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Archive for December, 2011
GE Healthcare, a major, international provider of pharmaceuticals and technology, agreed to pay $30 million to the U.S. to settle allegations that it improperly billed Medicare for its radiopharmaceutical drug Myoview. The settlement arose from a qui tam suit filed under the False Claims Act by James Wagel, a salesman for competing drug Cardiolite, in 2006. According to Wagel, GE Healthcare knowingly provided false information to the federal Medicare program from 2000 to 2003 regarding the reimbursement of Myoview, a diagnostic drug used for cardiology patients. More specifically, GE Healthcare improperly marketed the drug to physicians as one that could be diluted to maximize the number of doses per vial, while still receiving an inflated reimbursement from Medicare for each vial. As part of the settlement, Wagel will receive $5.1 million.
Merck Settles Massachusetts Medicaid Fraud Allegations for $24 Million—Total Recovery Now $47 MillionThursday, December 29th, 2011
Merck & Co, Inc., the second largest drug manufacturer in the nation, agreed to pay $24 million to the Commonwealth of Massachusetts to settle allegations that it knowingly reported inflated drug prices to the Massachusetts Medicaid program. The $24 million settlement is the largest single payment made to the Commonwealth for any one Medicaid fraud case in the state’s history, and comes as part of a suit filed against thirteen drug manufacturers over inflated drug prices that has led to the recovery over $47 million for the Commonwealth.
The Department of Justice announced that Kaman Precision Products, Inc., an Orlando-based defense contractor, will pay $4.75 million to the U.S. to settle allegations that it sold non-conforming fuzes to be used in “bunkerbombs” to the U.S. Army. The settlement arose from a False Claims Act suit filed by the U.S. in the Middle District of Florida. According to the U.S., Kaman knowingly submitted non-conforming motors in several lots of fuzes which were sold to the U.S. Army for use in target penetration warheads or “bunkerbombs”. The non-conforming parts could cause the fuzes to fire early or misfire which could be extremely hazardous to military personnel. As part of the settlement, Kaman agreed to adhere into a compliance program and dismiss the administrative claims it had against the U.S. for terminating its contract.
For more information see: http://www.justice.gov/opa/pr/2011/December/11-civ-1687.html
The Department of Justice (DOJ) announced that it has recovered over $3 billion in settlements and judgments under the False Claims Act in 2011. Of that $3 billion, $2.8 billion was recovered under the qui tam provisions of the False Claims Act. This is the second year in a row that the DOJ has recovered more than $3 billion under the Act and it has now collected more than $8.7 billion under the Act since January 2009. Nearly $2.2 billion of the $3 billion recovery was recovered from the pharmaceutical industry, including a $750 million settlement from GlaxoSmithKline and a $900 million settlement from eight drug manufacturers. The U.S. also recovered $422 million in procurement fraud cases, bringing the three year total of procurement fraud recovery to $1.5 billion.
For more information see: http://www.justice.gov/opa/pr/2011/December/11-civ-1665.html
SEC Chair Mary Schapiro advised Dodd-Frank sponsor, Barney Frank, that the new SEC whistleblower program is yielding results and that no changes should be made to the program without further study of its effects. In a letter to Frank, Schapiro contended that the SEC whistleblower program is providing “significant benefits. ”
Schapiro’s letter was written in response to efforts in the US House of Representatives to gut the whistleblower program by mandating internal compliance before going to the SEC. Schapiro characterized internal compliance as having a chilling effect on reporting corporate wrongdoing, which will reduce the amount of tips received. She also indicated that internal compliance would undermine the ability to report anonymously, which is an important consideration for whistleblowers. She believes that the SEC’s program appropriately incentivizes whistleblowers to report internally if they choose.
For more information see: http://www.marketwatch.com/story/congress-shouldnt-alter-whistleblower-plan-sec-2011-12-14
CVS agreed to pay $19.9 million to settle three separate qui tam suits in three separate states that it defrauded state prescription drug plans. The whistleblower suits, which were filed by two former CVS pharmacists, alleged that CVS Caremark fraudulently resold returned drugs, changed plan members submitted prescriptions to make more money, and falsely reported to the states how long it took to provide plan members’ prescriptions to avoid paying contractual penalties or losing state contracts. Of the $19.9 million settlement, almost $7 million will go to the State of California, $4 million to the State of Illinois, and $3 million to the State of Florida.
On December 8, 2011, the U.S. Tax Court held that a whistleblower filing under 7623(b) of the IRS whistleblower provisions was entitled to remain anonymous in the case record to protect against retaliation and professional ostracism. In the landmark decision of Whistleblower 14106-10W v. Commissioner, 137 T.C. No. 15 (T.C. Dec. 8, 2011), the Court found that the potential professional and personal harm in disclosing the whistleblower’s identity would outweigh the public interest in knowing his or her identity. Thus, all identifying information, including the whistleblower’s name, the whistleblower’s counsel’s name, and the potential defendant’s name, would be redacted from the record. The Court denied the whistleblower’s petition to seal the entire record, however, finding that granting the whistleblower’s request to remain anonymous would adequately protect the privacy interests at stake.
For more information see: http://www.rewardtax.com/files/Whistleblower_TC_WPD.pdf
Diakon Lutheran Social Ministries, a charitable organization operating as Diakon Hospice St. John (Diakon), agreed to pay the U.S. $10.56 million to settle allegations that it submitted claims for Medicare reimbursement for ineligible hospice patients from October 1, 2004 to October 1, 2010. Diakon, which is part of the Evangelical Lutheran Church of America, offers hospice services throughout Pennsylvania, Maryland, and Delaware. Diakon voluntarily disclosed to the U.S. Government that it received Medicare reimbursement for hospice patients who were ineligible for such reimbursement under Medicare regulations. By voluntarily disclosing the improper reimbursement, Diakon avoided a potential False Claims Act suit which would provide treble damages and civil penalties of up to $11,000 per claim.
For more information see: http://www.justice.gov/usao/pam/news/2011/Diakon_12_01_2011.htm
KV Pharmaceutical Company, the St. Louis parent corporation of the now defunct Ethex Corporation, has agreed to pay $17 million to the federal and state governments to resolve allegations that Ethex fraudulently received reimbursement for two of its drugs from federal healthcare programs. According to allegations made by relator Constance Conrad in U.S. ex rel. Conrad v. Ethex Corporation, et al., No. 02-11738-RWZ (D. Mass.), Ethex submitted false quarterly reports to the Center for Medicare and Medicaid Services (CMS) regarding the qualification for two of its drugs for federal health care reimbursement. Although the active ingredients in the drugs, Nitroglycerin ER, and Hyoscyamine Sulfate ER, had been in products on the market for a number of years, the FDA had previously decided that those drugs were ineligible for reimbursement by federal healthcare programs. Nevertheless, the U.S. alleges that Ethex deliberately mislead the government regarding the eligibility of those drugs for federal healthcare reimbursement. Under the terms of the settlement, the U.S. will receive $10,158,695, and the state Medicaid programs will receive $6,841,305. For her role in bringing the fraud to light, Conrad will receive a share of $1,523,804.
For more information see: http://www.justice.gov/opa/pr/2011/December/11-civ-1579.html