A federal appeals court has revived a whistleblower’s False Claim Act case against Millennium Laboratories for alleged excessive testing of patients’ response to chronic pain medications.

The U.S. Court of Appeals for the First Circuit issued the ruling on April 12 in U.S. ex rel. Estate of Robert Cunningham v. Millennium Laboratories of California Inc. Cunningham was a compliance officer at Millennium competitor Calloway Laboratories in 2007 and 2008. He sued in December 2009 and his estate continued the action following his death on December 2010.

The First Circuit vacated District of Massachusetts’ Judge Joseph Tauro’s January 2012 dismissal of the estate’s excessive-testing claim. It remanded for review of whether that claim meets general and fraud pleading standards.

Tauro dismissed Cunningham’s claims on the grounds that an earlier lawsuit Millennium filed against Calloway in California state court contained public disclosures that created a jurisdictional bar to the same claims under the False Claims Act. Millennium filed e-mails from Calloway employees to third parties that detailed the company’s allegedly fraudulent billing.

Judge Juan Torruella wrote the opinion, joined by judges Jeffrey Howard and O. Rogeriee Thompson. Concerning the surviving claim, he wrote, "Neither Millennium’s California complaint nor the e-mails attached thereto mention this kind of excessively frequent testing as part of Millennium’s fraudulent scheme."

The court affirmed Tauro regarding the whistleblower’s two other claims: that the company billed for multiple parts of the same test and fraudulently confirmed test results. On the other two claims, Torruella wrote, "the jurisdictional defect with respect to those FCA claims is incurable."

Cunningham’s lawyers at Charleston, W.Va.-based Bailey & Glasser and Boston’s Gargiulo/Rudnick did not respond to requests for comment. John Roddy, a Boston Bailey & Glasser partner who argued the case said: "We are, of course, very pleased with the First Circuit’s decision. The Relator has always maintained that Millennium’s so-called physician billing model illegally exploited the government’s healthcare reimbursement system. This decision allows us to go forward with our challenge to the second aspect of the billing scheme, which is perhaps the most lucrative aspect of the entire model."

Washington Hogan Lovells partner Catherine Stetson argued for Millennium.

In an e-mailed statement sent through a spokesperson, Millennium wrote that it was pleased that the First Circuit "upheld the majority of the district court’s decision to dismiss this frivolous whistleblower claim." The company added that Cunningham filed identical whistleblower lawsuits against several other Calloway competitors.

"As the First Circuit noted, the district court did not address Millennium’s other arguments as to why the case should be dismissed in its entirety. This will be the next step, and we remain fully confident that despite efforts to revive it, this will be merely a temporary stay," Millennium stated.

Contact Sheri Qualters at squalters@alm.com.