Campie and the Granston Memo in Effect

AHLA Health Care Liability & Litigation April 2019

Jonah D. Retzinger, Associate in the Health Care & Life Sciences and Litigation & Business Disputes practice, in the firm’s Los Angeles and Washington, DC, offices, co-authored an article in AHLA Health Care Liability & Litigation, titled “Campie and the Granston Memo in Effect.”

Following is an excerpt:

Much has been written about United States ex rel. Campie v. Gilead Scis. and for good reason. This is a False Claims Act (FCA) case in which relators—two former Gilead Sciences, Inc. (Gilead) employees—alleged that Gilead adulterated and misbranded certain drugs in violation of Food and Drug Administration (FDA) regulations. The district court dismissed the case, finding that the relators had failed to plead materiality, which is an important element of FCA liability following the Supreme Court’s decision in Universal Health Servs. v. United States ex rel. Escobar. But the Ninth Circuit reversed, and now that the Supreme Court has denied Gilead’s petition for certiorari; its decision will have a lasting impact on FCA decisions in the years to follow.

Most attention on the Campie litigation has focused on what the Ninth Circuit’s decision means for purposes of materiality anal­yses. However, this article has a separate focus that has received considerably less attention: Campie is the most high-profile litiga­tion to date in which the government has represented—despite a judicial determination by an appeals court that the relators’ FCA claims should survive—that it would seek to dismiss substantive FCA allegations under 31 U.S.C. § 3730(c)(2)(A) (i.e., the govern­ment’s authority to affirmatively seek dismissal of FCA matters, irrespective of whether a relator wants to proceed).

The degree to which this reflects a true policy shift on the part of the Department of Justice (DOJ) is to be determined, but for a DOJ that historically has been reluctant to exercise its dismissal authority, the government’s representation in the Campie liti­gation may signal an increased willingness on the part of the government to proactively dismiss cases in which DOJ tradition­ally elected not to intervene. This has the potential to dramatically alter the FCA litigation landscape. Consequently, all individuals and entities potentially subject to FCA liability, including those participating in federal health care programs and their counsel, should be aware of the implications of the government’s position.