|
              
            
Common
Types of
Fraud:
|
Fast
Facts
about
the
FCA
|
|
The Government Counts on Whistleblowers:
More than
80 percent of the False Claims Act cases that are now
pursued by the U.S. Department of Justice are initiated by
whistleblowers.
|
|
Cheaters Pay Whistleblower Awards:
Companies cheating the U.S. Government pay whistleblower
rewards – not one dime comes from U.S. taxpayers.
The reason for this is that the False Claims Act calls for
triple damages so that the Government can be made whole, not only
by recouping the cost of whistleblower awards, but also by
recovering the cost of investigations, prosecutions, and
lost interest.
|
|
Big
Cases Require Big Investments:
Big fraud cases prosecuted under the False Claims Act
often require many years of litigation and investigation.
For example, the whistleblower in the first Columbia-HCA
fraud case spent 13 years pursuing his False Claims Act
lawsuit. The law firm that spearheaded this case invested
more than 85,000 hours in
the case. In the end, the various frauds perpetrated by
Columbia-HCA returned over $1.5 billion to the U.S.
Treasury.
|
|
Frivolous Lawsuits are Discouraged:
Because most False Claims Act lawyers work on a contingency
basis, they only get paid if they win. This means that they
are unlikely to invest time, money and energy building a
case that they themselves do not feel will be productive.
In addition, under the False Claims Act, a complainant can
be required to pay the defendants attorney’s fees if the
court finds that the claim was frivolous or brought
primarily for purposes of harassment.
|
|
The
False Claims Act Provides Some Employment Protections:
If an employee is fired, demoted, harassed, or otherwise
discriminated against for filing a False Claims Act suit,
the law provides for reinstatement, double back pay, and
compensation for special damages, including litigation costs
and reasonable attorneys’ fees.
|
|
Drug Company Frauds are Pervasive and Large:
Over 500 pharmaceutical fraud cases are now under
investigation by the U.S. Department of Justice under the
False Claims Act.
Settlement of just 14 drug
manufacturing cases
(all those resolved to date) has returned over $3.45 billion
to the U.S. Government and the 50 states.
|
|
Routine Mistakes and Errors
are Not Prosecuted Under the False Claims Act:
The False Claims Act is not used to correct minor billing
mistakes or errors, as these frauds are not systematic and
rarely amount to truly large sums of money.
|
|
Major
Cases Under Watch:
|
|
Pratt & Whitney:
The Government awaits a
judge's decision in a False Claims Act case involving
hundreds of millions of dollars allegedly stolen from U.S.
taxpayers by United Technologies and Pratt & Whitney during
the Alternate Fighter Engine (AFE) program
of the 1980s.
Medco Health
Solutions:
A June trial date has been
set in a large case involving Medco Health Solutions. In
this case, the Government has joined a whistleblower lawsuit
that alleges that Medco defrauded hundreds of millions of
dollars from Medicare, Medicaid and other federal health
care programs.
Mario Gabelli:
A June trial date has been set in a case involving Wall
Street financier Mario Gabelli and various companies he
owns. The charge is that Mr. Gabelli and partners created
various front companies to act as "small business" investors
in a scheme to purchase radio bandwidth at a discount. The
bandwidth was later resold, netting Gabelli and partners
more than $250 million profit.
Tenet Healthcare:
A massive fraud case
against Tenet Healthcare involving Medicare "outlier"
payments remains under investigation. Tenet is known to
have reserved over a billion dollars in expectation of a
settlement in this and other federal and state cases. An unrelated criminal case against
Tenet is now before a jury in San Diego. However that case
is decided, some analysts expect Tenet to move to settle the
Federal outlier case.
Pharmaceutical
Fraud:
Only 14 pharmaceutical fraud cases that have been settled so
far, but they have returned well over $3.44 billion to the
U.S. Government. More than 150 other cases, involving more
than 500 drugs, are now under investigation. In all
likelihood, at least one or two large pharmaceutical cases
will be settled sometime in the next 9 months, and possibly
more.
