DEPARTMENT OF LABOR’S WHITE COLLAR OVERTIME RULES TO TAKE EFFECT – ARE YOU PREPARED?

Final rules that dramatically expand the class of employees entitled to overtime could take effect by spring of 2016. 

The Department of Labor (DOL) sent its final rule revising the white collar overtime exemption regulations of the federal Fair Labor Standards Act (FLSA) to the White House Office of Management and Budget (OMB) on Monday March, 14, 2016.

The proposed rule was issued in July of 2015 and would dramatically expand the class of employees entitled to overtime pay. It proposes to:

  • Increase the salary level governing the FLSA’s white collar exemptions from $455 per week ($23,660 per year) to approximately $970 per week (or $50,440 per year) and implement an automatic adjustment to the salary test going forward to ensure that salary levels continue to provide an effective and useful test for the exemption;
  • Raise the minimum salary test for the highly compensated exemption from $100,000 per year to $122,148 per year and index the level to the 90th percentile of weekly full-time employee earnings so that the level stays appropriate and relevant over time; and
  • Seek additional input as to whether the DOL should alter the duties requirements for various exemptions.

OMB review is the last step in the regulatory process before revised regulations take effect and are published in the Federal Register. The OMB is allotted 90 days to review proposed regulations, but it usually reviews and publishes proposed regulations in far less time. Accordingly, a final rule revamping the white collar overtime exemption regulations could be published as early as this spring.

IMPLICATIONS FOR EMPLOYERS
Larger and more sophisticated employers have been well aware that these changes are coming. Given the likely rollout date, it is time to start planning for them. Large and small employers can and should plan ahead to ensure they will be in compliance with the proposed salary requirements. Although potential changes to the duties test remain unclear, employers may also benefit from considering the nature and sophistication of their workforce and revisiting their staffing needs. As for employees, employees should take a hard look at their pay stubs and consider their job duties and consult a qualified attorney if they feel they are being improperly compensated.

CONTACTS
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact Justin Brooks at jbrooks@gbblegal.com.

GBB assists employers in navigating the complexities of employment law and assists employees in adjudicating their rights.

 

 

President Obama’s Supreme Court nominee has a history of siding with health agencies

The Food and Drug Administration and other public health agencies will likely be pleased by President Barack Obama’s nomination Wednesday of Merrick Garland to the Supreme Court.

That’s because Garland, currently chief judge on the US Court of Appeals in Washington, D.C., is known for backing federal agencies like FDA and the Environmental Protection Agency against legal challenges on health-related cases.

Read the full article on STATnews.com.

FDA AND AMARIN REACH SETTLEMENT ON OFF-LABEL STATEMENTS IMPLICATING FIRST AMENDMENT ISSUES

Settling claims that drug maker Amarin promoted its fish-oil pills for unapproved uses, the FDA stresses the settlement does not signify a position on the First Amendment and commercial speech. It refused to acknowledge that the First Amendment allows a pharmaceutical manufacturer to promote off-label if the promotion is truthful. 

OVERVIEW
On March 8, 2016, the United States District Court for the Southern District of New York approved a settlement between the Food and Drug Administration (“FDA”) and drug company Amarin Pharma, Inc. in connection with Amarin Pharma, Inc., et al. v. U.S. Food & Drug Admin., et al. The case focused on a legal dispute concerning Amarin’s promotion of off-label claims for its fish oil product Vascepa®.[1]

In a prior decision, the district court had applied a 2012 decision by the U.S. Court of Appeals for the Second Circuit in the case of United States v. Caronia finding that pharmaceutical and medical device companies have a constitutionally protected right to provide truthful and non-misleading information regarding off-label uses of their products.[2] The previous Amarin decision, in a limited preliminary injunction context, ruled against the FDA and upheld the rights of Amarin to make truthful and non-misleading statements regarding off-label uses of its FDA-approved drug, including the right to make those promotional statements to healthcare providers through sales representatives. The court also held that truthful and non-misleading promotional statements do not alone form the basis of a prosecution for misbranding in violation of the Food, Drug and Cosmetics Act.

