Esoterix Genetic Laboratories sues Qiagen for patent infringement

Esoterix logo

Esoterix Genetic Laboratories has filed a lawsuit against Qiagen, claiming the German company breached a License Agreement signed in 2008 that involves a patent for detecting epidermal growth factor receptor (EGFR) mutations.

Background

In 2008, a British company called DxS Ltd, which was purchased by Qiagen in 2009, signed a License Agreement with Genzyme Corporation.  This agreement allowed DxS to manufacture and sell test kits for detecting EGFR mutations that utilized US Patent No. 7,294,468 (’468) in exchange for royalty payments.

The ’468 patent, a “Method to determine responsiveness of cancer to epidermal growth factor receptor targeting treatments”, was originally assigned to The General Hospital Corporation, which does business as Massachusetts General Hospital (MGH), and the Dana Farber Cancer Institute on November 13, 2007.

But pursuant to an agreement announced on May 2, 2005, Genzyme Corporation, and not MGH and Dana Farber, actually had rights to the ’468 patent.

When LabCorp acquired Genzyme Corporation in December 2010, it created Esoterix to control the assets acquired from Genzyme, which included the rights to the ’468 patent.

The License Agreement DxS signed (and Qiagen assumed), allowed Qiagen to sell products utilizing the ’468 patent for non-commercial research only until the entire EGFR test kit gained approval by the Food and Drug Administration (FDA).

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LabCorp suffers setback in Pap test negligence suit

LabCorp

The Court of Appeals for the 11th Circuit has reversed a district court’s ruling in a Pap test negligence suit filed by a woman who claims she developed metastatic cervical cancer due to multiple misreadings of her Pap tests by LabCorp employees.

In its decision, the appellate court noted its disagreement with the district court’s reliance upon the Pap test litigation guidelines put together by the College of American Pathologists (CAP) and the American Society of Cytopathology (ASC).

Case details

I first wrote about this case way back in February 2012, when it was being heard by the district court.

Very briefly, Christina Adams had five Pap tests between January 2006 and September 2008, all of which were sent to LabCorp for interpretation.  Four of those were reported as normal (January 2006, January 2007, March 2008, September 2008), and one (October 2007) was reported as ASC-US.

Ms. Adams was diagnosed with cervical cancer in August 2009.  It is unclear to me based on what I have read whether it was metastatic when she was diagnosed or metastasized later.

She and her husband filed suit against LabCorp in September 2010, alleging it is liable for the negligence of its employees who “misinterpreted and reported inaccurate test results” that “permitted her cancer to metastasize.”

The plaintiffs hired Dr. Dorothy Rosenthal, a pathologist at Johns Hopkins University, as their expert witness.  Dr. Rosenthal performed a non-blinded review of only the Pap tests in question and nothing else and concluded:

…LabCorp’s cytotechnologists’ review of Ms. Adams’s slides fell short of the applicable standard of care by failing to identify abnormal cells that should have been identified.

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$15.8 million award against LabCorp for Pap smear error cut to $4.4 million

(examiner.com)

(examiner.com)

A district judge in Florida has reduced the damages a jury ordered LabCorp to pay to the family of a woman who died of cervical cancer from $15.8 million to $4.4 million.

I first wrote about this case back in April, not long after the jury rendered its verdict.  Briefly, 33 year old Darian Wisekal began feeling “ill” in 2007.  A workup in 2008 included a Pap smear, which was reportedly read as negative by a LabCorp cytotechnologist.

Mrs. Wisekal was due to have another Pap smear in 2009, but reportedly on the advice of her physician, she postponed it until the following year.  The Pap smear performed in 2010 was also read as negative by a LabCorp cytotechnologist.

Within a week of the second negative Pap smear, she was hospitalized and diagnosed with cervical cancer, to which she succumbed the following November.

Her family sued LabCorp, claiming it was negligent when its cytotechnologist missed “high grade lesions” that were present on her 2008 pap smear.

LabCorp argued in court documents that it was not negligent, that Mrs. Wisekal’s tumor was “not subject to detection by a pap smear”, and that she was at fault for not “obtain[ing] a pap smear in 2009″.

