A whistleblower suit is typically brought under the False Claims Act
The False Claims Act covers these typical frauds:
In the case of United States ex rel. Bennett v. Abiomed, (Civil Action 13-cv-12277 IT), 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, Abiomed agreed to pay $3.1 million dollars to the federal government:
A more sophisticated bribery scheme was alleged in the case of United States v. Amgen et al., (Civil Action No. 06-10972-WGY). In this case, our client alleged that Amgen had deliberately overfilled vials of Aranesp and used the overfill as a “liquid kickback” in a nationwide scheme spanning an entire decade. That case was settled along with a series of other qui tam cases for a total of $780 million:
Finally, in United States, et al. Collins v. Pfizer Inc., (Civil Action No.04-11780-DPW) 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.
Off Label Marketing Fraud
To put it simply, a doctor can prescribe a drug for its “off label” effects but a pharmaceutical company can’t market a drug for its off label effects. To allow the pharmaceutical companies to market off label would make the “label” meaningless and result in a breach of the False Claims Act. However, for some companies, the temptation is just too great.
In, United States ex rel. Relators v. Aegerion Pharmaceuticals, Inc. (Civil Action 13-11785 IT), this firm represented the three whistleblowers who alleged that Aegerion marketed its signature drug Juxtapid for off label uses. Juxtapid was approved solely to treat HoFH, a one-in-a-million disease causing super high cholesterol levels. However, according to the allegations, the company was marketing the $300,000 a year drug for people with relatively normal cholesterol. On September 22, 2017, the Department of Justice and the Securities and Exchange Commission, announced a joint settlement with the company. Aegerion agreed to pay a $28.8 million civil penalty, a $7 million criminal fine and $4.1 million to the SEC. This is believed to be the first joint DOJ/SEC settlement ever:
Unusually, this firm then teamed up with Berman Tabacco to prosecute declined claims against the executives at Aegerion. Those follow up claims resulted in an additional $6.5 million settlement:
In, United States v. Elan Corporation, PLC, et al. and the related case of United States v. Esai Inc., et al. (Civil Action 04-11594 RWZ), the Irish manufacturer of the anti-seizure medication Zonegran paid a total of $214 million to settle whistleblower allegations that the company marketed Zonegran for off label indications of weight loss and mood stabilization. Elan pled guilty to misbranding the drug and paid a criminal fine of $97 million:
“Upcoding” and billing for non-existent or unnecessary services
Along with flat-out bribery, this has got to be the most obvious of all false claims’ scenarios. For example, fixing the paperwork to make it look like widgets were delivered when they were not; or to inflate the number of widgets delivered; or to make it look like higher quality widgets were delivered. The widgets could be anything, medical devices, pills, microchips or even hours worked.
More specifically, healthcare providers bill medical procedures under codes known as current procedural terminology (“CPT”) codes. When the medical bill is sent to Medicare or Medicaid, the CPT code determines how much the healthcare provider gets paid. “Upcoding” refers to the practice of assigning a code which artificially increases the rate of pay for the provider. It is a simple and effective fraud and, without a whistleblower coming forward to stop it, can be almost impossible to detect. Similarly, the billing of government healthcare programs for services not actually rendered or services which were not medically necessary, is also fraudulent.
In, United States ex rel. Ruckh v. CMC II, et al. (Civil Action 11-1303 SDM), our client, a Registered 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. We took the case all the way to trial and the jury awarded a landmark verdict of $345 million in our favor. That verdict was reduced on appeal to $250 million.
Patient Assistance Program Fraud
Over the last few years, certain PAPs have become a means by which pharmaceutical companies can simply subsidize their own drugs. But when used as originally intended, PAPs play a vital role in making prescription drug copays affordable for Medicare patients (especially those relying on Part D insurance). However, a recent study by Citi found that for every $1 donated to a Patient Assistance Charity for copay assistance, a pharmaceutical company can reap a $21 benefit. But if these programs make expensive drugs affordable for seniors, what is wrong with that? Recent settlements have shown how these programs can be corrupted making healthcare more expensive for all.
Some drugs are very expensive and the copay can be very expensive too. Unscrupulous companies use “captive” PAPs to funnel money to their own drugs. But “donations” are supposed to be just that: gifts. Donations are not supposed to be earmarked for any specific drug.
In, United States ex rel. Relators v. Aegerion Pharmaceuticals, Inc. (Civil Action 13-11785 IT), this firm represented the three whistleblowers. Following investigation, the government alleged that the drug maker used a PAP (Patient Services Inc.) to “eliminate price sensitivity” to Aegerion’s flag ship product. This was arguably the first such settlement and set off a wave of similar False Claims Act settlements: Lundbeck ($52 million); Jazz ($57 million); Pfizer ($23 million); and United Therapeutics ($210 million).
In this case in December of 2017, United Therapeutics paid $210 million to settle allegations that it effectively used a PAP, Caring Voice Coalition, to unlawfully subsidize four of its therapies: Adcirca; Remodulin; Tyvaso and Orenitram.
Nursing Home and Long-Term Healthcare Fraud
Medical providers are not permitted to bill the government for medically unnecessary services or procedures performed solely for the profit of the provider. The most basic requirement for reimbursement eligibility under Medicare and Medicaid is that the service provided must be reasonable and medically necessary. See, e.g., 42 U.S.C. § 1395y(a)(1)(A); 42 U.S.C. § 1396, et seq.; 42 C.F.R. § 410.50. Consequently, fraud in this area often includes the provision of medically unnecessary services, kickbacks for referrals, and the manipulation of the length of home stays and readmission dates.
In, United States ex rel. Ruckh v. CMC II, et al. (Civil Action 11-1303 SDM), our client, a Registered 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. We took the case all the way to trial and the jury awarded a landmark verdict of $345 million in our favor, $250 million of which was upheld on appeal.
At one time there was no reward for an insider to shed light on SEC violations. That has changed. Over the last few years, the United States has seen an unprecedented level of economic turmoil. Thanks, in part, to fraud in the financial sector. In response, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under this program, the Securities and Exchange Commission will pay awards to eligible whistleblowers who provide information leading to a successful enforcement action yielding at least $1 million.
The award may be up to 30 percent of the total monetary sanctions collected in the action, or any related action, such as in a criminal case. The Dodd-Frank Act also expressly prohibits retaliation by employers against whistleblowers and provides them with a private cause of action if they are discharged or discriminated against.
In, our case United States ex rel. Relators v. Aegerion Pharmaceuticals, Inc. (Civil Action 13-11785 IT), on September 22, 2017, the Department of Justice and the Securities and Exchange Commission, announced a joint settlement with the company. Aegerion agreed to pay a $28.8 million civil penalty, a $7 million criminal fine and $4.1 million to the SEC. This is believed to be the first joint DOJ/SEC settlement ever.