We noted briefly on Tuesday afternoon that the dyspeptic verdict for more than $330 million in the Louisiana AG action over J&J’s marketing of Risperdal had been reversed by the Louisiana Supreme Court and judgment entered for the defendants. After a little time to digest the decision, we can say that it is thoroughly satisfying and perhaps an amuse-bouche for other decisions limiting how some state and federal government plaintiffs have been using fraud statutes against health care defendants. Our satisfaction and food focus stems in part—it is lunchtime as we type this—from the fact the Louisiana Court of Appeal’s noxious affirmance of the trial court was this blogger’s first post and was followed five months later with a post on the Louisiana Supreme Court’s decision to consider the case. Along the way, the intermediate appellate decision made #2 on our list of the worst decisions of 2012, right behind the First Circuit’sBartlett monstrosity. We are not suggesting that our lists or posts influence court decisions, but we know what happened toBartlett.
The Louisiana Supreme Court decision does do many things we derided the decision below for not doing—like identifying the name of the drug, its indication, the risk its manufacturer allegedly misrepresented, and even the language in communications from the manufacturer that the plaintiff said were actionable. Slip op. at 2-6. What the court could not identify was any evidence from the plaintiff that pertained to specific doctors, patients, or claims—this was, after all, a case about allegedly false claims being submitted to Louisiana’s Medical Assistance Programs—because no such evidence was ever introduced at trial. This is because the plaintiff’s theory, which the courts below bought, was that no such evidence was needed. As the trial court put it, if plaintiff “prove[s] false, misleading, misrepresentative, deceitful, intent to defraud type statement, attempts to defraud type statements, that in and of itself is the causation  needed” under the state statute. This fallacy did more than write causation out of the statute. It also took the “false” and “claim” out of a false claim statute (based on the federal False Claim Act), so that every misrepresentation about the drug—7,604 copies of letters sent to health care providers in the state and 27,542 calls of sales representatives in the state—counted as a violation of the statute without proof that a single claim for Medicaid reimbursement was submitted or was false. Thus, while Caldwell involves a relatively straightforward interpretation of a state statute by state’s high court, it also rejects the attempt to use some proof of generalized causation for hundreds or thousands of counts of alleged fraud as a substitute for actual proof for each count. We have made our views on this sort of end run known many times, particularly with the Neurontin decisions. Even in cases where the damages tally does not pass $330 million, the requirement that there be proof of each element of each cause of action asserted by each plaintiff is engrained in our legal system. Class actions obviate these principles, but substitute in several procedural requirements. The state or federal government civil lawsuits (particular in cases involving drugs, devices, and healthcare) that seek to do away with individualized proof through either legerdemain with legislation or statistical extrapolation are two sides of the same coin. Because of the coin they seek, to line depleted governmental coffers, the due process rights of rich defendants get trampled. Reducing procedural protections as the stakes rise makes no sense. Kudos to the Louisiana Supreme Court for playing it straight.
So, how did the court get to its decision? First, it did what we said the Court of Appeal was supposed to do: interpret the meaning of the applicable Louisiana statutes de novo. Id. at 9. In doing so, it noted (as we did) that the district court had based its peculiar interpretation of the Louisiana law on a West Virginia case (interpreting a very different West Virginia statute) that was no longer good law in West Virginia by the time the Court of Appeals deferred to the trial court’s interpretation of the law. Id. at n.5. Then it noted, like we said and the Court of Appeal missed, that the Louisiana legislature had given a clear statement of the intent of the Medical Assistance Programs Integrity Law (as if its name were not a strong hint) was “to combat and prevent fraud and abuse committed by some health care providers participating in the medical assistance programs and by other persons and to negate the adverse effects such activities have on fiscal and programmatic integrity.” Id. at 12. It continued to other parts of the statute that made it clear it was about fraudulent claims for Medicaid reimbursement. It then walked through each of the subsections of the statute that plaintiff asserted had been violated to see if the statute supported liability without proof of anything beyond a drug company’s statements about its prescription drug. Because each of these required proof that plaintiff never offered, judgment for the defendants was entered.