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LabCorp and UnitedHealthcare to introduce BeaconLBS in Florida

BeaconLBS

On October 1, 2014, UnitedHealthcare (UHC) will roll out its Laboratory Benefit Management Program in Florida, which will be administered by Beacon Laboratory Benefit Services, Inc. (BeaconLBS), a wholly-owned subsidiary of LabCorp.

According to the “About” page of the BeaconLBS website:

BeaconLBS® is a laboratory benefit solutions company that enables health plans, physicians and network labs to connect and deliver high-quality, cost-effective care to patients. BeaconLBS® is distinctive in its approach, offering a fully integrated, solutions-based technology that automates real-time clinical and financial decision-making at the point of care and point of ordering.

UHC states the Laboratory Benefit Management Program (LBMP) is for now only a pilot program and will only apply to outpatient laboratory services for fully-insured UHC Commercial members.  Currently there are multiple benefit plans that will be excluded.

We have heard of BeaconLBS before

BeaconLBS has been around since at least late 2011, as both Laboratory Economics and The Dark Report reported on it in September and December of 2011, respectively.

At that time, however, it is my understanding BeaconLBS was mainly intended to be limited to managing preauthorizations of “expensive genetic and molecular assays”, as The Dark Report explained.

Not just for expensive tests anymore

BeaconLBS, at least the way UHC is using it, is now an absolute beast that will require referring physicians to provide BeaconLBS with advance notification if they want to order any of the 82 tests specified on pages 10-13 of UHC’s Administrative Protocol.

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LabCorp wrests upstate NY VA contract away from Quest Diagnostics

LabCorp

A federal judge has sided with LabCorp in its post-award bid protest of an upstate New York Veteran’s Administration (VA) contract that had been awarded to Quest Diagnostics.

I originally wrote about this case on June 11th, right after the judge had ruled on whether two declarations from LabCorp experts were admissible.  The judge filed this final decision under seal a few days later, but it only became available to the public on June 23rd.

Briefly, the VA recently awarded a contract to provide laboratory services at five upstate New York VA Hospitals to Quest Diagnostics.  LabCorp, the incumbent contractor, protested, alleging the contract was improperly awarded, as the VA did not evaluate pricing “rationally”.

QuestAfter considering all 2,365 pages of the administrative record as well as all arguments, the judge stated he “has great difficulty accepting the VA’s method of conducting” the award process.

The judge then went on to illustrate six VA actions that were “arbitrary and capricious and lacking a rational basis”:

1)  The VA mainly evaluated bidders on the number of tests they offered in their proposals, but never told the bidders the number of tests they offered would be evaluated at all.

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Quest Diagnostics awarded upstate New York VA contract; LabCorp protests

LabCorp

The Department of Veterans Affairs recently awarded a contract to provide laboratory services at five upstate New York VA Hospitals to Quest Diagnostics.  LabCorp, the incumbent contractor, protested, alleging the contract was improperly awarded and offered two supporting declarations, one of which the judge has just determined is inadmissible.

Background

Unfortunately, many of the documents, including LabCorp’s original complaint as well as pertinent motions and responses, are sealed from public view, so the only information I have is that which is provided in the most recent order.

The VA evaluated bidders based on six factors and sub-factors.  One of those factors was pricing, which apparently held the lowest priority.  Specifically, bidders were asked to submit pricing for 1,575 different tests based on the VA’s estimated utilization for 2014.

At the end of the process, the contract was awarded to Quest.  LabCorp filed its complaint on April 4, 2014 and claimed, among other things, the VA did not evaluate pricing rationally.  In addition, LabCorp alleged the VA used an unstated criterion that took into account how many of the 1,575 tests each bidder offered, which resulted in an “apples to oranges” comparison in which total price was evaluated against a different number of tests for each bidder.

QuestLabCorp submitted a declaration from an outside economist which contained “extensive mathematical analysis” of the pricing proposals, pointed out the flaws in the VA’s evaluation process and offered ways in which it could have been more “rational”.