Dialysis Fraud:
Most of the major renal
care facilities in the country are now under investigation
for fraud. One large case, against Gambro, has already been
settled for $325 million, but investigations against
Fresenius, DaVita,
Renal Care Group, Quest Diagnostics, and Bone Care
International are still underway.
|
|
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Latest News & Updates from TAF |
l
Oil Lease Fraud
l
DoJ Sues Dey
l
FCA Lawyer of the Year
|
l
AWP in Plan English
l
Whistleblower of the Year
l
U. of Phoenix Case |
 |
 Supreme
Court to Hear Rockwell Case
In 1999, the
U.S. and Jim Stone won a $4.2 million False Claims
Act jury verdict against Rockwell
International which was defrauding the U.S.
Government concerning hazardous waste disposal at
the Rocky Flats
Nuclear Weapons Plant in Colorado.
In 2002, Rockwell appealed the verdict and
lost. Rockwell then asked for a rehearing and lost
for the third time in 2004.
Now, almost 20 years after first blowing the
whistle, and despite winning his case,
Jim
Stone's case
is going to the U.S.
Supreme Court.
The issue? Was Jim Stone an "original source"
as defined under the False Claims Act?
It's worth noting what is NOT being argued in
this case. There is no question that Rockwell
International is guilty of ripping off the American
people -- their second offense under the False
Claims Act. Nor is there any question that Jim
Stone was the first person to bring to the
Government's attention the fact that nuclear waste
was being improperly disposed of at Rock Flats due
to defects in the "pondcrete" manufacturing
process. Finally, there is no question that the
Government amended and joined Jim Stone's original
complaint when it finally decided to take Rockwell
International to trial. The only question is
whether Rockwell International -- the guilty party
-- can determine who is, and who is not, an original
source in a case that has been joined by the U.S.
Department of Justice.
For a transcript of
the debate see >>
Supreme Court
web site (Dec. 5 arguments).
"The
Good Guys" In Brief:
Two citizens reporting
fraud against U.S. taxpayers; the chief lawyer for
the United States Government; the U.S. Senator that
co-authored the 1986 False Claims Act amendments,
and; the leading nonprofit organization representing
taxpayer interests in the False Claims Act arena.
"The
Bad Guys" In Brief:
A repeat fraud-feasor;
an aggressive litigator for corporate interests; a
trade association for corporations;
a pharmacy trade association whose members have
repeatedly engaged in fraud against U.S. taxpayers;
a national defense trade association whose members
have repeatedly engaged in fraud against U.S.
taxpayers, and; a hospital trade association whose
members have repeatedly engaged in fraud against
U.S. taxpayers.
|
 Omnicare
Settles for $49.5 Million
Omnicare, Inc., one of the
nation's largest long-term care pharmacy
companies, has agreed to pay $49.5 million to settle
a False Claims Act case filed by two whistleblowers
who said
Omnicare was substituting
tablets for capsules when filling prescriptions for
generic Zantac, Buspar and Prozac. This is
the second
large False Claims Act case in a month settled by
Omnicare. >>
To read more
|
Nov.
15,
2006
|
 Contractors
Must Explain FCA
Beginning January 1,
2007, companies that do $5 million a year or more in Medicaid
business
must
include in their personnel manuals a
detailed description of the
company's policies and procedures for preventing fraud, and
a detailed
explanation of the rights of whistleblowers and the
provisions of the Federal
and state False Claims Acts. >>
To read the law
(Section 6032 of
S.1932, the Deficit Reduction Act of 2005) |
Nov.
15,
2006 |
 In
Plain English: Serious Trouble
U.S. District
Judge Patti Saris has ruled that "Average
Wholesale Price" (AWP) means what the dictionary says,
and that it is not a "term of art." Though this
ruling comes in a
private class
action lawsuit in Boston, it will also hold true
in False Claims Act cases waiting to come to
trial in this same court. The bottom line:
Pharmaceutical companies are in serious trouble.
More than
40 companies face Average Wholesale Price False
Claims Act cases. >>
To read more |
Nov.
7,
2006 |
 Amerigroup
to Pay $144 Million
Amerigroup was
found liable,
in a trial by jury, in the largest qui tam
False Claims Act judgment ever levied -- $144
million with an additional $190 million in statutory fines possible.
Amerigroup
was accused of discriminating against pregnant women and
other potentially high-risk patients who were supposed to be
recruited into a state-sponsored Medicaid HMO.
>>
To read more |
Oct.
