DePuy Asks Supreme Court to Decide “Statistical Guilt” Standard

DePuy Orthopaedics, Inc. wants the U.S. Supreme Court to decide whether or not statistical evidence is enough to have a device maker found guilty of violating the False Claims Act (FCA). Every device maker should be paying attention.

False Claims Act

Generally speaking, the FCA says you are guilty of making a “False Claim” if you bill the government for a service the government says wasn’t legitimate. To prove the false claim, it seems likely there should be documentation of an actual submitted bill.

But some courts have allowed statistical evidence that demonstrated it was a statistical certainty that a false claim would have been submitted.

Statistical Analysis

This case began when a couple of whistleblower physicians claimed DePuy was selling allegedly defective Pinnacle metal-on-metal hip implants for procedures reimbursed by the government and causing third parties to submit false claims.

According to attorneys Anne Walsh and Andrew Hull writing in the Law Blog on March 22, 2018, the physicians had a “weak example of one claim, and primarily relied on a statistical analysis of the sales and use of the device, along with the percentage of procedures typically covered by government programs, to contend that it was virtually certain that government programs reimbursed many of the procedures in which a defective device was used.”

Inconsistent Court Decisions

The district court sided with the company and dismissed the case because the physicians failed to plead with particularity under Federal Rule of Civil Procedure 9(b). The government had declined to join the suit.

The appeals court disagreed. The appeals court, wrote Walsh and Hull, noted that relator must “allege the essential particulars of at least some actual false claims that were in fact submitted to the government for payment,” the court stated that there is an exception for allegations that a defendant “induced a third party to file false claims.”

The court wrote that a relator could satisfy Rule 9(b) by providing “factual or statistical evidence to strengthen the inference of fraud beyond possibility,” without, write the lawyers, “necessarily providing details as to each false claim.”

Guilt by Statistics

Walsh and Hull continue, “Because relators had alleged facts showing that it was statistically certain that DePuy caused third parties to submit false claims to the government, the First Circuit held that relators had met Rule 9(b)’s specificity standard. The court also noted that it ‘need not and [did] not’ decide whether the one pleaded example was necessary to satisfy Rule 9(b), id. at 27 n.8, leaving open the door that relators could build an FCA case without alleging any specific example of a manufacturer inducing third parties to submit false claims to the government.”

Guilty by statistics.

That’s what DePuy wants the Supreme Court to address and clarify. The company says various appeals courts have been applying inconsistent standards and the standard should be decided by the Supreme Court.

Device makers, through AdvaMed, have filed a friend of the court brief in support of DePuy. They are joined by others, including The Pharmaceutical Research and Manufacturers Association of America and the Chamber of Commerce. The government has not filed a brief.

Walsh and Hull wrote the Supreme Court is expected to make a decision on whether to grant the petition to decide on the particularity standard in the coming weeks.