Commercial Litigation Update

In its recent unpublished decision, United States ex rel. Stebbins v. Maraposa Surgical Inc., 2024 WL 4947274 (3d Cir. Dec. 3, 2024), the Third Circuit clarified that the public disclosure bar prevents whistleblower False Claims Act (FCA) qui tam actions arising from information gathered solely through publicly accessible databases.

As the Third Circuit explained, “[t]he FCA punishes the submission to the Government of fraudulent claims for payment under, for example, the Medicare and Medicaid programs.”  Id. at *1.  While the FCA encourages individuals, known as relators, to report government-related fraud by way of filing a qui tam suit, the public disclosure bar prevents a relator from bringing an FCA qui tam suit “if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed” in a “Federal report” or “from the news media” unless the relator is “an original source of the information.” 31 U.S.C. § 3730(e)(4)(A).  In the Third Circuit, “the public disclosure bar applies if either Z (fraud) or both X (misrepresented facts) and Y (true facts) are publicly disclosed by way of a listed source.” Stebbins, 2024 WL 4947274, at *2 (quoting U.S. ex rel. Zizic v. Q2Administrators, LLC, 728 F.3d 228, 236 (3d Cir. 2013)). 

In United States ex rel. Stebbins v. Maraposa Surgical Inc. et al., despite having no affiliation whatsoever with the defendants, the relator filed a qui tam action alleging, inter alia, that the defendants fraudulently sought reimbursement for the arteriograms performed in a physician’s office, rather than a licensed ambulatory surgery center, which the relator asserted violates Pennsylvania’s regulations.  Without deciding whether the defendants actually engaged in any wrongdoing, the Third Circuit held that the public disclosure bar prohibited the relator from proceeding with suit because the relator drew each piece of information supporting his FCA allegations from publicly disclosed databases.

In a rebuke of the Department of Justice, the Third Circuit recently overturned money laundering conspiracy convictions for a reverse distributor pharmaceutical company, Devos Ltd., and two of its former executives, CEO Dean Volkes and CFO Donna Fallon. The Third Circuit’s opinion, United States v. Fallon, affirmed other convictions against the company and individuals but ordered a resentencing and a recalculation of the sums subject to forfeiture.

We blogged last October (here) about the Third Circuit’s decision in FTC v. AbbieVie Inc., holding that Section 13(b) of the Federal Trade Commission Act, which expressly gives the FTC authority to obtain injunctive relief, does not allow a district court to order disgorgement or restitution. We also noted that the Supreme Court had granted certiorari to hear an appeal of the 9^th Circuit’s decision in AMG Capital Management, LLC v. FTC, where the 9^th Circuit upheld the Commission’s right to seek equitable monetary remedies pursuant to Section 13(b) of the FTC Act, while the 3^rd

In July, we reported (here) on a Third Circuit decision that held an out-of-network provider’s direct claims against an insurer for breach of contract and promissory estoppel were not pre-empted by ERISA. That opinion was a significant win for healthcare providers. Recently, there has been another important win for out-of-network providers—this time from the Ninth Circuit.

In Beverly Oaks Physicians Surgical Ctr., LLC v. Blue Cross & Blue Shield of Illinois, 983 F.3d 435, 442 (9th Cir. 2020), an out-of-network surgical center sued Blue Cross for improperly refusing to ...

Congratulations—you’ve been sued again. This time it’s in federal court under the Lanham Act. You review the complaint, and while it’s not outrageously frivolous on its face (which we previously discussed here), it’s also not your run-of-the-mill Lanham Act case. You might assume that your only option is to fully litigate the claim, and wait for vindication from the Court on summary judgment or after trial. But the Lanham Act provides another remedy: fee-shifting to recoup your legal fees. If the Lanham Act claim you’ve defended against is “exceptional” under the ...

On September 30, 2020, the Third Circuit reversed a decision by the Eastern District of Pennsylvania ordering AbbieVie, Inc. (“AbbieVie”) and Besins Healthcare Inc. (“Besins”) to pay $448 million in disgorgement of ill-gotten profits for allegedly filing sham patent lawsuits to stifle competition. AbbieVie and Besins had filed patent infringement lawsuits against two developers of generic alternatives to its brand-name testosterone gel product AndroGel. The FTC sued AbbieVie and Besins in 2014 alleging that the patent suits were baseless and brought for no other ...

The Third Circuit recently affirmed the significant discretion that district court judges have to manage their dockets when it confirmed that “good cause” must be shown under Federal Rule Civ. P. 16(b)(4) to add a party or amend a pleading after the deadline in a district court’s scheduling order has passed rather than Rule 15(a)’s more liberal (“[t]he court should freely give leave when justice so requires”) standard. In Premier Comp Solutions, LLC v. UPMC, 970 F.3d 316 (3d Cir. 2020), the plaintiff made a motion to amend its complaint and add a party, relying on Rule 15 of ...