31,
2006 |
 InterMune
to Pay $40 Million
InterMune Inc. has agreed to
pay $36.9 million to settle charges the
company illegally promoted Actimmune to treat lung scarring
despite the fact that the drug was not FDA-approved for that
use. A criminal prosecution has been deferred for two years,
contingent on the company cooperating with the investigation
and implementing changes to its compliance policies. >>
To read more |
Oct.
31,
2006 |
 Medco
to Pay $155 Million
Medco Health Solutions
Inc. will pay $155 million plus
legal fees to settle three False Claims Act lawsuits previously
joined by the Federal Government. The settlement covers a wide
variety of cheats, including: shorting prescriptions,
canceling prescriptions to avoid paying non-performance
penalties,
soliciting and
accepting kickbacks from pharmaceutical manufacturers to favor
their drugs, and paying kickbacks to health plans to obtain
business.
The relators will
receive $23
million as their award for helping the Government achieve this
recovery.
>>
To read more |
Oct.
24,
2006 |
 Hospital
Consultant Nailed
for $64.25 Million by Court
The District Court for the
Northern District of Illinois
has ordered that a health care
consultant who effectively
controlled a teaching hospital,
first as CEO until 1997 and
later through a management
company, must repay three times
the amount of Medicare and
Medicaid claims submitted by the
hospital from 1995 through 2000,
plus a $7,500 penalty for each
claim.
>>
To read more
|
Oct.
24,
2006
|
 Lighting
the Fuse on Gunpowder Fraud
For decades, the
St. Marks Powder company, has
been producing gunpowder for the military but not testing it as
required. St. Marks, a division of
General Dynamics, sells about $100 million worth of gunpowder
every year, most of it used in small-caliber weapons. General
Dynamics rushed to self-disclose the fraud when they found out a
whistleblower might come forward. Under the FCA, a company is
required to pay double damages, rather than triple damages, if
they self-disclose. >>
To read more
|
Oct.
24,
2006 |
 Omnicare
settles for $52 Million
Omnicare has agreed to pay the
state of Michigan
$52.5 million to
settle a civil suit filed against its subsidiary, Specialized
Pharmacy Services.
The settlement is the largest
Medicaid fraud recovery in Michigan's history.
The
criminal case against Daniel Lohmeier, former president of
Omnicare's Specialized Pharmacy Services unit in Michigan,
remains in place and is moving forward.
Rumor has it that Omnicare may be working towards
a global settlement on other charges. >>
To read more
|
Oct.
10,
2006 |
|
 Record Year for
Fraud Recoveries
Fiscal Year
2006 will be a record year for False Claims Act recoveries,
says Taxpayers Against Fraud, which estimates total
settlements and judgments will top $3.142 billion. This
figure does not include more than $200 million in
settlements which have been announced by companies but not
yet green-lighted by the U.S. Department of Justice.
Notes Jim Moorman, President of Taxpayers Against Fraud, "We
have seen extraordinary fraud settlements this year. The
whistleblowers, investigators, and private and Department of
Justice attorneys that have worked on these cases deserve a
huge thank you from the American people." also
said that the numbers should grow as activity increases in
states that pass their own False Claims Acts. >>
To read more
Top FCA Cases in the first 10 Months of FY
2006
|
 FCA Case
Filed Against Oil Companies
Four government auditors who monitored oil
and gas leases on federal property say the
Interior Department
tried to squelch their efforts to recover millions of
dollars stolen from U.S. taxpayers. The scam
involved the theft of at least $30 million in
oil revenue underpayments from companies
pumping oil from publicly owned waters in the
Gulf of Mexico. The four whistleblower, who
filed four False Claims Act cases in Oklahoma named a total of more than two dozen companies.
A fifth FCA complaint has been filed by another
auditor in Colorado. That case is against Kerr-McGee,
the company was made
infamous by their actions against whistleblower
Karen Silkwood
back in the 1970s.
>>
To read more
| Sept.
26,
2006
|
 A
Field Guide to Health Fraud
The Office of the Inspector General of HHS has released its 2007
"work plan." A close reading of this publication is a bit like
reading a field guide to fraud prosecutions in the year ahead.
