/ ReplyU.S. Opposition
In a reply brief filed today, defendants Teva Pharmaceuticals and Teva Neuroscience urge U.S. District Judge Nathaniel Gorton to postpone a Sept. 18 trial on the U.S. government’s False Claims Act, or FCA, claims against the drug manufacturer pending an immediate appeal of a July 14 summary judgment causation ruling
. According to Teva’s motion for an immediate appeal and to postpone trial, “Teva faces a judgment that may exceed $10 billion” at trial, “an enterprise-threatening amount that may render a post-judgment appeal impossible.”
The government alleges in its August 2020 complaint
that from 2006 to 2015 Teva illegally paid over $300 million in kickbacks to two foundations that covered multiple sclerosis patients’ copays for Teva’s drug Copaxone but not for competing MS drugs, generating “hundreds of millions of dollars in false claims to Medicare and a corresponding amount of revenue for Teva.” According to the government, the foundations “functioned not as charities for MS patients, but as pass-through vehicles for money from Teva to Copaxone patients.” The government seeks to recover treble damages, restitution and civil penalties from Teva under the anti-kickback provisions of the FCA.
In the court’s July 14 order, Judge Gorton rejected Teva’s argument that the government could not prove the alleged kickbacks caused the filing of any fraudulent Medicare claims as a matter of law, citing government evidence that Teva intended to induce Copaxone prescriptions, patients told Teva they needed assistance to afford the drug and Teva knew it would lose sales if it did not provide assistance.
Normally, this interlocutory decision would not be appealable until after trial, but Teva asks Judge Gorton to certify the decision for immediate review by the U.S. Court of Appeals for the First Circuit and postpone the trial because the applicable causation standard “is a controlling, dispositive, and purely legal issue on which there is an active circuit split and no controlling First Circuit authority.”
According to Teva, the government must point to specific fraudulent Medicare claims that would not have been submitted but for the alleged kickbacks, but Judge Gorton applied a more lenient standard that only requires the government show a “causal connection” between the kickbacks and Medicare claims. Teva maintains that the First Circuit may decide on appeal to join the U.S. Courts of Appeal for the Sixth and Eighth Circuit in adopting the stricter “but for” standard.
“If Teva is correct that the government must demonstrate ‘but for’ causation, then summary judgment should be granted because the government has not identified any particular claims for reimbursement that would not have been submitted to Medicare in the absence of Teva’s donations,” Teva argues.Teva stresses that forcing it to go to trial before the First Circuit considers the applicable causation standard could deprive it of effective appellate review because a victory by the government could result in a $10 billion verdict that threatens the company’s existence.
“Given the potential stakes, an interlocutory appeal may well be the only way for the First Circuit to provide guidance on this unsettled and important issue,” Teva concludes.
The government responds that interlocutory appeals of summary judgment decisions are “rarely granted” and “only in exceptional circumstances.” According to the government, Judge Gorton’s causation decision is based on persuasive First Circuit precedent that has been interpreted in the same way by other district courts and therefore there is no “substantial ground for a difference of opinion” on the causation standard, as required for an interlocutory appeal.
“It is true that other circuits have interpreted the causation standard differently than the First Circuit,” the government concedes, but “this is irrelevant when considering whether to grant an interlocutory appeal.”
The government further denies that reversal on appeal would resolve the litigation - another factor in the interlocutory appeal analysis. “Although Teva asserts that its proposed causation standard would necessarily result in summary judgment in its favor, that argument ignores the fact that all of the government’s evidence of causation applies with equal force under either standard (and would be sufficient under either standard),” the government maintains.
Teva counters in its reply that the principal First Circuit causation case relied on by Judge Gorton “expressly declined to resolve what constitutes a ‘sufficient causal connection’” under the FCA. Teva also asserts that even if reversal on appeal would not entirely resolve the government’s claims, “the government cannot dispute that the causation standard will have significant effects on the evidence presented at trial and the jury instructions.”