LabCorp also submitted a declaration from a witness who stated the VA, in 2013, ordered far fewer tests than the 1,575 in the solicitation.

On May 12, 2014, the government filed a motion to strike the declarations, arguing both contained facts and opinions the VA did not consider during the bid evaluation process.

LabCorp countered that the information contained within the economist’s declaration is based solely on data within the (2,365 page!) administrative record and corrects errors the VA made.  It contends the other declaration contains historical information the VA should have used in its evaluation.

Judge’s order

Relying on precedent, the judge stated, in cases of bid protests, the court should focus on the existing administrative record and nothing new, unless omitting the new material would preclude effective review of the existing record.

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Judge dismisses LabCorp from Virginia whistleblower suit

LabCorp

A federal judge has dismissed with prejudice (at least with respect to LabCorp) the qui tam (whistleblower) suit filed by Chris Riedel of Hunter Laboratories against Quest Diagnostics and LabCorp that alleged the two lab giants committed Medicaid fraud in Virginia.

The suit was originally filed in 2007 but was unsealed and moved to federal court in 2013, which is when I first learned of it and started writing about it.

Basically, Mr. Riedel alleged Quest and LabCorp charged Virginia Medicaid significantly more for laboratory testing than they charged non-government payors, and this was a violation of the Virginia Fraud Against Taxpayers Act (VFATA) and the federal Anti-Kickback Statute.

The judge disagreed with Mr. Riedel’s argument and said labs are not actually required to charge Virginia Medicaid the lowest rate they charge non-government payors; Virginia Medicaid is simply required to pay the lowest rate.  I go into more depth on this issue in this post for those interested.

Furthermore, the judge stated Mr. Riedel failed to provide even a single example of a false claim filed by either laboratory to Virginia Medicaid, which he is required to do by the Federal Rules of Civil Procedure.

The judge then dismissed the suit, but gave Mr. Riedel an opportunity to amend his complaint and try again, which he did in December 2013.

In that amended complaint, Mr. Riedel altered his argument slightly but maintained the original allegations—that the labs charged Virginia Medicaid more than they charged other payors, and therefore violated state and federal law.

LabCorp filed a motion to dismiss the amended complaint, and the judge granted the motion, stating Mr. Riedel again failed to adequately plead his case and, even after being given explicit instructions to do so, failed “to identify at least a single false claim”.

The judge further ruled that given the fact Mr. Riedel had two opportunities to make his case (original complaint and amended complaint), and failed to do so, giving him another chance would be futile and would be unfair to LabCorp.

The case was then dismissed with prejudice, meaning it cannot be refiled, but can be appealed.  It remains to be seen if Mr. Riedel will appeal.

At the very end of the judge’s order it says, “This Order CLOSES the case” (emphasis in original), and I do not know for sure if this means the order also applies to Quest, or if the order only applies to LabCorp and Quest is still on the hook.

As I stated in my previous post, Quest entered into a provisional settlement with Mr. Riedel in late 2013, but that settlement is still under a stay, so it will be interesting to see what happens there.

The judge’s order is here.

LabCorp hit with class action lawsuit for labor law violations

LabCorp

A phlebotomist in California has filed a proposed class action lawsuit against LabCorp, a wholly-owned subsidiary of LabCorp called LabWest, California Laboratory Sciences and West Pacific Medical Laboratory, alleging multiple violations of California state labor laws.

The plaintiff claims that since at least April of 2010, the defendants:

  1. Had a policy that required employees to work more than 8 hours a day and more than 40 hours a week without paying overtime
  2. Had a policy of not paying employees for all hours worked
  3. Had a policy of requiring employees to work more than 5 hours without a meal break and then not paying the employees for the time spent working during the missed meal break
  4. Had a policy of not allowing employees their required intra-shift rest periods and then not paying the employees for the time spent working during the missed rest periods
  5. Failed to reimburse employees for incurred expenses, including mileage and office supplies
  6. Failed to maintain accurate records regarding employees’ earned wages and work periods
  7. Failed to properly compensate employees who were discharged, laid off, or resigned

The complaint goes on to allege the defendants “intentionally and improperly changed, adjusted and/or modified” employee time sheets to avoid having to pay overtime and other benefits.

