Legal Update

True Health Diagnostics Sued by Cleveland Clinic Foundation, Cleveland HeartLab

Cleveland Clinic Foundation, Cleveland HeartLab claim True Health Diagnostics is infringing patents

IT’S GETTING DOWN AND DIRTY in the cardiology testing sector of the lab industry. No less than the Cleveland Clinic Foundation, along with Cleveland HeartLab, have filed a patent infringement lawsuit against a start-up lab in Texas.

The defendant is True Health Diagnostics LLC, of Frisco, Texas. In an amended complaint filed November 30 in the United States District Court for the Northern District of Ohio, Eastern Division, CCF and CHL claim that True Health Diagnostics is selling its proprietary cardiac-risk assessment test called Myeloperoxidase (MPO) and thus infringing on five U.S. patents that CCF owns and licenses exclusively to CHL.

Agreement with HDL

What adds color to this case is that True Health, founded in 2014, is the lab company that purchased Health Diagnostics Laboratory in a bankruptcy court auction in September.

It has been reported by some media outlets that investors and some executives of True Health are the same individuals named as defendants in a federal whistleblower lawsuit filed in Richmond, Virginia that seeks to recover $500 million and treble damages allegedly paid by the Medicare and Tricare programs to defendants Berkeley Heartlab, Inc., BlueWave Healthcare Consultants, Inc., Latonya Mallory, Floyd Calhoun Dent III and Robert Bradford Johnson. (See TDR, September 14, 2015.)

Mallory, Dent, and Johnson were all associated with Health Diagnostics Laboratory, the cardiology testing lab that paid $47 million to the federal government to settle its part of the whistleblower case earlier this year.

As True Health has ramped up its sales program, competing labs have begun commenting that True Health is offering different forms of incentives to physicians to encourage lab test referrals—incentives that some competitors consider to be inducements that violate federal antikickback laws. Some of these comments can be found on postings at CafePharma.com.

CCF and CHL’s lawsuit against True Health seems straightforward. It describes how executives at True Health declined to negotiate a license to offer the patent-protected assays. Instead, the court papers say that True Health began using a similar MPO assay by purchasing kits from Diazyme, which are for research purposes only.

CCF and CHL charge that True Health infringed on the five patents and asks the court for an injunction against the sale of these tests without authorization. The plaintiff labs also ask for a jury trial and triple damages. Further, if it is true that True Health is offering an assay for clinical testing that was only approved for research purposes, this would put the young lab company at risk of federal regulatory enforcement.

 

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