A Florida federal jury returned a verdict of almost $15 million in a suit brought by Ameritox Ltd. against Millennium Laboratories Inc. over alleged false advertising and unfair competition in the drug-testing market. The jury found Millennium giving physicians drug-test cups violates anti-kickback and other laws. The jury awarded Ameritox more than $2.75 million for actual damages and $12 million for punitive damages. The court issued a follow-up civil judgment in accordance with that finding. The court further rejected all of Millennium’s counterclaims against Ameritox in the suit.

Scott Walton, chief executive of Ameritox, said that Millennium should stop providing doctors with point-of-care cups. He said in a statement:

All Ameritox wanted was a level playing field, and we’re pleased that the jury rejected Millennium’s practice of providing free point-of-care test cups to physicians. The ruling underscores our belief that the significant health care challenges facing our country require steadfast adherence to the highest compliance standards, ethical business practices and quality of service.

The jury verdict in favor of Ameritox is the most recent development in the action, coming about two months after U.S. District Judge Susan C. Bucklew granted summary judgment to Millennium on Ameritox’s claim that providing physicians with urine cups containing drug-testing strips amounted to a violation of the Lanham Act. Baltimore-based Ameritox sued its San Diego-based rival in early April 2011, accusing Millennium of, among other things, improperly inducing referrals by giving doctors free supplies to secure business. Millennium responded with allegations that Ameritox doled out kickbacks to physicians and interfered with its business relationships.

According to Ameritox, Millennium gave its customers at least 750,000 free point-of-care test cups in 2013 alone – totaling millions of dollars in giveaways. Millennium provided one Florida clinic with more than 8,000 free test cups, according to the Plaintiff. The jury on Monday concluded that the provision of free point-of-care cups under a so-called cup agreement, in exchange for business, violates federal Stark Law and anti-kickback laws. Michael R. Osterhoff of Perkins Coie LLP, a lawyer for Ameritox, told Law360:

The jury repudiated Millennium’s practice of inducing business by providing doctors with free supplies. The jury rightly found that Millennium violated both the Stark and anti-kickback laws. This verdict will be instrumental in leveling the playing field.

Millennium said the decision doesn’t affect the majority of its customers, who either buy cups and seek reimbursement or choose not to perform point-of-care testing at all. Millennium said it has voluntarily agreed to suspend the program nationwide and will take immediate action to ensure full compliance while it appeals the jury’s decision. Millennium said: “We hope the decision on appeal will be favorable, and we will continue to vigorously defend ourselves.”

Ameritox is represented by Patrick M. Collins, Michael R. Osterhoff, Adam L. Marchuk, Heather A. Boice and Mark T. Smith who are with Perkins Coie, and Margaret D. Mathews and Richard H. Martin, lawyers with the firm Akerman. They did a very good job in this matter. The case was tried in the U.S. District Court for the Middle District of Florida, Tampa Division.

Source: Law360.com

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