TERMS OF THE AMARIN SETTLEMENT AGREEMENT
Under the settlement agreement, the FDA agreed to be bound by the District Court’s preliminary injunction decision that Amarin may engage in truthful, non-misleading speech promoting off-label use of Vascepa® to treat patients with persistently high triglycerides. The FDA also agreed that the materials that provided a basis for the court’s preliminary decision, including disclosures and scientific information (as modified by court order) were truthful and non-misleading.

The settlement makes Amarin responsible for assuring that future communications to doctors regarding off-label use of Vascepa® are truthful and not misleading. The settlement also allows Amarin, at its discretion, to provide up to two communications regarding the off-label use of Vascepa® per year to FDA for comment and identification of objections. This may assist but cannot reasonably be said to guarantee that all of Amarin’s future off-label communications will be truthful and not misleading. The settlement agreement imposes time requirements on FDA to provide feedback to Amarin on its off-label communications and a set period for Amarin to respond to this feedback. It also allows the parties to submit a motion to the District Court to hear disputes as to whether particular off-label statements are misleading. The court review process will remain in place until 2020. The FDA insists the case is narrow and specific, involving a single drug and single company. In an agency statement, the FDA expressly stated “[t]his settlement is specific to this particular case and situation,” and “does not signify a position on the First Amendment and commercial speech.”[3]

IMPLICATIONS AND KEY TAKEAWAYS
Putting aside the merits of whether truthful off-label promotion should be permissible and enjoy First Amendment protection, the Amarin case and its predecessor Caronia inject substantial uncertainty into False Claims Act jurisprudence and liability for criminal misbranding. Since 2004, there have been at least 31 settlements by pharmaceutical companies to resolve allegations of off-label promotion of drugs. Many of these settlements involved significant civil damages under the False Claims Act and often involved guilty pleas to criminal misbranding in violation of the Federal Food, Drug and Cosmetic Act. Individual settlements have run into hundreds of millions, and in some cases, billions of dollars. Billion dollar settlements post-date Caronia.[4] In what was the largest pharmaceutical settlement in U.S. history at the time, Pfizer reached a $2.3 billion settlement with the Department of Justice to resolve criminal charges and civil claims under the False Claims Act for the alleged off-label promotion of Bextra, Geodon, Zyvox, and Lyrica. The Second Circuit is the only appellate court to currently hold that off-label promotion of drugs enjoys constitutional protection, and lower courts in other jurisdictions have sharply cabined Caronia, in some cases outright rejecting the decision and its reasoning regarding free speech.[5] Moreover, all courts to confront the issue have agreed that false or misleading off-label promotion does not enjoy constitutional protection, a position the Caronia court itself reiterated.

Pharmaceutical companies should view the Amarin decision and settlement with caution and should not view Caronia or its successors as providing free license to promote off-label. Companies face the risk that a court in another jurisdiction will reject the rationale of the Caronia majority, perhaps adopting the rationale set forth in the Caronia dissent, authored by Judge Debra Ann Livingston, which would have upheld bans on truthful off-label promotion as constitutionally viable. Along the lines of Judge Livingston’s dissent, the United States government could be expected – in another case – to argue that an outright prohibition on off-label promotion is the only reasonable means of achieving FDA goals because off-label promotion, by its nature, so inherently strays into being misleading that the concept of truthful off-label promotion is not possible to apply. Drug and device manufacturers also run the risk that promotion they view as being truthful could be found by a fact-finder to be false or misleading on the grounds that it overstates product efficacy, minimizes safety concerns, lacks fair balance, or for a myriad of other reasons. Nevertheless, Caronia and Amarin do provide one avenue for pharmaceutical companies accused of off-label promotion to avoid liability if they can convince a court to accept Caronia and Amarin‘s rationale and establish that the promotion at issue was truthful.

CONTACTS

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact Justin Brooks at jbrooks@gbblegal.com.

GBB’s experienced team of attorneys assist qui tam relators and the United States government in prosecuting fraud and provide compliance counseling to companies wishing to avoid legal liability under the False Claims Act and other federal and state statutes.

