By Kelly A. Briganti, Editorial Director, G2 Intelligence
It’s been several years but Millenium won an appeal in a lawsuit Ameritox brought against the company arguing Millenium’s point-of-care testing (POCT) cup program violated unfair competition laws and the Anti-kickback statute (AKS) and Stark law. As we reported in G2 Compliance Advisor earlier this year, Ameritox had alleged violations of the Lanham Act and state tort laws claiming Millenium engaged in unfair competition and tortiously interfered with Ameritox’s business relationships by providing POCT cups at no charge to physicians who referred urine samples to Millenium for testing. Ameritox claimed these cups had immunoassay testing strips embedded in the cup and were provided to physicians for free under certain conditions set forth in agreements.
Ameritox won a jury verdict awarding over $14 million to Ameritox but the federal trial court later reduced the punitive damages awarded. Now on appeal, the Eleventh Circuit Court of Appeals has ruled that the federal district court that held the jury trial didn’t have the jurisdiction to hear the claims asserted. Basically, the appeals court said that Ameritox’s allegations really raised state law claims when it argued that the POCT cup agreements violated state unfair competition laws because those practices violated federal Stark and AKS law. Those state law claims should have been dismissed the appeals court said because federal courts shouldn’t decide state law issues—except in certain circumstances which the court found didn’t exist in this case. The appeals court said the federal trial court’s decision “resulted in the needless creation of new law for nine states and permitted parties that were either ignorant of the law or disingenuous to waste scarce judicial resources.”
However, the appeals court also clearly stated it was not making any decision about whether the POCT cups violated the AKS or Stark law: “We also explicitly note that we express no opinion whatsoever as to whether the [POCT cup agreements with physicians] violate Stark, AKS, or some other state law. We also express no view as to whether it would be wise to allow Stark and AKS violations to prove, as a matter of law, elements of state unfair competition law. It certainly does not require any great leap of logic to believe that a company that profits by declining to comply with government regulations enjoys an unfair advantage vis-à-vis its competitors who choose to obey the law. We hold only that exercising supplemental jurisdiction under these … circumstances was an abuse of discretion.” The court also left the door open for the parties to litigate their claims “in a proper forum.”
For more information about this court decision see future issues of National Intelligence Report and G2 Compliance Advisor.