OIG IG Dan Levinson recently told TAF that HHS has one auditor
for every billion dollars in HHS spending. >>
To read more (PDF) False Claim
Act investigations and prosecutions in the health care arena
return $15 back for every $1 invested.
|
Sept. 26, 2006 |
 US
Joins Suit Against Dey
Dey Pharmaceuticals, a unit
of Merck, has been accused by the
U.S. Dept. of Justice of overcharging Medicaid by lying about the
Average Wholesale Price (AWP) of prescription drugs. DoJ alleges
Medicaid paid over $500 million more than it should have
due to Dey's price deceptions. The Dey lawsuit is the second major AWP case joined by
DoJ. The first case was against
Abbott. >>
To read more
| Sept. 19,
2006
|
 California
False Claims Act:
Arbitrator Awards $37 Million
An
arbitrator has ruled that Navigant Consulting
Inc. must pay the city of Vernon, California over $37
million to resolve a case brought under the California False
Claims Act.
The
case involves a
dispute
related to electric distribution maintenance services that a
Navigant subsidiary provided to the city before Nov. 30,
2005.
To read more
| Sept. 19, 2006 |
 TAF's Whistleblower of the Year
Taxpayers Against Fraud has
named Ven-a-Care of the Florida Key (Mark Jones, Luis Cobo,
Dr. John Lockwood, and Zach Bentley) whistleblowers of the
year for their
extraordinary work in combating fraud against the Federal
Government in the prescription drug arena. In 2005,
GlaxoSmithKline settled a case brought by the Ven-a-Care
whistleblowers for the sum of $150
million. The case involved fraudulent
misreresentation of the "Average
Wholesale Price" of the anti-nausea drugs Zofran and
Kytril. The Ven-a-Care relators have,
so far, helped return more than $700 million stolen from
the American people. >>
To read more
| Sept. 10, 2006 |
 TAF's FCA Lawyer of
the Year
Taxpayers
Against Fraud has named Orlando, Florida
lawyer Alan Grayson Lawyer of the Year for 2006 for his work
in the Custer Battles case which sought to recover money
stolen from the American people through fraudulent billing
in Iraq. In a trial by jury, a
jury awarded maximum damages on every single
point -- a total of more than $10 million. The case is
currently on appeal. >>
To read more
| Sept. 10, 2006 |
 U.
of Phoenix Case Moves Forward
The U.S. Court of Appeals for the Ninth Circuit
has reinstated a massive False Claims Act lawsuit against
the University of Phoenix which, with 180 campuses and over
310,000 students nationwide, is now America's largest accredited
university. The overwhelming majority of students at the U. of
Phoenix have federally funded tuition loans and grants, and last
year U.S. taxpayers paid, and the University of Phoenix
obtained, $1.7 billion in federal education funds. Yet many
students who enroll at the U. pf Phoenix never complete their
education, and many are unable to even finish the classes they
signed up for. >>
To
read more
| Sept. 19, 2006 |
 Schering to
Pay $435 Million
Schering-Plough has
agreed to pay a total of $435 million to resolve criminal
charges and civil
liabilities in connection with illegal sales and marketing
programs for brain tumor medication Temodar, and
Intron-A which is used in the treatment of bladder cancer
and hepatitis
C. The Schering settlement also covers best price violations
related to Claritin RediTabs (an antihistamine), and K-Dur,
which is used in the
treatment of ulcers. Past False Claims Act settlements by
Schering include $345 million paid for best price violations
(Claritin), and $27 million paid for Average Wholesale Price
violations (albuterol). Overall, the pharmaceutical
industry has paid $4 billion to settle False Claims Act
violations. >>
To read more
| August 29, 2006 |
 HHS Issues FCA Guidelines
The Federal
Register has published the "OIG
Guidelines for Evaluating State False Claims Acts." The
Guidelines (read
here) lay out a clear roadmap for states wishing
to receive additional funds under the Deficit Reduction Act (DRA).