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[1] Stipulation and Order of Settlement, Amarin Pharma, Inc., et al. v. U.S. Food & Drug Admin., et al., No. 15 Civ. 3588 (S.D.N.Y. Mar. 8, 2016).

[2] Amarin Pharma, Inc., et al. v. U.S. Food & Drug Admin., et al., 119 F. Supp. 3d 196 (S.D.N.Y., 2015) (applying U.S. v. Caronia, No. 09-5006 (2d Cir. Dec. 3, 2012).

[3] See https://www.washingtonpost.com/national/health-science/fda-settles-with-drug-company-on-promotion-of-fish-oil-pill-for-unapproved-uses/2016/03/08/0403a5ea-e57d-11e5-bc08-3e03a5b41910_story.html?postshare=7361457531156927&tid=ss_mail

[4] For example, in November 2013, Johnson & Johnson reached a $1.391 billion settlement to resolve false claims resulting from its off-label promotion of Risperdal, Invega, and Natrecor. Companies also entered into settlements in the hundreds of millions of dollars after the Second Circuit decided Caronia. In July 2013, Wyeth agreed to pay $257.4 million to resolve claims involving off-label promotion of the immunosuprressant drug Rapamune. In February 2014, Endo Pharmaceuticals agreed to pay $171.9 million to resolve civil liability under the False Claims Act for its off-label promotion of Lidoderm.

[5] E.g. Hawkins v. Medtronic, Inc., No. 13-00499, 62 F. Supp. 3d 1144 (E.D. Cal. Feb. 15, 2016); Beavers-Gabriel v. Medtronic, Inc., 15 F. Supp. 3d 1021 (D. Haw. 2014); McDonald-Lerner v. Neurocare Assocs., P.A., No. 373859-V, 2012 Md. Cir. Ct. (Md. Cir. Ct. Aug. 29, 2013).

 

GBB files amicus on behalf of law professors in FCA case before Supreme Court

Congress intended the False Claims Act to apply broadly and reach all fraudulent attempts to cause the United States Government to pay out money. In Universal Health Services, Inc. v. United States ex rel. Escobar, a key case pending before the United States Supreme Court, the Petitioner has urged a counter-textual interpretation that would vitiate the False Claims Act and compromise Congress’ intent.  On behalf of a distinguished group of law professors, Guttman, Buschner & Brooks PLLC has filed an amicus brief in the matter.

The amicus brief proposes a comprehensive model, the application of which will ensure the Act continues to effectuate Congress’ intent.  As the brief explains, the starting point for determining whether conduct is fraudulent and should be captured by the Act begins by looking to principles of common law fraud. However, Congress expanded upon the liability available under the False Claims Act, specifically by eliminating traditional reliance and scienter requirements of common law. Application of the Act’s statutory provisions expanding liability, coupled with use of limiting principles of materiality – routinely applied to other fraud statutes to ensure minor violations are not cognizable – balances concerns of the Act’s over-expansion with its stated purpose to broadly reach all fraudulent or deceitful acts that cause the Government to pay out money.

The full amicus brief is available here: Universal Health Services Inc v US and Massachusetts, ex rel Escobar and Correa – Brief of Law Professors as Amici.

Doctors promoting treatments on social media routinely fail to disclose ties to drug makers

by Sheila Kaplan (Statnews.com)

Washington – Physicians across the United States routinely offer medical advice on social media — but often fail to mention that they have accepted tens and sometimes hundreds of thousands of dollars from the companies that make the prescription drugs they tout.

A STAT examination of hundreds of social media accounts shows that health care professionals virtually never note their conflicts of interest, some of them significant, when promoting drugs or medical devices on sites such as Facebook, Instagram, and Twitter. The practice cuts across all specialties.

. . .

But Reuben Guttman, an attorney in Washington who specializes in food and drug law, said the system leaves patients vulnerable to misinformation.

“Doctors who accept these dollars and then turn around and promote on social media corrupt the market for honest medical information,” Guttman said. “And drug companies that pay these doctors are similarly poisoning the market for honest information.”

Read the full article at statnews.com.