The Supreme Court of Arkansas has unanimously reversed a $1.19 billion award that had been granted under the state's False Claims Act, effectively narrowing the scope of the fraud statute.
On March 20, in the case of Ortho-McNeil-Janssen Pharmaceuticals, Inc. v. State of Arkansas, the court reversed the ruling on a Medicaid fraud claim because the cause of action was not based on a statement made in the context of an actual claim for payments. The complaint alleged violations under the state's False Claim Act for the mislabeling of a prescription medication.
The decision turned on the court's interpretation of Ark. Code Ann. ยง 20-77-902, and the justices concluded that in order for a statement to give rise to a false claims cause of action, the statement must be made in support of a claim for payment, not merely concern a product that is made the subject of a reimbursement claim such as a prescription medication.
This decision parallels the Supreme Court of Louisiana's decision in Caldwell ex rel State of Louisiana v. Janssen Pharmaceutical, Inc., where the court rejected the theory of liability that virtually any public statement about any product that might be subject to Medicaid reimbursement could give rise to a claim under the state's False Claims Act.
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