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Archive for May, 2013

New Push For Pennsylvania To Adopt State False Claims Act

Friday, May 31st, 2013

To date, the District of Columbia and two other states have adopted some form of a false claims act.  Although two municipalities – Philadelphia and Allegheny County – have adopted legislation which prohibits city or county contractors from submitting false claims for reimbursement – the Commonwealth of Pennsylvania has yet to adopt a law which applies to individuals and/or companies who submit fraudulent requests for payment to the state.  However, it appears that two state legislators – Representatives Anthony DeLuca of Allegheny County and Brandon Neuman of Washington County – are planning to introduce a bill which would provide the state with a means of recovering losses due to Medicaid fraud.  Representatives DeLuca and Neuman noted that between 1986 and 2011, the federal government recovered over $31 billion as a result of suits brought under the federal False Claims Act and that a federal statute which was adopted in 2007 allows states to recover an additional 10% of the monies obtained in a federal false claims act suit alleging Medicaid fraud if the state has its own false claims act and the state law meets certain federal guidelines.  According to Mr. DeLuca and Mr. Neuman, even if Pennsylvania doesn’t pass a law that meets federal requirements, the Commonwealth would still have a way to go after health care providers who submit false claims to the state. 

The fact that two representatives support creation of a mechanism which would allow the state to prosecute fraudsters doesn’t mean that passage of such a statute is a certainty.  Attempts have been made since 1999 to have Pennsylvania adopt a false claims act.  The last try was in 2011 but the bill never made it out of the House Judiciary Committee.  Only time will tell whether the current effort has greater success. 

For more information, please see:
http://newsandinsight.thomsonreuters.com/Legal/News/2013/05_-_May/States_pressured_to_match_their_false_claims_acts_to_federal_law/

Generic Drug Manufacturer to Pay $500 Million to Resolve FCA and Criminal Allegations

Thursday, May 23rd, 2013

In the largest drug safety settlement ever by a generic drug manufacturer, Ranbaxy USA, Inc. (“Ranbaxy”), a subsidiary of the Indian generic drug manufacturer Ranbaxy Laboratories Limited, agreed to pay $500 million to resolve a whistleblower lawsuit and criminal charges that it manufactured and distributed adulterated drugs which it sold in the U.S.  Specifically, Ranbaxy manufactured drugs at two of its facilities in India did not use proper methods for manufacturing, processing, packaging, and holding in violation of the Current Good Manufacturing Practice (“CGMP”) regulations.  

As part of the $500 million settlement, Ranbaxy agreed to pay $350 million to settle allegations brought under qui tam provisions of the False Claims Act (“FCA”) that it submitted false claims to federal and state health care programs for generic drugs that did not meet required specifications for strength, purity, or quality or that were not manufactured in accordance with the FDA approved formulation. The case, U.S. ex rel. Thakur v. Ranbaxy Laboratories Limited, Case No. JFM-07-962 (D. Md.), was filed under seal in the U.S. District Court for the District of Maryland by Dinesh Thakur, a former executive with Ranbaxy.  Of the $350 million settlement, the federal government’s share is $231.8 million with $118.2 million going to the states participating in the settlement. The whistleblower who brought the lawsuit, Dinesh Thakur, will receive $48.6 million as his share of the federal portion of the recovery.

In the related criminal settlement, Ranbaxy agreed to pay a criminal fine of $130 million, forfeit another $20 million, and plead guilty to felony charges that it violated the Food Drug and Cosmetics Act (“FDCA”) for manufacturing and distributing adulterated drugs into interstate commerce and for knowingly making false statements to the FDA.   

The U.S. Attorney’s Office for the District of Maryland and the Civil Division’s Commercial Litigation Branch negotiated the civil settlement.  

For more information, please see:
http://www.justice.gov/opa/pr/2013/May/13-civ-542.html

C.R. Bard to Pay $48.26 Million to Resolve FCA Allegations

Wednesday, May 22nd, 2013

C.R. Bard, Inc., a New Jersey-based drug manufacturer, agreed to pay $48.26 million to the United States to resolve allegations that it violated the FCA by providing illegal remuneration to physicians and potential customers to induce them to purchase its brachytherapy seeds used to treat prostate cancer. The settlement arose from a qui tam suit filed in the Northern District of Georgia under the Federal False Claims Act by Julie Darity, a former Bard manager for brachytherapy contracts administration.  In her suit, Darity alleged that from 1998 to 2006, C.R. Bard paid illegal kickbacks to customers and physicians to induce them to purchase the brachytherapy seeds.  This illegal remuneration included certain types of grants, guaranteed minimum rebates, free medical equipment, marketing assistance, and conference fees. Because this remuneration was provided to customers and physicians violated the Anti-Kickback Statute, C.R. Bard caused the submission of false claims to Medicare by the physicians who billed for the seeds.  As her share of the recovery, Darity will receive $10,134,600.

