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At Solicitor General’s Request, Supreme Court Closes Door in Gilead Sciences, Inc. v. United States ex rel. Campie

AOL - False Claims Lit

Following the Solicitor General’s recommendation, on January 7, 2019, the Supreme Court rejected Gilead Sciences’ (“Gilead”) petition for review of a Ninth Circuit decision allowing a False Claims Act (“FCA”) case against Gilead to move forward. The Campies, relators in the case, alleged that Gilead had misrepresented to the Food and Drug Administration (“FDA”) that its pharmaceutical drugs complied with FDA standards, which allowed Gilead to collect Medicare payments for the drugs. The Supreme Court’s decision no doubt resulted in part from the Solicitor General’s statement that the Department of Justice (“DOJ”) planned to intervene when the case returned to the district court and, over relators’ likely objections, dismiss the action using its powers under 31 U.S.C. § 3720.

As we discussed in our prior post, the Solicitor General’s position — and now the Supreme Court’s decision — present a mixed result for companies. On the one hand, the DOJ intervening in Campie to dismiss the case suggests a more proactive role by the government in terminating meritless or highly burdensome FCA cases. That action would be consistent with the Granston Memo, which tasked DOJ attorneys with evaluating FCA cases to determine if the government should move to dismiss. In mid-December 2018, the DOJ moved to dismiss numerous FCA cases brought by what the DOJ described as a “professional relator,”1 suggesting that Campie will be only one of many cases that the DOJ moves to dismiss on such grounds, which could spell relief for defendants.

On the other hand, by rejecting Gilead’s request, the Supreme Court leaves in place a relatively lenient Ninth Circuit standard for determining whether a misrepresentation is “material” to the government. In 2016, the Supreme Court held that the standard, which it described as “rigorous” and “demanding,” required allegations showing knowledge of the misrepresentations would have had a “likely or actual” effect on the government’s payment decision.2 In Campie, the Ninth Circuit held that the relators had satisfied that test even though they had alleged that the government continued to pay Gilead for its drugs after learning about Gilead’s purported misrepresentations.3 The Ninth Circuit’s holding appears to establish a more lenient standard than the one described by the Supreme Court.

The Supreme Court may yet have an opportunity to review that standard. In United States ex rel. Rose v. Stephens Institute, the Ninth Circuit applied a similarly lenient standard of materiality to overturn a district court order dismissing an FCA case.4 The deadline for the defendant in Rose to file a petition for review by the Supreme Court is February 24.

Now that Campie is headed back to the lower courts with the DOJ’s promise of dismissal, in addition to arguments about the materiality standard in the Ninth Circuit, a new debate is likely to emerge about the DOJ’s discretion to dismiss cases over relators’ objections. Stay tuned for updates as these debates play out in the lower courts.

Disclaimer: Vinson & Elkins represented amici supporting petitioners in Campie and Rose.

Visit our website to learn more about V&E’s False Claims Act/Qui Tam Litigation practice. For more information, please contact Vinson & Elkins lawyer Jessica Heim.

1 See The United States’ Motion To Dismiss Relator’s Second Amended Complaint at 2, United States, et al. ex rel. Health Choice Group, LLC v. Bayer Corp., et al., No. 5:17-cv-126-RWS-CMC, Dkt. No. 116 (E.D. Tex. Dec. 17, 2018) (describing other cases that the United States moved to dismiss).

Universal Health Services, Inc. v. United States ex rel. Escobar, et al., 136 S. Ct. 1989, 2002, 2003 (2016).

United States ex rel. Campie v. Gilead Sciences, Inc., 862 F.3d 890, 906-07 (9th Cir. 2017).

4 909 F.3d 1012, 1019-22 (9th Cir. 2018).

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.