient for the complaint to survive under Rule 9(b)....
For more on the history of the case, see Federal Judge Sanctions Milberg for Alleged "Elaborate Scheme of Deceptive Conduct" in Drug Study, published in the ABA Journal in May, 2017.