Summary Judgment for Defendants in FCA Action: No Admissible Evidence of False Claims

[Rachel B. Weil]

How much is “enough?”  Will we have enough money to retire someday?    Did the Drug and Device Law College Sophomore study enough for her computer science midterm?  Is there enough salt in the matzo ball soup? In the realm of summary judgment, we who represent defendants are painfully familiar with courts that dodge this question, allowing claims to proceed and avoiding the complicated issues of admissibility that determine whether a plaintiff has presented enough evidence to create a genuine issue of material fact.

Not so in United States of America ex rel. John King and Tammy Drummond, et. al. v. Solvay S.A., et al.. 2016 U.S. Dist. LEXIS 43133 (S.D. Tex. Mar. 31, 2016).   In King, a False Claims Act case, the Relators claimed that the defendant promoted three drugs for off-label uses, and that the off-label promotion resulted in false claims being submitted for prescriptions paid for by government health care programs.  King, 2016 U.S. Dist. LEXIS at *5.  The defendants moved for summary judgment on these claims, arguing that the relators did not have any admissible evidence of false claims.  Specifically, the defendants argued that the  Relators relied on inadmissible Texas and New York claims data to create summary charts of supposed false claims and didn’t disclose who created the charts or explain how they were created.  Further, the defendants objected to the Relators’ reliance on sales representatives’ “call notes,” arguing that the call notes contained hearsay and lacked foundation.  Id. at *8-9.

New York Claims Data

The Relators claimed that the New York claims data was self-authenticating because it was produced in response to a subpoena.  The court disagreed, holding, “. . .[W]hile certainly Relators’ assertion that the State of New York produced the New York Claims Data pursuant to a subpoena must be what was requested in the subpoena,” documents produced pursuant to a subpoena are not always self-authenticating.  Id. at *13.   In contrast to a case cited by the Relators, which involved documents that were going to be used against that producing party,  the Relators, who sued on behalf of the State of New York, were using the documents to benefit New York.  The court concluded that the New York claims data was not self-authenticating “simply because it was produced pursuant to a subpoena.”  Id. at *13-14.  

The Relators also “urged the Court to accept the New York Claims Data for what it purports to be under Federal Rule of Evidence 901(b)(4),” which provides that evidence satisfies the authentication requirement if its “appearance, contents, substance, internal patterns, or other distinctive characteristics,” taken together with all of the relevant circumstances, support a conclusion that the evidence is what the proponent says it is.  Id. at *14.   The court noted that there was no affidavit in the record from the person who compiled the data, and that the briefing made clear that the data was “unwieldy” and couldn’t be interpreted without testimony about what was included in the dataset and why.  Instead, the Relators offered a declaration from their lead counsel “stating only the summary chars accurately present[ed] the underlying [data] and that Relators organized the [data] using a consultant . . . .”  The court held, “While this is somewhat helpful in understanding how the summary charts were compiled, it does not assure the court that the underlying database is what it purports to be.”  Id. at *15.  As such, the court sustained the defendants’ objections to the New York claims data.

Texas Claims Data

The eelators did provide affidavits to support the authenticity of the Texas Claims Data included in their charts.  However, the affidavits were made by “surprise” witnesses who had not been disclosed in the Relators’ Rule 26 (a)(1) disclosures, in any later supplements to the disclosures, or in response to an interrogatory specifically seeking the identity of persons who would authenticate the claims data.  The court noted,  

These people have discoverable information and should have been disclosed long ago. . . . Relators have not provided substantial justification for not disclosing these witnesses and they have not shown that the failure was harmless. . . .  [To the contrary,] allowing Relators to disclose witnesses who can authenticate the data that forms the backbone of their case after the close of discovery and well after all dispositive motions were due would cause significant prejudice to [the defendants] and would be a waste of judicial resources.”

Id. at *22-23.  The court added, “This is particularly true because even if the court were to consider the [affidavits] at this point, they are insufficient to authenticate the Texas Claims Data,” id. at *23, concluding that  the Relators could not rely on the undisclosed witnesses’ affidavits to authenticate the Texas claims data.  Without the witnesses, and with only a declaration from the Relators’ counsel to authenticate the Texas data, it, like the New York data, was inadmissible.  

Call Notes as Proof of Off-Label Promotion

To support their claim that the defendants promoted their drugs for off-label uses, the Relators relied upon “call notes” – notes that the defendants’ sales representatives prepared to documents their sales calls to physicians’ offices.  While the authenticity of the call notes was not at issue, the defendants argued that they were inadmissible hearsay, and that the Relators had “not properly laid the foundation for these call notes, as they provide[d] no evidence regarding the purpose of call notes or what types of information the sales representatives were required to document.”  Id. at *31-32. 

The court found that statements of physicians, memorialized in the call notes, were hearsay.  Even if the notes simply recorded questions the physicians asked, the questions were “being asked for the truth of the matter asserted – that the physician asked certain off-label questions” about the drugs in question.   Id. at *32.  Further, even if the notes themselves satisfied the business records exception to the hearsay rule, “the business records exception does not apply to the physicians’ statements within the call notes, which are hearsay within hearsay.”  Id. at *33. 

Summary Charts

The Relators argued that they should be allowed to rely on charts summarizing the underlying claims data and the information in the call notes.  The defendants objected, arguing that the charts relied on unauthenticated claims data and call notes containing hearsay.  Further, because the charts were created by the Relators’ counsel, the attorney would need to testify about how she compiled the charts, which would violate the “advocate as witness” rule.  Id. at *44-45.  The court agreed, noting that the Texas Disciplinary Rules of Professional Conduct prohibited a party’s lawyer from also being a witness to establish an essential fact.  Thus, “even if the underlying data were admissible, the summary charts are not admissible because they were actually prepared by Relators’ lead counsel, who cannot serve as the proponent of the charts at trial.”  Id. at *47-49.

And so, the court concluded, the Relators lacked admissible evidence of the submission of false claims.  Even if they did, they had not “highlighted enough claims that a reasonable jury could determine resulted from off-label promotion to support their claims of a nationwide scheme resulting in false Medicaid claims.”  Id. at *49-50.   It just wasn’t enough, and the court correctly granted summary judgment for the defendants.  

Now please pass the salt.