DAILY WHISTLEBLOWER HEADLINES:

Judge nixes claim against whistleblower

Citing the public’s interest in shielding whistleblowers from retaliation, a federal judge Monday threw out a counterclaim filed against a man who accused his employer of defrauding the government.

In a written opinion, U.S. Magistrate Judge Sidney I. Schenkier dismissed without prejudice the counterclaim LifeWatch Services Inc. brought against Matthew Cieszynski after he sued LifeWatch under the False Claims Act.

The counterclaim alleged Cieszynski violated a LifeWatch privacy policy and a confidentiality agreement he entered with the company by providing the government with client information protected by the Health Insurance Portability and Accountability Act.

Cieszynski submitted that information to the government in support of his contention that LifeWatch was violating Medicare regulations by seeking reimbursement for heart-monitoring services performed by technicians located outside the United States.

In his opinion, Schenkier conceded an employer is entitled to expect that its confidential information will be kept confidential.

But both federal and Illinois law have a public policy that protects whistleblowers from retaliation for reporting fraud to the government, Schenkier wrote.

Therefore, he wrote, “we must balance the need to protect whistleblowers and prevent chilling their attempts to uncover fraud against the government against an employer’s legitimate expectations that its confidential information will be protected.”

In deciding whether to dismiss a counterclaim filed in a False Claims Act suit, courts consider whether the defendant could recover damages even if it is found liable on the plaintiff’s claim, Schenkier wrote.

In deciding whether to dismiss a breach-of-contract counterclaim in a false claims suit, he wrote, citing United States ex rel. Wildhirt v. AARS Forever Inc., No. 09 C 1215, 2013 WL 5304092 (N.D. Ill. Sept. 19, 2013), some courts examine whether the plaintiff, or relator, disclosed more information than necessary to support his or her allegations.

LifeWatch failed to make that showing, Schenkier held.

In its counterclaim, he wrote, LifeWatch does not allege Cieszynski took company documents for any reason other than to support his False Claims Act claim.

Also, LifeWatch failed to show Cieszynski took many more documents than necessary, Schenkier wrote.

He conceded that a spreadsheet taken by Cieszynski included information about patients covered by private insurers as well as those covered by Medicare or other government insurers.

But it would “gut the strength and purpose of the public policy exception” to hold a relator liable for taking more than the bear minimum of documents, Schenkier wrote.

“It is unrealistic to impose on a relator the burden of knowing precisely how much information to provide the government when reporting a claim of fraud,” he wrote, “with the penalty for providing what in hindsight the defendant views as more than was needed to be exposure to a claim for damages.” read more »

J&J faces federal probe over alleged relationships with PBMs: Reuters

Johnson & Johnson ($JNJ) is facing a federal probe over its relationships with pharmacy benefit managers. The demand for documents is the latest Department of Justice move to investigate a drugmaker under the False Claims Act.

The U.S. Attorney’s office sent J&J’s Janssen Pharmaceuticals unit a civil investigative demand for information about its contractual relationships with PBMs. The demand covers Jan. 1, 2006 to the present and "certain pharma products." It was issued in connection with an investigation under the False Claims Act, the company disclosed in its quarterly filing with the Securities and Exchange Commission.

J&J is staying quiet about the probe. "The statement in the filing is accurate, and we are cooperating fully in the process," the company told FiercePharma in an email. "We have nothing further to add at this point."

J&J is not the only company dealing with federal probes. Pharma peers including Valeant ($VRX) and Horizon Pharma ($HZNP) have also come under fire during the past year from lawmakers, and across the pharma industry, companies have agreed to pay fines and penalties to settle FCA and kickbacks allegations.

The demand for information about relationships with PBMs appears to be unusual, however. If the Justice Department chooses to zero in on pharma's contracts with those companies, which negotiate prices and set reimbursement conditions, other drugmakers could find themselves roped in.

In October, Valeant revealed that it got subpoenas from the U.S. Attorney’s office for the Southern District of New York and the U.S. Attorney’s office for the District of Massachusetts for documents about its financial support to patients, drug distribution and pricing decisions. The same month, the company cut ties with specialty pharma Philidor amid rumors that the pharmacy changed doctors’ orders to get more money from insurers.

Horizon has also encountered federal pushback. In March, the company said that the U.S. Attorney’s Office for the Southern District of New York was investigating its financial support to patients and its alleged ties to specialty pharmacies. read more »