Court finds veracity of study claiming effectiveness of Prevagen is an issue for trial

A single study of effectiveness is not sufficient evidence to preclude claims that a product does not produce the results claimed in marketing and on the label.

A magistrate judge found that a study purporting to show the effectiveness of a dietary supplement intended to boost memory may be relevant to a manufacturer’s defense that the product’s marketing is false or misleading, but it does not automatically preclude such claims. The judge noted that the study was extrinsic evidence and its reliability was not an issue to be taken up in a motion to dismiss and recommended that the district court deny the motions (Engerat v. Quincy Bioscience, LLC, October 8, 2019, Hightower, S.).

Product claims. Quincy Bioscience, LLC (Quincy) manufactures, markets, sells and distributes Prevagen, which is a dietary supplement made with the protein apoequorin. Prevagen advertising and labeling claim that the product supports a “sharper mind,” “clearer thinking,” and “healthy brain function” and will “improve memory within 90 days.” Three consumers brought a class action lawsuit against Quincy alleging claims under the Texas Deceptive Trade Practices Act, breach of express and implied warranties, and a violation of the Magnuson-Moss Warranty Act. The consumers allege that the advertisements regarding Prevagen were false and misleading and designed to dupe customers into purchasing a product that has no effect on the brain.

Apoequorin. According to the complaint, Prevagen’s only active ingredient, apoequorin, is a protein that when digested is broken down into amino acid constituent parts. As a result, Prevagen never reaches the bloodstream as apoequorin and the broken down amino acids are no different than any other protein such as those found in a regular diet, which do not improve memory or brain function. Further, if Prevagen did somehow enter the bloodstream as apoequorin, it cannot pass through the blood-brain barrier and therefore can have no effect on brain function. The consumers contend that there has never been an independent, randomized, controlled clinical trial subject to a peer review process that supports the products claims and that there is no scientific basis for the representations made about the product.

Extrinsic evidence. Quincy claims that a clinical drug trial was done on Prevagen that is made available on the product’s website, and on which the advertising claims are based. Based on this study, Quincy argued that all of the claims asserted should fail because the study demonstrates that the marketing statements were truthful and fully substantiated. The judge held that in a motion to dismiss, it can only look to the facts set forth in the complaint, the documents attached to the complaint, and matters of which judicial notice may be taken. Here, the consumers may have mentioned the study in their original complaint, however they never mentioned it in or attached it to their First Amended Complaint which supersedes the original complaint.

Additionally, the public records that a court generally may take judicial notice of, include things like government-provided records. A commercial website may be available to the public, but it is not a public record. Finally, the reliability of the study is a disputed issue of fact in the case and therefore, not appropriate for determination in a motion to dismiss. Therefore, the judge found that the study was extrinsic evidence that could not be considered and the argument that the claims should be dismissed based on the study were meritless.

Failure to plead. Quincy made the alternative argument that an element of each of the claims requires the consumers to show that the product did not comply with a promise made in the marketing or labeling or that the marketing or labeling were false or misleading. Quincy argued that the consumers failed to plead these claims because they could not show that the labels were false or misleading or the product didn’t live up to the claims made on the label, in light of the study. The judge noted again that it could not rely on extrinsic evidence when considering a motion to dismiss and the reliability of the study is a fact issue inappropriate at this stage. It therefore held that the motions to dismiss based on this theory should be denied.

Everything is Big in Texas, Including Fraud Efforts. Maybe Too Big, Say Doctors

CORRECTION: This post was edited on August 29, 2012 to reflect that Carousel Pediatrics is not a hospital but a large pediatric medical practice.

With the success of recent Texas Medicaid fraud efforts, the state’s Health and Human Services Commission has been applauded as a model for other states seeking to reduce costs in their own Medicaid programs. Recently, the Commission’s Office of Inspector General (OIG) has greatly increased the number of cases under investigation and subsequently, the potential amount of money recovered.

Part of the OIG’s success has come as a result of the employment of a tactic called a payment hold, which allows the agency to deny reimbursement to the provider in question under any federal Department of Health and Human Services (HHS) program, including Medicare and Medicaid, while the OIG completes its investigation of the matter. This strategy has many health care providers crying foul, claiming that payment holds punish providers without affording them due process.

Since 2011, the OIG has implemented payment holds for about 100 health care providers, effectively halting the financing for many of them. Under federal law, a state must cease Medicaid payments if a “credible allegation of fraud” (CAF) has been verified by the state’s Medicaid agency. Texas law supports the federal regulation by permitting a stoppage in payments “on receipt of reliable evidence that the circumstances giving rise to the hold on payment involve fraud or willful misrepresentation under the state Medicaid program…” CAF holds can now be issued on a “preponderance of the evidence” as opposed to the higher standard of “beyond a reasonable doubt.”

Providers contend that as little as an anonymous call to the agency’s fraud hotline can be interpreted by the OIG as a CAF, and can result in payments being suspended immediately without a hearing. These providers express concerns that this practice cripples their businesses and affects their ability to provide services to Medicaid patients, causing a lack of access to health care for the poor residents and children covered under the program.

A prominent Texas pediatric medical practice, Carousel Pediatrics, recently came under suspicion for billing errors and had payments cut off by OIG while it investigated. Panic ensued as the hospital could not afford to treat its Medicaid patients, which make up 90 percent of the 40,000 children it treats. It took intervention by Texas HMOs and Medicaid managed care plans, which defended the hospital, for payments to be reinstated.

