Gibson Dunn | FDA and Health Care

EXPERIENCE & RECENT REPRESENTATIONS

Secured dismissal for Sanofi of a novel False Claims Act lawsuit by qui tam relator Amphastar Pharmaceuticals, Inc. The suit, which related to U.S. federal and state reimbursements for Sanofi’s blockbuster anticoagulant drug Lovenox®, sought damages and fines exceeding $5 billion. After a four-day evidentiary hearing, the Central District of California found that rather than independently developing a generic version of Lovenox®, Amphastar had copied the teachings of Sanofi’s patent. As a result, the court determined that Amphastar had failed to prove that it qualified as an “original source” of the information underlying its allegations, a jurisdictional requirement under the False Claims Act for suits based on publicly disclosed information. On that basis, the suit was dismissed.
Secured appellate victory for Momence Meadows Nursing Center, Inc. when the Seventh Circuit vacated a $9 million jury verdict in a False Claims Act suit, rejected a cross-appeal seeking to impose an additional $19 million in penalty fines, and remanded with instructions to enter judgment for Momence, holding that relators’ claims failed as a matter of law. Relators had alleged that Momence submitted thousands of false claims to Medicare and Medicaid in connection with its Illinois skilled nursing facility and was liable under “worthless services” and “false certification” theories. In reasoning with broad implications for the healthcare industry, the court rejected “worthless services” liability with the explanation that “[i]t is not enough to offer evidence that the defendant provided services that are worth some amount less than the services paid for;” rather, liability cannot be established unless the services are “[t]ruly worthless.”
Obtained summary judgment for the former general counsel and chief compliance officer of Tenet Healthcare in an action brought by the U.S. Department of Justice, alleging personal liability under the False Claims Act for alleged Stark Law violations by a Tenet hospital in Florida. This case generated substantial attention within the health care industry due to its unprecedented attempt to hold in-house counsel personally liable for alleged wrongdoing by a subsidiary entity.
Successfully defended Tenet Healthcare in a number of False Claims Act cases brought by the government and/or qui tam plaintiffs involving issues such as coding and whether physician contracts were in violation of the Stark Law. We have also represented Tenet in antitrust representations on matters before the Federal Trade Commission and Department of Justice, and numerous other U.S. state and federal investigations.

Secured summary judgment of non-infringement for Medtronic, Inc. in the Western District of New York. Plaintiff Medgraph, Inc. alleged that use of Medtronic’s blood glucose monitors and associated software indirectly infringed method claims and directly infringed a system claim in Medgraph’s patents related to remote patient monitoring. Gibson Dunn successfully argued that because multiple independent actors were required to perform the steps of the asserted method claims, there could be no direct infringement – and thus no indirect infringement – under the Federal Circuit’s single-actor rule. The parties submitted several rounds of briefing while the single-actor rule was challenged in the Federal Circuit and the U.S. Supreme Court before being upheld by the Federal Circuit’s 2015 Akamai Tech., Inc. v. Limelight Networks, Inc.decision. Gibson Dunn also convinced the district court that Medtronic’s accused system lacked key elements of the asserted system claim as it would be understood by a person of ordinary skill in the art.
Obtained summary judgment of non-infringement in favor of St. Jude Medical in a suit in the Southern District of Florida accusing St. Jude’s implantable pacemakers and defibrillators of infringing a patent directed to wireless networking and communication protocols. Shortly after St. Jude was sued, Gibson Dunn won a motion to dismiss under the recently enacted Leahy-Smith America Invents Act, as the plaintiff had improperly joined St. Jude with one of its primary competitors. In a separate case then filed by the plaintiff against St. Jude, Gibson Dunn first obtained a favorable claim construction ruling, and then a favorableDaubert ruling, striking the plaintiff’s entire damages expert report, which sought $798 million in damages. We then won summary judgment of non-infringement on all asserted claims.
Secured unanimous U.S. Supreme Court victory for Nautilus, Inc. when the Court struck down the Federal Circuit’s test for patent indefiniteness, holding that the “insolubly ambiguous” standard tolerated too much ambiguity in patent claims. The decision makes it easier to prove a patent claim invalid for indefiniteness under 35 U.S.C. §112, ¶2. The Circuit had found a patent assigned to Biosig and directed to a heart-rate monitor for use during exercise not indefinite. After certiorari was granted, Gibson Dunn was retained as co-counsel to Nautilus and successfully urged rejection of the Federal Circuit’s standard The Supreme Court adopted a more exacting definiteness standard.
Secured dismissal with prejudice of trademark and copyright claims in the Western District of Pennsylvania for CNS Vital Signs, one of the leading sellers of neurocognitive testing software. CNS’ chief rival, Impact Applications, Inc., alleged that CNS’ concussion tests and their marketing infringed Impact’s trademarks, copyrights and state law rights. In response to Gibson Dunn’s motion to dismiss, a U.S. Magistrate Judge recommended that it be granted but that Impact be given leave to replead. Gibson Dunn briefed objections and advocated for dismissal with prejudice, which the court’s chief judge subsequently granted.