The court’s common sense approach to interpreting the statute quickly deemed the AG’s interpretations “absurd.” Liability based on the prohibition that “[n]o person shall knowingly present or cause to be presented a false or fraudulent claim” would require that the drug company’s misrepresentations “caused [at least one] health care provider or his billing agent to knowingly present a claim for payment that is false, fictitious, untrue, or misleading in regard to any material information.” Id. at 14 (emphasis in original). This, in turn, would require proof that a “health care provider . . . knowingly committed malpractice, prescribing or dispensing Risperdal despite knowing there were better, cheaper, or safer, more efficacious drugs available,” which cannot be assumed and was never proven. Id. at 15-16.
For liability to be based on the prohibition that “[n]o person shall knowingly engage in misrepresentation to obtain, or attempt to obtain, payment from medical assistance program funds,” the term “misrepresentation” would need to encompass any statement in drug labeling.
Aside from the fact that there is no showing the defendant knowingly attempted to obtain payment from the medical assistance programs pursuant to a claim . . . the attorney General’s proposed construction of the definition of “misrepresentation” is inconsistent with the purpose of the MAPIL and could lead to absurd consequences . . . . [If a “misrepresentation” in drug labeling counted,] [s]uch a result would lead to absurd consequences, in that potentially any information required by any federal or state agency or source, which is not fully disclosed by any person who ultimately receives Medicaid funds, directly or indirectly, could, if not truthfully or fully disclosed, subject that person to civil penalties under MAPIL.
Id. at 17-18. That is a mouthful of absurdity. It makes more sense to read the statute as only dealing with misrepresentation about Medicaid claims, as opposed to a reading that allows liability without any proof that any claim was ever submitted.
The same refusal to apply an interpretation of “misrepresentation” divorced from the Medicaid context of the statute meant that the prohibition that “[n]o person shall conspire to defraud, or attempt to defraud, the medical assistance programs through misrepresentation or by obtaining, or attempting to obtain, payment for a false or fraudulent claim” also could not be a basis of liability. As the court said, “even if the defendants’ conduct was intended to influence the prescribing decisions of doctors treating schizophrenia patients, there has been no causal connection between this conduct and any false or fraudulent claim for payment to a health care provider or other person.” Id. at 21. Knowing a little about how discovery and trials go, this failure to introduce evidence—like the others noted in the opinions—was unlikely the result of some desire by the outsourced plaintiff’s counsel not to pile on. Rather, we assume that prescribing physicians testified that the allegedly actionable misrepresentation in defendants’ letters and sales calls did not make them prescribe the drug to patients whose care was covered by Medicaid. It is also conceivable that the trial court, convinced of the correctness of its view that “attempts to defraud type statements . . . in and of itself is the causation  needed,” would have excluded defendants’ evidence from prescribing physicians negating causation as irrelevant. The defendants will not need that evidence for a retrial, because there will not be one. Failure of proof by a plaintiff at trial is fatal.
We hope that other courts will follow the lead of the Louisiana Supreme Court in requiring that plaintiffs prove the claims they assert. Even statutes with avowed remedial purposes are not supposed to be mere vehicles for ringing up damages against deep pockets defendants. We also hope that the state AGs who outsource their work to plaintiff lawyers, or other governmental lawyers who get in bed with plaintiff lawyers in the hopes of big settlements and verdicts, give a little more thought to the process going forward. The Louisiana AG may not care that the Louisiana Supreme Court said that it advocated absurd interpretations of Louisiana statutes. We suspect, however, that the private lawyers at the trial court level took extreme positions to get an extreme verdict and the AG was put in the position of having to justify those positions to hold on to the verdict, with its compounding interest. Nobody likes a pig. Except maybe Wilbur. Or Babe. Or even Miss Piggy and Arnold Ziffel. Or bacon. Just about everybody likes bacon.