One doctor stated that a hold that has been placed on his practice for months while the OIG completes its investigation “is like an atom bomb being dropped on my business. I could lose everything.” He claims that he has been forced to cut his employees’ wages as a result of the payment freeze and that layoffs are a real possibility.

The OIG emphasizes the importance of freezing payments at the first indicator of fraud or abuse. “When we’re going after them after the fact, they’ve already spent our money,” said one agency official.

The agency maintains that it utilizes hired physicians to assist it with thorough reviews before issuing payment holds, and that collected data dictates which providers are targeted by the investigations. The agency claims this strategy is essential to saving the program costs of up to $50 million over time, as they had been pressured to do by state lawmakers.

OIG officials conceded that providers may not be able to get administrative hearings for months after a payment hold is issued, but stated that providers may access an informal review of their case at any time.

State Governors Elect Not to Implement Parts of PPACA

After the United States Supreme Court’s ruling last week that states cannot be forced to expand their Medicaid programs to receive federal funding, states are given the tough decision to make whether they will indeed expand their Medicaid rolls as suggested by the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148).

Thus far, five states have made it clear that as a result of last week’s decision, they do not plan to expand their Medicaid programs: Florida, South Carolina, Louisiana, Mississippi and Wisconsin.

All of those five states, which have Republican governors, participated in the lawsuit against the bill, which was the subject of last week’s ruling. In addition, six states have publicly raised doubt as to whether they will participate: Iowa, Missouri, Nebraska, Nevada, New Jersey and Texas. Currently, only ten states have affirmatively pledged to participate in Medicaid expansion, which leaves nearly two-thirds of the states in question.

Wisconsin Governor, Scott Walker issued a statement on the same day the Supreme Court released their decision on PPACA, indicating, “Wisconsin will not take any action to implement ObamaCare.” (Obama Care is a casual term commonly used to refer to PPACA and its provisions.) Walker emphasized his concerns that the bill would cost his state’s tax payers to “pay more money for less healthcare” and that both quality of and access to care would be reduced under the bill. He expressed his hope that this year’s elections would ultimately result in the repeal of the bill at a federal level.

Governor Bobby Jindall of Louisiana announced that his state will not be expanding its Medicaid program in response to PPACA; nor will it be setting up private health insurance exchanges called for by the bill. Under the provisions of PPACA, if Louisiana or any other state fails to establish a fully operable exchange by January 1, 2014, the federal government will implement an exchange for that state. Jindall agreed that reform of the health care system is necessary, but that an “expensive, unsustainable entitlement program is not the solution to our problems.”

In Florida, Governor Rick Scott similarly announced that his state will neither set up exchanges nor expand its Medicaid rolls to comply with PPACA. Approximately 20 percent of Florida residents are uninsured, however, Scott pointed out that it would cost Florida taxpayers $1.9 billion to add those residents to the Medicaid program. He raised concern over the rapidly increasing Medicaid program in the state, which he said is growing “three and a half times as fast as Florida’s general revenue.”

South Carolina Governor Nikki Haley declared that her state will opt out of expanding its Medicaid program and that block grants, which offer flexibility to states as to how they will use the money, offer the best solution to state-specific problems. She referred to PPACA’s changes as a “broken system that further ties our hands.”

Lt. Governor Tate Reeves of Mississippi “is not inclined to drastically expand Medicaid” as called for by PPACA. He explained that such an expansion, which would add nearly 400,000 residents to the program, would cost the state nearly $1.7 billion over ten years. He maintained that “(t)rue health care reform should look at reducing costs for services not increasing the burden on taxpayers.”

Connecticut Proposes Deaf Child Bill of Rights to Address Education Gap

Deaf and hard of hearing (HOH) children generally do not differ cognitively from their peers in a way that would prevent them from learning the same material just as well. So why is it that in Connecticut, as well as other locations, children with hearing disabilities appear to be falling behind hearing children in state tests? In 2011, approximately 71 to 81 percent of children with hearing disabilities failed to reach state standards in Connecticut Mastery Tests (CMTs) and Connecticut Academic Performance Tests (CAPTs). Comparatively, between 35 to 58 percent of hearing students failed to meet the goals.

The answer, according to advocates for deaf and HOH persons, is not the disability itself, but the manner in which the children are being taught.  According to Terry Bedard, president of Hear Here Hartford, a deaf advocacy group, “Their needs are not being addressed in the way they should be, and that’s resulting in this wide achievement gap.” Advocates believe that since there is a relatively “low incidence” of hearing disabilities, they are commonly overlooked. In Connecticut, approximately 700 children are registered with the education department as having a hearing disability; however, the number could be greater since such students are not tracked carefully.

Consequently, the Connecticut General Assembly’s education committee will be considering legislation this term to address the gap. “A Deaf Child Bill of Rights,” introduced by the Connecticut Council of Organizations Serving the Deaf, would focus on an individualized education program (IEP) centered around each student’s communication and language needs. Each student’s IEP would be connected to a formal “Language and Communication Plan” that would address that child’s specific needs. The measure would also require that the team implementing the IEP includes at least one educational professional who specializes in hearing disabilities. The bill would compel the state to execute a more specific tracking system in order to better identify hearing disabled children and chart their academic progress.

If the bill is passed, Connecticut will be the 12th state in the country to implement a deaf child bill of rights, joining California, Colorado, Delaware, Georgia, Louisiana, Montana, New Mexico, Pennsylvania, Rhode Island, South Dakota and Texas.