This may add a whole new wrinkle to whistleblower lawsuits. A federal appeals court ruled that Cell Therapeutics can pursue a claim for nearly $23 million against a former consultant, theAssociated Press reports. And the 9th U.S. Circuit Court of Appeals ruling creates a new interpretation of law surrounding fraud cases brought on behalf of the government ( the ruling).
The case concerns Trisenox, a leukemia drug developed by Cell Therapeutics, which claims it marketed the med off-label on the advice of a consultant, formerly known as Documedics Acquisition and now called Lash Group, the AP writes. As a result, docs billed Medicare for unapproved uses. After a former employee filed a whistleblower lawsuit, Cell Therapeutics agreed to settle $10.5 million without admitting liability.
Cell Therapeutics believes the mistake was not its fault and sued Lash Group, hoping to recover the $10.5 million plus $12.3 million in attorneys fees and damages, including loss of reputation, the AP continues. There's the twist. As the AP notes, historically, courts have not allowed defendants in whistleblower suits to try to recover fines or settlements by suing others.
But the appeals court noted the biotech never admitted liability. So was wrongdoing committed? The court sent the case back to US District Court in Seattle. "For the first time here, the 9th Circuit has now swept away the rationale for all of that law," Dan Dunne, who represented the biotech, tells the AP. "That's a very important development. With hundreds of billions of dollars of stimulus money being sprinkled across the country, you can expect qui tam lawsuits to be a growth industry."
It's not clear if Lash Group will appeal, the AP writes, adding that Cell Therapeutics sold Trisenox to Cephalon in 2005.