No Rehearing in Case Against Consulting Co.

(CN) - The 9th Circuit won't reconsider its decision to reinstate a lawsuit against a consulting company accused of falsely assuring a small drug company that Medicare would reimburse it for "off-label" uses of a cancer drug.

In November last year, a three-judge panel agreed that Documedics Acquisition Co., now called Lash Group, wrongly advised Cell Therapeutics that it would be reimbursed by Medicare when its leukemia drug, Trisonex, was used for "off label" treatments of other kinds of cancers.

The drug company said the bad advice cost it $12.3 million, plus another $10.5 million it had to pay to settle a false claims case with the government. Cell Therapeutics was also forced to settle with whistleblower James Marchese, who filed the original false claims action.

The San Francisco-based panel ruled that the False Claims Act, which protects the government against fraudulent Medicare claims, does not bar actions against a third party - in this case, Lash.

The appeals court also rejected the district court's finding that the settlement also barred Cell Therapeutics from suing Lash, because it implied liability.

"Not only did the parties to the qui tam suit not foreclose claims vis-à-vis Lash, but giving the consent judgment the imprimatur of a liability finding would upend the settlement process," Judge Margaret McKeown wrote.

The district court "read between the lines to conclude that the certainties about [Cell Therapeutic's] liability 'outweigh[ed] the uncertainties,'" McKeown wrote. "This invasion into the settlement milieu is unprecedented."

The panel remanded Cell Therapeutic's $12.3 million claim for damages, instructing the district court to decide if the claims against the consulting company are independent.

On Wednesday, the 9th Circuit rejected a petition to rehear the case before the full court.

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