Rulings coming as Trump's DOJ fights Philadelphia-area lawyers it says wasted its time with baseless lawsuits

By John O'Brien | Apr 2, 2019

Philadelphia federal court  

PHILADELPHIA – It’s now up to a pair of Philadelphia federal judges to decide whether the Trump Administration was right when it said private lawyers wasted more than 1,500 hours of its time with frivolous lawsuits.

Last year, the Department of Justice asked judges hearing 11 False Claims Act lawsuits around the country to throw them out of court, claiming the lawyers had concocted a scheme to sue the health care industry by creating shell companies to act as whistleblower-plaintiffs.

Three of those cases were filed in Philadelphia federal court. The plaintiff voluntarily dismissed one of them after the DOJ’s December motion.

Lawyers have responded to the DOJ, and the DOJ has filed its replies. Now it’s up to the judges hearing the cases to decide what happens next.

The DOJ wrote recently that the plaintiffs’ cases lack common sense.

“Because Relator, a made-for-litigation entity, has no other knowledge other than the information it ‘learned’ through a series of paid interviews with several former Teva employees conducted under the misleading pretense of market research, this Court should dismiss the complaint,” a Feb. 11 DOJ reply says.

The FCA is a law that allows whistleblowers to sue companies that allegedly overcharge the federal government for certain services and products, most commonly involving Medicaid and Medicare. Once a whistleblower files its suit, the federal government and eligible states have the option to join the plaintiff in prosecuting the action.

The whistleblower, for its efforts, is entitled to a substantial percentage of any recovery.

The DOJ says because of the possible impact of the claims made in these cases, it spent 1,500 hours investigating them – only to find they lacked merit.

The cases allege kickbacks. For example, the lawsuit against Teva Pharmaceutical said the company paid tens of millions of dollars to employ specialists and nurses who unlawfully provided services to prescribers in exchange for recommendations of its multiple sclerosis drug Copaxone.

Thus, Medicare and Medicaid have paid for Copaxone prescriptions that were tainted by kickbacks, it is alleged.

These area law firms filed the Philadelphia cases: Anapol Weiss in Philadelphia; Geyer Gorey in Cinnaminson, N.J.; Florio Perrucci in Phillipsburg, N.J.; Joseph Trautwein & Associates in Blue Bell; and Youman & Caputo in Newtown Square.

Anapol Weiss wrote in January that the DOJ can’t meet the burden needed for dismissal of its lawsuit.

“Here, the United States cannot meet this burden as the two grounds it asserts for the legitimate governmental interests, costs and policy considerations are unfounded,” the firm said.

“The discovery requests and resulting costs that the Government fears are not present at this time and may substantially different at a future date.

“Moreover, public policy calls for investigating and ending fraud.”

The plaintiff companies are formed by National Health Care Analysis Group, which is itself a pseudonym for a partnership comprised of limited liability companies set up by investors and former Wall Street investment bankers, the DOJ said in its motions.

The partnership, acting through shell company relators, filed 11 separate qui tam complaints in seven jurisdictions against a total of 38 different defendants for essentially the same alleged conduct, the DOJ says.

Described as a “big-data entrepreneur,” NHCA managing agent John Mininno recalled that when the Centers for Medicare and Medicaid Services made available to the public vast amounts of Medicare claims data, he viewed it as “a massive business opportunity,” specifically with regard to whistleblower suits.

Backed by a “Wall Street angel investor,” NHCA Group was established.

In order to obtain information for its qui tam business, NHCA Group created a database of resumes, “scraped and extracted from publicly-available sources,” which the organization used to identify “potential informants,” the motion states.

NHCA Group then contacted the individuals under the guise of conducting a “research study” of the pharmaceutical industry, offering to pay them to participate in what it called a “qualitative research study," the DOJ says.

However, the information was actually being collected for use in qui tam complaints filed by the NHCA Group through its pseudonymous limited liability companies, the DOJ says.

Similar lawsuits have been filed in Texas, Illinois, Washington and Massachusetts. Among the highest-profile law firms pursuing them are the Lanier Law Firm of Texas and Beasley Allen of Alabama.

Judge Jan DuBois is hearing the case against Teva. Judge Timothy Savage will decide the case against EMD Serono, Pfizer, Quintiles IMS Holdings, RXC Acquisition Company.

From the Pennsylvania Record: Reach editor John O’Brien at john.obrien@therecordinc.com.

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Organizations in this Story

Anapol Weiss Beasley Allen Florio Perrucci Teva Pharmaceuticals The Lanier Law Firm PLLC U.S. Department of Justice U.S. District Court for the Eastern District of Pennsylvania Youman & Caputo, LLC

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