Fourth Circuit Finds Violations of FDA Safety Regulations Do Not Support False Claims Act Liability

Summary: Relators bringing False Claims Act (FCA) qui tam suits based on FDA regulatory violations concerning product safety continue to face skepticism from the courts. In U.S. ex rel. Rostholder v. Omnicare, Inc., No. 12-2431, 2014 WL 661351 (4th Cir. Feb. 21, 2014), the Fourth Circuit affirmed the dismissal of relator’s qui tam complaint alleging that the defendant repackager of drugs failed to comply with FDA regulations requiring separate facilities for packaging penicillin and non-penicillin drugs. Relator claimed that this regulatory breach resulted in the submission of false claims for reimbursement in violation of the FCA because the improperly repackaged drugs were not eligible for reimbursement. The court disagreed, holding that the relator failed to state a claim because the Medicare and Medicaid reimbursement statutes did not require compliance with the packaging regulations “or any other FDA safety regulations” as a precondition for reimbursement by the government. In dismissing, the Fourth Circuit cautioned against the FCA’s broad use as a “regulatory-compliance mechanism” in light of FDA’s own “significant remedial powers.”