As a result of these transgressions, the complaint argues the defendants:

…have under reported to state authorities wages earned by non- exempt, hourly employees and, therefore, have underpaid state taxes, employer matching funds, unemployment premiums and Worker’s Compensation premiums. The aforesaid conduct is criminal in nature and subjects the Defendants, and each of them, to sanctions, fines and imprisonment…

In addition, these policies allowed the defendants to “unfairly compete with other comparable facilities in the state of California” by being able to “charge lower prices for its goods and services than the prices charged by other comparable companies doing business in the state of California.”

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LabCorp ordered to pay family $15.8 million for pap smear error

LabCorp

A Florida jury last week ordered LabCorp to pay the family of a woman who died of cervical cancer $15.8 million after it found the lab giant misread her pap smear and is 75% responsible for her death.

Unfortunately, not all of the details are available at this time, since the case has not reached the appellate level (yet), where detailed information is more easily obtained by the public.

According to a news report from January 2014, Darian Wisekal began feeling sick in 2007, when she was 33 years old.  What her signs and symptoms were at the time is not clear.

Part of her workup in 2008 included a pap smear, which was reported as negative by a LabCorp cytotechnologist.

She went in for a repeat pap smear the following year, but upon the advice of her physician, decided to postpone the pap until 2010.  Apparently she had what sounds like a gynecologic infection, and the physician was worried the results of the pap smear would be affected by the process.

Mrs. Wisekal had her repeat pap smear in 2010, which was also sent to LabCorp, and was again reported as negative.

She continued to feel ill and was hospitalized within a week of the second pap smear, where she was diagnosed with cervical cancer.  Despite surgery and chemotherapy, she unfortunately died in November 2011.

Her family sued LabCorp, claiming it was negligent when its cytotechnologist missed “high grade lesions” that were present on her 2008 pap smear.

The January 2014 news report states LabCorp argued in court documents that it was not negligent, that Mrs. Wisekal’s tumor was “not subject to detection by a pap smear”, and that she was at fault for not “obtain[ing] a pap smear in 2009″.

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Husband may get another chance to prove LabCorp pap smear negligence

(examiner.com)

(examiner.com)

Timothy Lavelle, the husband of a woman who died of cervical cancer in 2008, may get another chance to prove a LabCorp cytotechnologist was negligent in missing abnormal cells on his wife’s 2006 pap smear, according to the Georgia Court of Appeals.

The case was before the appellate court because the trial court granted (in part) the motions LabCorp filed during the discovery period to prevent three expert witnesses from testifying and for summary judgement (ending the case in LabCorp’s favor).

In his appeal, Mr. Lavelle took issue with three rulings from the trial court:

  1. The denial of a motion to compel further deposition of a witness;
  2. The grant of a motion excluding the testimony of an expert witness; and
  3. The grant of partial summary judgment in favor of LabCorp on the issue of breach of the standard of care.

Witness deposition

In 2011, Lavelle deposed the LabCorp cytotechnologist alleged to have been negligent with his wife’s pap smear.  Of note, in 2006, the cytotech reviewed 140 slides per day that were initially screened by a computer that would flag 22 fields for the cytotech to review.

During the deposition, Lavelle showed the cytotech photographs and quizzed her about whether the cells were atypical or not.  The LabCorp attorney objected and told the cytotech to not answer the questions.

LabCorp objected because in real life the cytotech did not screen slides using photomicrographs, which make the cells appear different when viewed through a microscope. In addition, LabCorp argued there was no way to prove the cells she was being shown were the same ones the computer flagged back in 2006, and that the cytotech now had hindsight bias.

Lavelle asked the court to compel the cytotech to answer his questions, but for the reasons mentioned above, the court ruled no further deposition would be permitted.

The appellate court upheld the trial court’s ruling on this matter, citing the cytotech’s hindsight bias as well as the “significant differences between the witness’s original review of the slide and the review which Lavelle sought to elicit on her deposition.”

Expert Witness

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