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The Utah Supreme Court has revived a lawsuit that accuses pharmaceutical companies of engaging in a drug pricing scheme that led to overpayments from the state's Medicaid program.
In a unanimous decision on Tuesday, the justices said the state can amend its suit to meet a newly clarified standard for how detailed allegations about a widespread scheme must be.
The Attorney General's Office filed suit in 3rd District Court in May 2008 accusing 17 companies of violations of the Utah False Claims Act and fraudulent misrepresentation. They allegedly provided inflated drug-pricing information to reporting services. The services then published price indices for the medications, including their average wholesale prices, which caused Utah Medicaid to overpay providers, the suit claimed.
The defendants argued that the suit should be thrown out because it did not delineate each individual company's alleged misconduct.
In dismissing the case, 3rd District Judge Tyrone Medley ruled that the state had failed to make its claims "with particularity" and to provide critical elements of the alleged scheme. The judge also ruled that many of the claims brought under the Utah False Claims Act were barred under a one-year statute of limitations.
The Supreme Court ruling said that plaintiffs are not required to give every "instance and detail of every false claim allegedly part of a widespread fraudulent scheme." Instead, it said, they must provide an "adequate basis" for a court to infer that each defendant submitted false claims or made fraudulent misrepresentations.
Although the state failed to provide "reliable indicia" of false claims, it can file an amended lawsuit based on the clarification of the required standard, the court said.
The defendants won a partial victory: The court upheld the dismissal of alleged acts that occurred before April 30, 2006 — a year before the state Legislature extended the statute of limitations for the false claims act.
The high court also affirmed Medley's dismissal of Boehringer Ingelheim Corporation from the suit. The judge ruled that the suit failed to list any drug manufactured by the company and had lumped it with several independent subsidiaries that had not been named as defendants.
Robert Steed, director of the Medicaid fraud control unit at the AG's Office, said the state had settled with the company before the decision came out.
Twitter: @PamelaMansonSLC