On Dec. 1, 2014, a motion by defendant Managed Health Care Associates Long Term Care Network (MHA LTC) seeking attorney fees and expenses in a dismissed false claims case was granted by United States District Judge Denise Cotes. In granting the defendant’s request, Cotes says that the relator, Fox Rx, Inc. is a serial relator that has brought a half dozen actions against entities with which it had previously worked in its role as a Medicare Plan D sponsor. All of the cases were dismissed. In her ruling on MHA LTC’s motion, Judge Cotes says, “the court finds that the claim … was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.” In the original case, Fox had filed its complaint and a first amended complaint against MHA LTC’s parent, MHA, alleging two specific illegal practices. Fox alleged that (1) MHA failed to substitute generic drugs for brand-name drugs in states that have laws mandating such substitution, and (2) MHA dispensed drugs after the termination date of a national drug code in states that have laws prohibiting pharmacies from dispensing drugs beyond their shelf-life expiration dates. MHA arranged a meeting with Fox before it filed the second amended […]
On Dec. 1, 2014, a motion by defendant Managed Health Care Associates Long Term Care Network (MHA LTC) seeking attorney fees and expenses in a dismissed false claims case was granted by United States District Judge Denise Cotes. In granting the defendant’s request, Cotes says that the relator, Fox Rx, Inc. is a serial relator that has brought a half dozen actions against entities with which it had previously worked in its role as a Medicare Plan D sponsor. All of the cases were dismissed.
In her ruling on MHA LTC’s motion, Judge Cotes says, “the court finds that the claim ... was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.”
In the original case, Fox had filed its complaint and a first amended complaint against MHA LTC’s parent, MHA, alleging two specific illegal practices. Fox alleged that (1) MHA failed to substitute generic drugs for brand-name drugs in states that have laws mandating such substitution, and (2) MHA dispensed drugs after the termination date of a national drug code in states that have laws prohibiting pharmacies from dispensing drugs beyond their shelf-life expiration dates.
MHA arranged a meeting with Fox before it filed the second amended complaint in an attempt to get the relator to withdraw its complaints. At that meeting, MHA presented information that showed that Fox’s claims were erroneous and provided a copy of a motion for sanctions it intended to file if Fox persisted. Instead of withdrawing, Fox filed a second amended complaint against MHA LTC rather than the parent. The second amended complaint was dismissed in its entirety on Aug. 12, 2014. MHA LTC filed its motion seeking fees and costs on Aug. 26, 2014 and in a Jan. 13 document, it requested costs and fees in the amount of $168,967.61.
This latest case demonstrates how the law can protect innocent companies facing qui tam complaints. Other cases during 2014 addressed the application of Rule 9(b) of the Federal Rules of Civil Procedure in false claims cases. The district courts are divided on the issue of how much evidence is required to substantiate a false claim but it is encouraging to see a qui tam defendant recover some of the devastating costs of qui tam litigation.
Takeaway: Relators are part of our lives in today’s health care environment, and if accused when your laboratory hasn’t done anything wrong, you should fight back with every tool that you have
