Dist. Ct. did not err in granting defendant-pharmacy’s motion for summary judgment in plaintiff’s qui tam action alleging that defendant violated False Claims Act by knowingly submitting false claims to government health programs when it reported its retail price for certain drugs as it “usual and customary” (U & C) price, even though many customers in defendant’s discount drug plans paid much less than said retail price. Under Safeco, 551 U.S. 47, defendant did not act with “reckless disregard” as long as its interpretation of relevant statute or regulation was objectively reasonable and no authoritative guidance warned defendant away from its interpretation. Moreover, under Garbe, 824 F.3d 632, drug prices under discount drug plans that were offered to general public should be reported as U & C, but defendant’s contrary interpretation was in effect only prior to Garbe decision. As such, Ct. of Appeals found that plaintiff could not prevail because defendant’s interpretation of U & C was objectively reasonable because at time of its interpretation, definition of U & C was open to multiple interpretations, including defendant’s interpretation that excluded from definition of U & C prices resulting from discount price-matching. Also, footnote contained in CMS Manual that explained why discount prices in generic drug programs should be treated as U & C prices was not authoritative guidance so as to characterize defendant’s contrary interpretation of U & C as reckless for purposes of imposing liability under False Claims Act. (Dissent filed.)
Federal 7th Circuit Court
Civil Court
False Claims Act