United States ex rel CIMZNHCA LLC v. UCB Inc.- The Government Can Intervene by Way of Filing a Motion to Dismiss
The 7th Circuit set a new standard for the government dismissal of a whistleblower False Claims Act (“FCA”) case. This case involves a “qui tam” suit, which is brought under the FCA. In a qui tam suit, a person can be financially rewarded if he or she assists the government in recovering funds that were lost to fraud. In the suit, the government is the plaintiff, or the entity bringing the suit to court. The person providing information is considered a whistleblower and is called a “relator” for purposes of the lawsuit. If the government is successful, the whistleblower/relator can receive between 15 to 30 percent of the money the government receives from the suit. Since the government is the plaintiff in these cases, it also has the power to dismiss the suit as it sees fit. However, to do so, the government must give the whistleblower/relator notice of the attempt to dismiss, and give the whistleblower/relator an opportunity to be heard.
In this case, the whistleblower/relator is CIMZNHCA, LLC (“the company”). The company alleged that the defendants illegally paid physicians for prescribing/recommending a drug to treat Crohn’s disease––a drug which the defendants created. The company also alleged that the defendants were giving the physicians and patients illegal kickbacks for prescribing/recommending/using the drug. The company states that these kickbacks consisted of “free education services” and “free reimbursement support services” for filing the insurance paperwork.
The government was directly involved in this matter, as it had already investigated the claims the company allege and determined that it lacked “sufficient merit to justify the cost of investigation and prosecution.” United States ex rel CIMZNHCA LLC v. UCB Inc., 970 F.3d 835, 840 (7th Cir. 2020). Thus, the government had an absolute right to intervene, but chose not to. Instead, it chose to exercise its right to dismiss the case considering the government had already analyzed these claims and found them to lack merit. However, the lower court denied the government’s motion to dismiss because it failed to intervene.
The 7th Circuit reversed the lower court decision and stated that the government had a right to try and dismiss the case. The court explained that although the government has a right to dismiss the case, it must intervene to do so because the FCA requires the government to intervene as a party before exercising its right to dismiss. To “intervene” means to come between the existing parties of the litigation. The court found that the government did intervene in this instance when it filed for the motion to dismiss. Even though the government did not specifically file to intervene, it filed to dismiss the case, which the court is construing as a simultaneous motion to intervene and dismiss.
The court noted that the government’s reasoning for dismissing the case was justifiable. As the government discovered in its initial investigation of this matter, there was not sufficient merit to justify the defendant’s activity as illegal. Specifically, the actions taken by the defendant were not only legal, but benefitted the patients and the public as a whole. Thus, the court found the government to have intervened by way of moving to dismiss the case and dismissed the case accordingly.
Chelsea A. Padgett, Esq. is an associate attorney with Ward & Berry, PLLC. Ms. Padgett attended law school at the University of Florida Levin College of Law and is licensed to practice law in the Commonwealth of Virginia and Florida.