Secured a significant victory for Aetna, Inc. in a long-running class action when the District of New Jersey dismissed claims under RICO, the Sherman Act, and various ERISA and state law theories. The court agreed with virtually every argument advanced by Gibson Dunn in dismissing 13 of the 15 causes of action. The case, filed nearly eight years earlier, alleged that Aetna had systematically underpaid benefits to health plan members using a rigged database of provider charges. It grew to a multidistrict class action with claims brought by health care plan members, health care providers, and medical societies against Aetna and its alleged co-conspirators. Gibson Dunn filed multiple rounds of motions to dismiss, completed fact discovery, and completed multiple class certification briefings.
Won complete victory for St. Joseph Health System by securing dismissal of a putative data breach class action seeking $33 million in statutory damages. Asserting claims under California’s Confidentiality of Medical Information Act (CMIA) and the common law, including the right to privacy and negligence, plaintiff alleged that St. Joseph had lost possession of the confidential medical information of more than 33,000 patients at its Santa Rosa hospital. The California Superior Court agreed with Gibson Dunn that plaintiff had not alleged sufficient facts to proceed and dismissed with leave to amend. Plaintiff subsequently agreed to voluntarily dismiss his claims with prejudice.
Won dismissal in the Western District of Washington of a putative class action against Microsoft Corporation and its health plan. Plaintiff alleged that the plan’s exclusion of benefits for mental health treatment in residential treatment centers violated the U.S. Mental Health Parity and Addiction Equity Act of 2008, which required ERISA-governed health plans to provide mental health benefits “in parity” with medical and surgical benefits. The court agreed with Gibson Dunn that neither the statute nor its implementing regulations prohibited the residential treatment exclusion.
Won dismissal for Aetna Life Insurance Company in the Northern District of California of a putative nationwide class action alleging systematic and wrongful denial of claims for mental health care benefits provided at residential treatment facilities. The plaintiffs claimed that their residential treatment should have been covered because of the facilities’ licensing under state law, but the court held that plaintiffs had failed to satisfy the second requirement contained in their plans, that of 24/7 staffing by licensed behavioral health care providers. Because plaintiffs neither alleged satisfaction of this criteria nor could plead their way around it based on their arguments asserted in response to the motion to dismiss, the court held that they had failed to state a claim upon which relief could be granted.
Won denial of class certification for Aetna, Inc. in the Northern District of California, of two putative classes of plaintiffs challenging the insurer’s methodology for making coverage determinations regarding mental health benefits involving residential treatment facilities. The court concluded that any common issues were not central to the validity of plaintiffs’ claims, and therefore failed to satisfy the commonality requirement of Federal Rule of Civil Procedure 23. This victory was of particular importance as it foreclosed the possibility of classwide treatment of medical necessity determinations, considered by Aetna to be inherently individualized, and established needed helpful precedent.

