In U.S. ex rel. Manieri v. Avanir Pharmaceuticals, Inc., 2021 WL 857102 (N.D. Oh. Mar. 8, 2021), the Northern District of Ohio dismissed a relator’s claim that he had been improperly retaliated because he had raised concerns about alleged fraudulent conduct involving speaker fees under the False Claims Act (FCA) and the Federal Anti-Kickback Statute (AKS).  Manieri serves as a helpful reminder of the high standard for pleading a retaliation claim under the FCA.

The case was brought by a former employee of Avanir, Kevin Manieri, who alleged that Avanir violated the FCA and the AKS by paying speaker fees to physicians in exchange for the promise that such speaker-physicians will prescribe a drug manufactured by Avanir.  Before the most recent opinion, Avanir settled with the U.S. government in Sept. 2019, paying more than $108 million in criminal penalties and forfeiture and civil damages stemming from Manieri’s suit and two other lawsuits from former employees. Avanir also agreed to enter into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General and to cooperate in the prosecution of four company executives.  In bringing these cases, the government alleged the speaker events were “social, with no educational value.”

Manieri, who was to receive over $12 million from the earlier settlement with the U.S., continued his case against Avanir alleging he was terminated as retaliation for raising objections to the speaker fees kickback scheme with the company’s leadership. During the course of litigation, Manieri amended his complaint twice, each time, slightly changing the factual details around his conduct in opposition to the kickback scheme and his subsequent termination.  The court took note of these factual inconsistencies noting that Manieri “chang[ed] his story,” in its decision to dismiss the second amended complaint.

The court noted that Manieri failed to meet the elements of retaliatory discharge under the FCA, which requires showing that: (1) his pre-termination conduct was a protected activity under the FCA; (2) the employer had knowledge of the protected activity (i.e., aware that the employee was taking action in furtherance of a qui tam action or expressed concerns); and (3) then showing that the protected activity was the “but for” cause of the termination. The court found that Manieri failed to establish any one of these elements required for a prima facie case of FCA retaliation.

Specifically, the court relied on several facts alleged by Manieri, including the fact that upon becoming aware of the alleged scheme, he did not launch an investigation into the payments, and only non-urgently raised the issue with his supervisor during a regularly scheduled phone call.  The court reasoned further that Manieri did not raise potential illegality of the scheme with upper management, but only expressed general “concerns” that the arrangement was “crossing the line.” This was particularly problematic for Manieri’s retaliation claim as while he declined the allocation of additional speaker funds, he allowed a staffer “to ‘move forward with the existing funds that had been budgeted’ and that he would ‘reconsider’ should he be shown a ‘compelling business reason.’” The court went on to note that there was no evidence he raised concerns to the company’s compliance program or legal department. The court noted that protected conduct under an FCA retaliation claim must do more than “merely urge compliance with regulations” or merely express discomfort, one needs to take action to file a claim or attempt to stop the FCA violation.

While Avanir won dismissal of this retaliation case, highlighting the high standard that would-be whistleblowers must meet in order to prevail on an FCA retaliation claim, as noted above, Avanir settled the overall FCA and AKS claims with over $108 million in penalties. These government efforts reinforce the OIG’s concern with speaker programs where OIG recently issued a special fraud alert regarding speaker fees.  One of OIG’s facts that may be illustrative of potentially suspect speakers programs under the AKS is selecting speakers by sales or marketing personnel or on the basis of ROI. This case noted that Manieri was asked to spend more on a particular physician because “He’s our biggest prescriber and he likes to speak.”  Pharmaceuticals and device manufacturers need to take care and strengthen their speaker programs with the scrutiny the government is placing on speaker fees.

If you have any questions about the contents of this alert, this case, or about FCA retaliation claims, please contact the authors or any member of the McGuireWoods healthcare department.