Court Holds Relator’s “Unclean Hands” is Irrelevant to Defendant’s Liability for False Claims Act Violations

 

In United States ex rel. Gale v. Omnicare, Inc., 2013 U.S. Dist. LEXIS 102658 (N.D. Ohio July 23, 2013), the Northern District of Ohio rejected a qui tam defendant’s “unclean hands” defense on the ground that the defendant lacked standing to assert the relator’s possible wrongdoing as a shield to its own liability.

The relator alleged that Omnicare violated the Anti-Kickback Statute and thus the False Claims Act by discounting drug prices to nursing homes for Medicare Part A patients whose care was covered at a capitated daily rate in exchange for the nursing homes agreeing to order from Omnicare drugs paid for by other government health programs. The relator moved for summary judgment on some of his claims. Citing 31 U.S.C. § 3730(d)(3), which permits a court to reduce the relator’s share if the relator planned or initiated the FCA violation, Omnicare asserted the relator’s alleged involvement in the scheme as an affirmative defense to liability.

Judge Gwin held that Omnicare’s argument had no merit because the FCA’s relator share provisions do not directly affect the defendant’s liability. 2013 U.S. Dist. LEXIS 102658, at *32. Instead, the amount of the relator’s share is solely “a matter between [the relator] and the United States” that “[does] not concern Omnicare.” Id. Accordingly, Omnicare had no standing to assert that the relator’s acts shielded it from FCA liability. Id.