Secured a significant victory for Aetna, Inc. in a long-running class action when the District of New Jersey dismissed claims under RICO, the Sherman Act, and various ERISA and state law theories. The court agreed with virtually every argument advanced by Gibson Dunn in dismissing 13 of the 15 causes of action. The case, filed nearly eight years earlier, alleged that Aetna had systematically underpaid benefits to health plan members using a rigged database of provider charges. It grew to a multidistrict class action with claims brought by health care plan members, health care providers, and medical societies against Aetna and its alleged co-conspirators. Gibson Dunn filed multiple rounds of motions to dismiss, completed fact discovery, and completed multiple class certification briefings.
Won complete victory for St. Joseph Health System by securing dismissal of a putative data breach class action seeking $33 million in statutory damages. Asserting claims under California’s Confidentiality of Medical Information Act (CMIA) and the common law, including the right to privacy and negligence, plaintiff alleged that St. Joseph had lost possession of the confidential medical information of more than 33,000 patients at its Santa Rosa hospital. The California Superior Court agreed with Gibson Dunn that plaintiff had not alleged sufficient facts to proceed and dismissed with leave to amend. Plaintiff subsequently agreed to voluntarily dismiss his claims with prejudice.
Won dismissal in the Western District of Washington of a putative class action against Microsoft Corporation and its health plan. Plaintiff alleged that the plan’s exclusion of benefits for mental health treatment in residential treatment centers violated the U.S. Mental Health Parity and Addiction Equity Act of 2008, which required ERISA-governed health plans to provide mental health benefits “in parity” with medical and surgical benefits. The court agreed with Gibson Dunn that neither the statute nor its implementing regulations prohibited the residential treatment exclusion.
Won dismissal for Aetna Life Insurance Company in the Northern District of California of a putative nationwide class action alleging systematic and wrongful denial of claims for mental health care benefits provided at residential treatment facilities. The plaintiffs claimed that their residential treatment should have been covered because of the facilities’ licensing under state law, but the court held that plaintiffs had failed to satisfy the second requirement contained in their plans, that of 24/7 staffing by licensed behavioral health care providers. Because plaintiffs neither alleged satisfaction of this criteria nor could plead their way around it based on their arguments asserted in response to the motion to dismiss, the court held that they had failed to state a claim upon which relief could be granted.
Won denial of class certification for Aetna, Inc. in the Northern District of California, of two putative classes of plaintiffs challenging the insurer’s methodology for making coverage determinations regarding mental health benefits involving residential treatment facilities. The court concluded that any common issues were not central to the validity of plaintiffs’ claims, and therefore failed to satisfy the commonality requirement of Federal Rule of Civil Procedure 23. This victory was of particular importance as it foreclosed the possibility of classwide treatment of medical necessity determinations, considered by Aetna to be inherently individualized, and established needed helpful precedent.

Defeated a motion for preliminary injunction in the Western District of Texas on behalf of the American College of Allergy, Asthma & Immunology, the Joint Council for Allergy, Asthma & Immunology, and numerous individual defendants. This antitrust lawsuit concerned joint marketing and advocacy campaigns to physicians and health insurance companies undertaken by the defendants regarding proper standards of care in the practice of allergy therapy, which the plaintiffs asserted violated section 1 of the Sherman Act and Texas state law. The injunction would have effectively enjoined any and all communication by the defendants regarding health and safety concerns raised by certain allergy therapy practitioners. The court agreed with Gibson Dunn that the plaintiffs had not established a likelihood of success on the merits on their price-fixing, group boycott, and Texas state law claims.
Acted as antitrust counsel to Tenet Healthcare Corporation in connection with its $131 million acquisition of Emanuel Medical Center. We secured Federal Trade Commission clearance for the transaction, making Tenet the largest provider of hospital services in California’s Central Valley. Gibson Dunn, retained after the FTC issued a Second Request, successfully argued that the acquisition was procompetitive, and the agency closed its 10-month investigation.
Obtained a victory on behalf of the directors of Allergan, Inc. in the Supreme Court of Delaware in derivative lawsuits. The substantively identical lawsuits against Allergan’s directors were filed in both California and Delaware. The court agreed with Gibson Dunn that a previous California dismissal precluded further proceedings in Delaware, holding that the preclusion law of California, not of Delaware, must be applied; and that under established California preclusion law, the dismissal of one shareholder derivative complaint precludes complaints by other shareholders on the same allegations and theories.

