“A house of cards will always collapse.“

This is a complicated field of law: choose a lawyer with experience of the False Claims Act. I am proud to say that, not only have I filed and settled some remarkable cases, I have also taken cases through litigation and trial. In 2020, for example, my trial success in Ruckh v. CMC II, LLC, was upheld for $250,000,000.00.

This case alleged the wholesale upcoding of reimbursement claims to Medicare and Florida Medicaid by a chain of skilled nursing facilities in Florida.  The relator, a nurse who worked at the defendants’ skilled nursing facilities, alleged that the facilities provided substandard medical care and inflated billing codes submitted to government health care programs.

During a four-week trial, in which Rory Delaney was co-counsel with Kellogg Hansen Todd Figel & Frederick, we presented evidence that:

• Defendants falsified paperwork (MDS Assessments) for residents covered by Medicare and TRICARE by overstating residents’ medical needs and the amount of care provided to them;
• Defendants fraudulently inflated the Resource Utilization Group (“RUG”) levels reported in MDS Assessments in order to increase their Medicare and TRICARE reimbursement rates;
• Defendants routinely falsified MDS Assessments to report that they had completed care plans for their Medicaid residents, when in fact no such care plans even existed;
• To avoid detection of this fraudulent scheme, Defendants would routinely create generic, boilerplate care plans for residents many months after their admission, but shortly before scheduled audit periods;
• Defendants routinely falsified the identities of the persons submitting MDS Assessments to facilitate their fraudulent scheme.

After two days of deliberations, the jury returned a verdict in the sum of $115 million dollars which was trebled by the judge under the False Claims Act to $345 million. However, the trial judge later vacated the verdict and handed a win to the Defendants, reasoning that the upcoding theory was a “handful of paperwork defects.” 

The Court of Appeals for the 11^th Circuit reinstated the Medicare judgment, observing that the district court’s view was a “mischaracterization [which] misses the mark.” The Court of Appeals continued “At its core, the concept of upcoding is a simple and direct theory of fraud.” And indeed, what could be simpler and more direct than inflating bills?

This case was remarkably similar to the Ruckh trial verdict, only here the government settled the allegations. Our client, a Licensed Practical Nurse, worked for a chain of skilled nursing facilities. The whistleblower saw an obvious disconnect between the services that were being provided and the codes used to bill for the services. In short, she saw that Medicare patients were getting unnecessary rehabilitation services and the Medicaid patients were getting little or no rehab.

Here our client alleged that Abiomed had been overspending on lavish meals for doctors to influence their choice of medical devices. On March 6, 2018, the company announced that despite an internal audit which suggested that less than 2% of those means exceeded Abiomed’s internal guidelines, it had agreed to pay $3.1 million dollars to the federal government:

Aegerion, of Cambridge, Massachusetts, agreed to pay a $28.8 million civil penalty, more than $7 million in criminal fines and $4.1 million to the SEC in a global settlement to resolve allegations filed by three former company insiders. The case, filed in 2013 in Boston federal court, alleged that Aegerion caused false claims by making false and misleading statements regarding its drug Juxtapid.

Juxtapid was approved solely for the treatment of HoFH, a rare and life-threatening high cholesterol disease, which affects literally one in a million people. However, Aegerion made misleading claims about the drug’s suitability for people who did not have HoFH but simply had stubbornly high cholesterol. In addition to the rarity of the disease, the drug cost government healthcare programs approximately $300,000 per year, per patient. After we alerted the FDA of false and misleading statements by the then CEO Marc Beer, the FDA issued a warning letter addressed to the CEO rebuking him directly:

“OPDP FDA’s Office of Prescription Drug Promotion requests that Aegerion immediately cease misbranding Juxtapid and introducing it into interstate commerce for unapproved uses for which it lacks adequate directions. Please submit a written response to this letter on or before November 22, 2013, stating whether you intend to comply with this request, listing any promotional materials (with the 2253 submission date) for Juxtapid that contain statements such as those described above, and explaining your plan for discontinuing use of such materials or, in the alternative, your plan to cease distribution of Juxtapid.”