The word is spreading that millions of Medicaid dollars are now
available to states that have a DRA-qualifying False
Claims Act. TAF's Model State False
Claims Act appears to meet or exceed all of the OIG
Guidelines, and can be read >>
here. (PDF)
| August 29, 2006 |
 PowerPoint
on
State
FCA Benefits
Jim Moorman, President of TAF, and Roderick Chen,
Office of Counsel to the HHS Inspector General, delivered a
PowerPoint presentation to the National Conference of State
Legislatures meeting in Nashville. >>
To see the PowerPoint
on how states can recover stolen money
| August 29, 2006 |
 Fighting
Healthcare Fraud:
Whistleblower Statute Returns
$15 for Every $1 Invested
A
new TAF report by economist Jack Meyer, concludes that every
dollar invested by the U.S. Government in investigation and
prosecution of federal health care fraud returns $15 back to the
American people -- a phenomenal rate of direct return that does
not even factor in the benefits of fraud deterrence.
>>
To read more
| August 2, 2006 |
|
 Supreme
Court Takes 17-Year Old Case
In 1999, the U.S. and Jim
Stone won a $4.2 million False Claims Act jury verdict
against Rockwell International which was defrauding
the U.S. Government concerning hazardous waste disposal at
the Rocky Flats Nuclear
Weapons Plant in Colorado. Rockwell appealed the verdict,
lost again in 2002, asked for a rehearing, and lost for the
third time in 2004.
Now, almost 20 years after first blowing the whistle, and
despite winning his case, 80-year old
Jim Stone's case
is going to the Supreme
Court. >>
To read Supreme Court
briefing on US ex rel. Stone v. Rockwell International
|
 Medtronic
to Pay $40 Million
Medtronic will pay $40 million to dismiss a
False Claims Act lawsuit against it filed by
Jacqueline Kay Poteet, a senior manager of travel services
for Medtronic who accused the company of paying over $50 million
in kickbacks to doctors in order for get them to use Medtronic
medical devices. >>
To read more |
 Gabelli
Settles: $130 Million
Wall Street
money manager Mario Gabelli and partners have agreed to pay $130
million to resolve allegations of fraud in connection with FCC
bandwidth auctions. The government initially declined to
intervene in the case which was pursued by the whistleblower and
his lawyers for four year before the Department of Justice
changed its mind. FCC Commissioner
Jonathan
Adelstein
has said he wants Gabelli banned from future FCC auctions.
>>
To read more
|
 Odyssey
to Pay $13 Million Odyssey HealthCare, a hospice care
provider with 82 Medicare-certified programs in 30 states, has
agreed to pay $13 million to
settle a False Claims Act case initiated by two whistleblowers.
As part of the settlement agreement, Odyssey will put in place a
corporate integrity agreement that will incorporate a
first-of-its kind clinical review protocol for end-of-life
decisions. >>
To read more |
 Tenet
Settles for $900 Million
Tenet Healthcare, the
second largest hospital chain in the U.S., has agreed to pay the
Federal Government $900 million for billing violations that
include manipulation of outlier payments to Medicare, as well as
kickbacks, upcoding, and bill padding. The DoJ press
release noted that the settlement was based on the company's
ability to pay. Several of the issues resolved by this
settlement were brought to the attention of the government as a
result of lawsuits filed by whistleblowers under the Federal
False Claims Act. >>
To read more |
 Tenet's
History of Business Plan Fraud
National Medical Enterprises' (NME), Tenet's predecessor, was
formed in 1964 when three lawyers recognized the potential for
profit in the new Medicare system. In
1994
NME was nailed for the largest
health care fraud scam in history,
and paid $379 million under the False Claims Act and another
$214 million
to settle state claims, with another $100 million going to pay
private civil cases. NME proceeded to sell off many of its
hospitals, renamed itself "Tenet" to reflect "its
core business philosophy" and went on to conduct even more fraud
scams. >>
To read more |
 St
Barnabas Hospital Pays $265 Million
St. Barnabas Healthcare, a nonprofit chain of eight hospitals in
New Jersey, has agreed to pay $265 million
to settle a False Claims Act lawsuit filed by a pair of
whistleblowers. The case dealt with "outlier" Medicare payments
which a hospital can claim if a procedure is particularly
difficult or complex.
St. Barnabas generated 41% of its
total inpatient Medicare
revenue from outlier payments as compared to the national
average of 4.75%. The government estimated damages in the St.