Tenet Healthcare in its:
- Formation of a historic $2 billion joint venture resulting in the largest ever acquisition of outpatient surgery centers
- $4.3 billion acquisition of Vanguard Health Systems, an operator of acute care and specialty hospitals. The transaction made Tenet the No. 1 or No. 2 hospital system in 19 key markets
Cardinal Health, Inc. in its:
- $1.5 billion public offering of notes issued, in part, to finance the acquisition of certain assets of Johnson & Johnson’s Cordis business
- $1.2 billion public offering of notes and redemption of outstanding notes
Kindred Healthcare, as special counsel in its $1.8 billion unsolicited acquisition of Gentiva Health Services, a home health care and hospice services firm.
Covidien, in its:
- $1.5 billion refinancing of a senior revolving credit facility
- Issuance of $750 million of senior notes
Northstar Healthcare in its $640 million acquisition and financing of a portfolio of 16 continuing care retirement communities in 11 U.S. states.
St. Jude Medical, in its:
- $375 million acquisition of the remaining 81% ownership of CardioMEMS, a medical device manufacturer
- Acquisition of Endosense SA, a Switzerland-based medical device company, for up to $331 million
- $200 million acquisition of NeuroTherm, a medical device company

Represented a coalition of manufacturers in a medical device reclassification matter and public hearing before the FDA. The coalition prevailed.
Served as FDA regulatory advisor to a major medical device manufacturer during False Claims Act litigation involving allegations of off-label promotion. The case was dismissed.
Conducted an enterprise-wide risk assessment of a Fortune 50 company’s health care communications, marketing and social media practices.
Advised a Fortune 50 company on the premarket pathway and clinical testing strategy for its first mobile health medical device. The FDA cleared the device for marketing.
Counseled companies through appeals of FDA decisions and the dispute resolution process, including issues relating to premarket pathways and product classifications.
Evaluated complaint-handling and adverse event reporting practices, and prepared corporate policies and procedures governing medical device reporting (MDR).
Led 510(k) audits of modifications to medical devices and “letters to file.”
Counseled companies on FDA and FTC regulatory strategies for digital health technologies, including mobile apps and telehealth devices.
Conducted training for new FDA personnel and companies on FDA law and regulation.

FDA and Health Care

LEADERS

Stephen Payne

Overview

EXPERIENCE & RECENT REPRESENTATIONS

RECENT PUBLICATIONS

2018 Mid-Year False Claims Act Update

Webcast: Defending Medical Necessity Enforcement Actions

Acting Associate AG Panuccio Highlights DOJ’s False Claims Act Enforcement Reform Efforts

Federal Circuit Update (May 2018)

FDA Releases Draft Guidance Proposing a Significant Expansion of the Abbreviated 510(k) Pathway for Medical Devices

Federal Circuit Update (March 2018)

2017 Year-End FDA and Health Care Compliance and Enforcement Update – Drugs and Devices

2017 Year-End False Claims Act Update

Elder Abuse Reporting Under Scrutiny

Federal Circuit Update (November 2017)

Federal Circuit Update (September 2017)

2017 Mid-Year FDA and Health Care Compliance and Enforcement Update – Providers

Webcast: 2017 Mid-Year Update: The False Claims Act and Health Care Providers

2017 Mid-Year FDA and Health Care Compliance and Enforcement Update – Drugs and Devices

Cybersecurity & Data Privacy: An Overview for Health Care, Pharmaceutical, and Biotech Companies

Webcast: 2017 Mid-Year Update: The False Claims Act and Drug and Device Manufacturers

Federal Circuit Update (July 2017)

TC Heartland—A Renewed Opportunity to Challenge Venue in Patent Infringement Cases

Federal Circuit Update (March 2017)

2016 Year-End Health Care Compliance and Enforcement Update – Providers

Federal Circuit Update (January 2017)

2016 Year-End FDA and Health Care Compliance and Enforcement Update – Drugs and Devices

2016 Year-End False Claims Act Update

Using and Defending Against Statistical Sampling in False Claims Act Cases

2015/2016 Federal Circuit Year in Review

The Trump Presidency: Selected Initial Observations and Considerations

FCA Liability after Escobar: Challenges and Opportunities for Device Companies

Compliance Perspectives on the Developing Contours of the PSQIA

Federal Circuit Update (September 2016)