It is believed this settlement may be the first time that the SEC and the US Attorney’s office have simultaneously resolved a claim under both the SEC’s whistleblower program and the False Claims Act. Notwithstanding the substantial resolution, the civil case proceeded against certain individuals including the former CEO Marc Beer and resulted in an additional $6.5 million settlement.

Department of Justice Press Release:

Securities and Exchange Commission press release:

Our client, Melayna Lokosky, received a multimillion-dollar whistleblower reward in connection with the U.S. government’s $18 million settlement with Johnson & Johnson and its subsidiary Acclarent, Inc. The settlement resolved claims that Acclarent defrauded the federal government by fraudulently concealing the true intended use of the MicroFlow Spacer. The MicroFlow Spacer was approved as a device to deliver saline into the sinuses, but the complaint alleged that the true intended use was to deliver Kenalog 40, a corticosteroid. 

Ms. Lokosky’s complaint alleged that, once the MicroFlow Spacer was cleared by the FDA, Acclarent ignored the limited scope of the clearance and proceeded to market the products as drug delivery devices to be used with Kenalog-40. The companies settled claims that the false and misleading marketing of MicroFlow Spacer for off-label uses caused the government to pay millions in claims that would not have been paid had Acclarent truthfully disclosed the intended use. When Ms. Lokosky complained about the illegal marketing, Acclarent’s management team terminated her.  The settlement brings an end to the nearly five-year qui tam lawsuit against Johnson & Johnson and Acclarent:

After two years of scorched-earth litigation, Amgen reached an agreement with the federal government to settle this case and several other sealed cases. Amgen ultimately paid $762 million to the federal government in 2012.

The amended complaint was filed pursuant to federal and state False Claims Acts by a former Amgen employee.  The suit alleged, among other claims, that Amgen engaged in a variety of illegal kickback schemes, the effect of which was to cause millions of dollars of overbillings to government health insurance programs. It was alleged, for example, that Amgen illegally induced physicians to prescribe its anti-anemia drug Aranesp by encouraging physicians to bill insurers for the “overfill” placed in the pre-packaged vials of the drug.    

The suit also alleged that, in some instances, patients were given more Aranesp than medically indicated, because of the lucrative “overfill”, notwithstanding a “black box warning” from the FDA about the health risks of Aranesp, and the need for minimal dosing.

Aranesp has been a lucrative product for Amgen with total sales reaching over $11 billion dollars since the drug was first introduced into the marketplace.  To date, the federal Medicare program and the state Medicaid programs have paid billions of dollars for Aranesp:

The US Department of Justice announced the resolution of the False Claims Act investigation of Irish pharmaceutical manufacturer Elan Corporation, PLC (Elan) and its U.S. subsidiary. The companies agreed to pay over $203.5 million to resolve criminal and civil liability arising from the illegal promotion of the epilepsy drug Zonegran. In a separate civil settlement, Japanese drug marketer Eisai, Inc. which purchased the drug from Elan, paid $11 million to resolve civil liability for off-label marketing of Zonegran.

Zonegran was approved by the Food and Drug Administration (FDA) as an adjunctive therapy for the treatment of partial seizures in epilepsy for adults over the age of 16, and was not approved for any other uses, including for example, seizures in children under the age of 16.

Pursuant to the agreement, Elan Pharmaceuticals, Inc. pled guilty to an information charging it with misdemeanor misbranding of Zonegran, in violation of the Food, Drug and Cosmetic Act. In addition, the company paid a criminal fine of $97,050,266. Elan also paid $102,890,517 to resolve civil allegations under the False Claims Act that the company illegally promoted Zonegran for a variety of uses that were not medically accepted indications:

The Department of Justice settled our client’s allegations of a nationwide kickback scheme to induce the prescribing of some of Pfizer’s blockbuster drugs including Lipitor, Norvasc and Viagra. This case, along with a number of other qui tam suits, settled for a record-breaking criminal fine of $1.3 billion and a civil settlement of $1 billion: