PENNSYLVANIA RECORD

PHILADELPHIA –  A federal appeals court has affirmed a prior decision that dismissed the retaliation claim made by a former employee against Animas Corporation and Johnson & Johnson.

The U.S. Court of Appeals for the Third Circuit on Monday issued a decision that affirmed an earlier ruling by the U.S. District Court for the Eastern District of Pennsylvania.

Lansdale resident Ehab Sefen began working for Animas, a West Chester-based manufacturer of insulin pumps and Johnson & Johnson subsidiary, as a Senior Quality System Analyst in June 2007.

Sefen’s chief responsibilities in this role were to ensure Animas’ electronic records met Food and Drug Administration (FDA) compliance measures, oversee the company’s electronic Patient Complaint System and assist with Computer Systems Validation projects and corrective actions.

According to the lawsuit, Sefen discovered shortly after his tenure began that Animas received a warning letter in February 2005, from Thomas D. Gardine, District Director of the Philadelphia District Office of the FDA, outlining alleged failures on the company’s part to comply with regulations governing the manufacturing of their insulin pumps.

“The methods used in, or the facilities or controls used for the manufacture of certain insulin pumps were not in conformance with Current Good Manufacturing Practice requirements,” Gardine’s 2005 letter read. “Failure to correct these deviations may result in regulatory action being initiated by the Food and Drug Administration without further notice.”

Upon its acquisition of Animas in February 2006, Johnson & Johnson allegedly represented to the federal government that all deficiencies cited by Gardine would be rectified.

But according to Sefen, in the two-plus years since the time of Gardine’s letter to the start of Sefen’s employment with Animas, the manufacturing defects pointed out by the FDA became even more severe.

Sefen brought these compliance concerns to his Animas colleagues, though he alleges they urged him to back off on voicing said concerns, as they believed a smaller company like Animas lacked the resources to fully meet the FDA’s compliance measures.

The lawsuit claims Sefen’s colleagues restricted his access to proprietary information, made thinly veiled threats to his job security and gradually lessened his work duties, in addition to pressuring him to sign documents certifying Animas and its manufacturing and computer systems were meeting FDA compliance requirements.

Sefen refused and contacted the FDA’s Office of Compliance himself - leading the group to conduct an on-site visit and inspection of the Animas facility in February 2008. One month later, Animas terminated Sefen’s employment.

In June 2010, Sefen filed a complaint of retaliation against his former employer through the Federal False Claims Act, charging Animas with continuing to manufacture and sell insulin pumps while representing they met FDA compliance standards and knowing they did not, in addition to terminating him for his efforts to correct the aforementioned deficiencies in Animas’ manufacturing process and computer systems previously cited by the FDA.

Animas argued that Sefen’s complaint was filed 27 months after his termination and did not meet the deadline of timeliness required under Pennsylvania’s whistleblower law (180 days) or its catch-all personal injury statute (two years).

Sefen countered by applying for a retroactive application of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a July 2010 law that amended the Federal False Claims Act. Though it contains a three-year statute of limitations pertinent to retaliation claims, there is no set rule on whether to apply that three-year standard retroactively, the court said.

That petition notwithstanding, Pennsylvania Eastern District Court Judge Richard Barclay Surrick pointed to U.S. Supreme Court jurisprudence disallowing retroactive application in this case.

“While we agree with Plaintiff that retroactively applying the Dodd-Frank Act statute of limitations would in no way impair either party’s rights at the time of the underlying conduct, imposing a longer statute of limitations indisputably increases Defendants’ liability for past conduct,” Surrick wrote.

Surrick also explained Sefen alleged Animas made false statements to the federal government, but did not connect that to a false claim for payment, thereby not meeting the federal False Claim Act’s standards for what constitutes retaliation.

Citing Sefen’s complaint not reaching a standard of timeliness in addition to the bar for retaliation not being met, Surrick decided to dismiss the claims against Animas and Johnson & Johnson in June.

Sefen appealed to the Third Circuit, where the matter reached Chief Judge Theodore A. McKee, Judge Marjorie O. Rendell and Judge Julio M. Fuentes. McKee authored the opinion for all three judges.

“Judge Surrick found that, because both state limitations periods had already elapsed when Sefen’s claim was filed, any retroactive application would revive a moribund cause of action, increasing a party’s liability for past conduct,” McKee wrote.

McKee added without congressional intent for the Dodd-Frank Statute to apply retroactively, Surrick found Sefen’s complaint unable to benefit from that application and the Third Circuit agreed.