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Court Blows Whistleblower Case Out of the 2nd Circuit

By William Vogeler, Esq. on August 15, 2018 6:58 AM

Until Copernicus, it was pretty obvious the Sun went around the Earth.

In Wood v. Allergan, it also seemed clear the plaintiffs had a case against Allergan. The plaintiffs, which included half of the United States, alleged the pharmaceutical company gave kickbacks to doctors who prescribed its products.

But the U.S. Second Circuit Court of Appeals said that's not how the False Claims Act works. The appeals court said it was pretty obvious, too.

False Claims Act

John Wood, an ex-Allergan employee, filed a whistleblower complaint against Allergan in New York. He alleged the kickback scheme caused state and federal governments to make overpayments from Medicare, Medicaid and other benefits.

The company argued, however, that the lawsuit should be dismissed because it was already being sued in separate actions under the False Claims Act. A trial judge agreed.

On appeal, the Second Circuit considered a question of first impression in the circuit: whether a violation of the FCA's "first-to-file bar" can be cured by an amended pleading. The appeals court answered "no."

"Under the terms of the statute, dismissal is the obvious response to an improperly filed action -- to permit the action to continue would be to ignore the violation," Judge Denny Chin wrote for the appeals panel.

First-to-File Bar

It was not so obvious to Wood, who filed his amended complaint after the previous lawsuits had been dismissed. The government plaintiffs and the First Circuit didn't see it either.

In Gabois v. PharMerica Corp., the First Circuit found the "defendant's position that supplementation cannot cure first-to-file defect untenable." But the Second Circuit declined to follow that decision, deepening a divide in the circuits on the issue.

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