For more information, please see:
http://www.justice.gov/opa/pr/2013/May/13-civ-547.html

IRS Slammed For Handling of Whistleblower Matters

Wednesday, May 22nd, 2013

Judge Maurice B. Foley, a U.S. Tax Court judge, slammed the IRS for its handling of the cases of two whistleblowers who were denied awards after submitting whistleblower claims against their employers. 

The two whistleblowers, who remain anonymous, appealed the dismissal of their awards claims in November 2012.  At that time, the U.S. Tax Court granted the IRS’ motion for summary judgment, ruling against the whistleblowers appeal.  However, in February 2013, the IRS sent letters to the whistleblowers, informing them that their claims had been reopened but that that the IRS had not made a decision as to whether they were eligible to receive an award.

Judge Foley, in a strongly worded opinion, chided the IRS for failing to tell the court in a timely manner that it had reopened the whistleblower’s investigation, and was potentially reopening the whistleblowers’ awards claim.  Judge Foley noted that he did “not know whether these failures were the result of bureaucratic confusion or ineptitude,” but that he did know that “the obfuscation surrounding this matter has either been caused or exacerbated” by the IRS.

For more information, please see:
http://www.reuters.com/article/2013/04/10/us-usa-tax-whistleblowers-idUSBRE93817320130410

Sequestration Damages IRS Battle Against Tax Evasion

Wednesday, May 22nd, 2013

For many years, strict secrecy laws in Switzerland and the Cayman Islands allowed US taxpayers a low-risk way to evade taxes.  In 2008, a whistleblower from UBS provided the government with the names of thousands of UBS clients who were hiding money to lower their tax bills.  This disclosure substantially increased the IRS’ already heavy case load and prompted the agency to institute an amnesty program that allowed tax evaders to avoid jail time if they agreed to pay the full amount of the taxes owed and a 20% penalty.  Lower penalty fees were imposed for accounts under $75,000.  To date, over 10,000 claims have been processed. 

Through it amnesty programs targeting Swiss banking customers, the IRS has recovered $5.5 billion in unpaid taxes and penalties since 2009. It is estimated, however, that government continues to lose $100 billion a year as a result of off-shore tax evasion.  Due to a lack of funding and sequestration budget cuts, the amount lost tax revenue will increase.  Recently, all IRS employees received a memo from the Acting Commissioner informing them that will be furloughed for 7 days during the summer, without pay.

For more information, please see:
http://www.huffingtonpost.com/2013/04/30/offshore-tax-havens-sequestration_n_3180922.html

Justice Department Files Suit Against Vitas Hospice Services

Wednesday, May 22nd, 2013

The United States has filed suit against Vitas Hospice Services LLC and Vitas Healthcare Corporation for the submission of false claims for hospice care.  Vitas provides services in 18 states and is the largest for-profit hospice chain in the country.  Medicare hospice benefits are available to patients who are terminally ill and whose life expectancy is 6 months or less.

As alleged in the Complaint, Vitas submitted claims for hospice care that either was not provided or was not medically necessary.  Vitas employees received bonuses based upon the numbers of patients that they enrolled in the program and the length of treatment to be provided.  The government’s investigation found that many patients who received hospice care were not terminally ill.  Between 2004 and 2011, Vitas’ billings for hospice care were 6 times the national average.

For more information, please see:
http://www.justice.gov/opa/pr/2013/May/13-civ-500.html

US Joins Whistleblower Case Against Novartis

Thursday, May 2nd, 2013

The US DOJ announced that it is intervening in a qui tam whistleblower case under the False Claims Act against Novartis Pharmaceutical Corporation.  The suit alleges that from 2001- 2011, Novartis marketed Cardiovascular drugs, including Lotrel, Valturna, Starlix, Texturna, Diovan and Exforge, through a variety of “pay to play” schemes that involved  kick-backs to physicians to encourage them to continue to prescribe these drugs.  As a result of the kickbacks, federal and state-funded healthcare programs were fraudulently billed for reimbursement for Novartis products.  “Novartis’ pervasive business practices to fraudulently market numerous drugs including Lotrel, Valturna, Starlix, Texturna, Diovan and Exforge, cost taxpayers hundreds of millions of dollars” said Eric L. Young, counsel for the relator. 

In September 2010, Novartis paid $422 million in criminal and civil fines and penalties to settle a case involving the payment of kickbacks to physicians who prescribed Trileptal, Diovan, Zelnorm, Sandostatin, Tekturna, and Exforge. 

For more information, please see:
http://www.bloomberg.com/news/2013-04-26/novartis-paid-for-doctor-fishing-hooters-outings-u-s-says-1-.html

 

 
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