Webcast: Hot Topics in Fraud and Abuse Enforcement Involving Health Care Providers

2016 Mid-Year Health Care Compliance and Enforcement Update – Providers

Evaluating U.S. Fraud and Abuse Compliance Controls, Including Corporate Integrity Agreement Provisions, for a Global Anti-Corruption Compliance Program

2016 Mid-Year FDA and Health Care Compliance and Enforcement Update – Drugs and Devices

2016 Mid-Year False Claims Act Update

Federal Circuit Update (March 2016)

2015 Year-End Health Care Compliance and Enforcement Update – Providers

Federal Circuit Update (January 2016)

2015 Year-End FDA and Health Care Compliance and Enforcement Update – Drugs and Devices

2015 Year-End False Claims Act Update

2015 Year-End Update on Corporate Non-Prosecution Agreements (NPAs) and Deferred Prosecution Agreements (DPAs)

Compliance Implications of the Rise of False Claims Act Cases Based on the 60-Day Rule

M&A Report – Depomed Decision Highlights Importance of Careful Monitoring of M&A Non-Disclosure & Use Obligations

Another Successful Challenge to Restrictions on Off-Label Promotion

RICO Suits Challenge Off-Label Drug Marketing

2015 Mid-Year FDA and Health Care Compliance and Enforcement Update – Drugs and Devices

2015 Mid-Year Update on Corporate Non-Prosecution Agreements (NPAs) and Deferred Prosecution Agreements (DPAs)

2015 Mid-Year False Claims Act Update

A Practical Guide to the Use of the Commissioned Public Report as an Effective Crisis-Management Tool

U.S. SEC Adopts Final Rules Implementing “Regulation A+” Offering Exemption for Offerings of up to $50 Million

U.S. Supreme Court Issues Long-Awaited Decision in Omnicare, Resolving Circuit Split Regarding Opinion Statement Liability under Section 11 of Securities Act of 1933

2014 Year-End FDA Compliance and Enforcement Update – Food and Dietary Supplements

Cybersecurity and Data Privacy Outlook and Review: 2015

2014 Year-End Health Care Compliance and Enforcement Update – Providers

2014 Year-End FDA and Health Care Compliance and Enforcement Update – Drugs and Devices

2014 Year-End False Claims Act Update

2014 Year-End Update on Corporate Non-Prosecution Agreements (NPAs) and Deferred Prosecution Agreements (DPAs)

Health regulation makes for strange bedfellows

2014 Mid-Year False Claims Act Update

2014 Mid-Year Update on Corporate Non-Prosecution Agreements (NPAs) and Deferred Prosecution Agreements (DPAs)

To Institute or Not to Institute IPR? That Question Is Not Immediately Reviewable by the Federal Circuit

2013 Year-End Update on Corporate Non-Prosecution Agreements and Deferred Prosecution Agreements (Part 2)

2013 Year-End Update on Corporate Non-Prosecution Agreements and Deferred Prosecution Agreements (Part 1)

U.S. Supreme Court Places the Burden of Proving Infringement on Patent Holders in Declaratory Judgment Actions

2013 Year-End False Claims Act Update

2013 Year-End Update on Corporate Non-Prosecution Agreements (NPAs) and Deferred Prosecution Agreements (DPAs)

Antitrust Scrutiny of Pharmaceutical Product Hopping

2013 Mid-Year False Claims Act Update

2013 Mid-Year Update on Corporate Deferred Prosecution Agreements (DPAs) and Non-Prosecution Agreements (NPAs)

United States Sentencing Commission Adopts Greater Penalties for Fraud Offenses and Fixes Anomaly in Sentences for Tax Crimes

For Skilled Nursing and Nursing Facilities, Compliance Counts

The European Commission Launches a Consultation Process in Relation to the Manufacturing Practices for Medicinal Products

2012 Year-End Health Care Enforcement Update

Off-Label Promotion: Still a Crime?

2012 Year-End False Claims Act Update