Barnabas case at $630 to $700 million, but the settlement amount
was based on St. Barnabas' ability to pay. >>
To read more
>>
To read the complaint
| June 20, 2006 |
The Scope
of Outlier Payment Chicanery
The $265 million St. Barnabas settlement (see above story) may
be just the edge of the wedge on outlier payments. Some
hospitals and hospital chains found they could easily manipulate
Medicare in order to generate millions of dollars in phony
claims. Along with Tenet Healthcare, where a "global"
settlement of well in excess of a billion dollars is reportedly
in the works, consider these numbers:
- Robert Wood Johnson
University Hospital at Hamilton (N.J.) received $18.2
million in outlier payments, representing 44.2% of its
inpatient Medicare revenue;
- Kimball Medical Center in
Lakewood, N.J., received 63% of its inpatient Medicare
revenue from outlier payments -- more than any other
hospital.
- Four-hospital Cathedral
Healthcare System, in Newark, received $30.4 million, or
26.6% of its Medicare inpatient revenue from outlier
payments;
- Hackensack (N.J.)
University Medical Center, received $35.6 million, or 20.4%
of its Medicare inpatient revenue from outlier payments;
- Methodist Hospital in
Houston netted $41.4 million, or 23.8% of its Medicare
inpatient revenue from outlier payments;
- Crozer-Keystone Health
System in Springfield, Pa., received $38.5 million, or 32.1%
of its Medicare inpatient revenue from outlier payments
| June 20, 2006
|
 TAF's
Moorman at ABA Institute
On June 15th, Jim
Moorman, President of Taxpayers Against Fraud, spoke at the 6th
ABA National Institute on the False Claims Act. The title of
his lunch-time presentation: The Whistleblower's Experience:
The High Cost of Integrity. >>
To read the speech
| June 20, 2006 |
 Honeywell
to Pay $2.6 Million
Honeywell has agreed to
pay the United States $2.6
million to resolve allegations the company violated the
False Claims Act by not
properly testing electrostatic protective packaging
used on over 186,000 sensitive parts used by the Department of
Defense and NASA. >>
To read more
| June 20, 2006 |
 Baxter
to Pay $8.5 Million
Baxter International Inc., has
agreed to pay $8.5 million to settle a False Claims Act lawsuit
charging the company with falsely reporting the prices of drugs
to the Texas Medicaid system. The Texas attorney general joined
a suit against Baxter, Abbott Laboratories and B. Braun Medical
Inc. in 2004. The Abbot and Braun cases are still pending.
>>
To read more
| June 13, 2006 |
 Feds
Say NY Fraud Fighting is Weak
The Centers
for Medicare and Medicaid Serices has issued a report that
says New York's fraud-fighting efforts are inadequate.
Notes the report: "Being
in compliance with the minimum regulatory standards is not
the same thing as having an effective fraud and abuse
program." The federal review found the staff assigned to
Medicaid anti-fraud work in New York has dropped more than
60 percent, from 950 in 1998 to 584 in 2004.
>>
To read more
| June 7, 2005 |
 Nevada
Court Upholds Best Price
A District Court has
denied a motion to dismiss a False Claims Act lawsuit filed
against Merck by the Attorney General of Nevada. The Attorney
General's office argues that
a discounted
price for drugs which is tied to purchases is not “merely
nominal” and is therefore not exempt from the Medicaid "best
price" statute. >>
To read the
opinion |
June 6, 2005 |
 Government to Intervene
Against Abbott
The United States
has intervened in a whistleblower suit filed against Abbott
Laboratories Inc., alleging the company engaged in
a scheme to report fraudulent and inflated prices for
several pharmaceutical products,
reporting prices that were more than 1000 percent
higher than the actual sales prices. Medicare and Medicaid reimbursed
Abbott's customers in excess of $175 million for the drugs
which are the subject of the complaint. >>
To read more
| May 23, 2005
|
 Past
Fraud Charges Against Abbott
Abbott Labs and its affiliates
have ripped off Medicare and
Medicaid in the past:
w
In October
2001, TAP Pharmaceuticals, a joint operation of
Abbott Labs and Takeda Pharmaceuticals, agreed to
pay $875 million to resolve criminal charges and
civil liabilities in connection with fraudulent
pricing and marketing of the cancer drug Lupron.
w
In July of 2003, Abbott Labs pled guilty to
obstructing a criminal investigation and defrauding
the Medicare and Medicaid programs, and agreed to
pay $400 million to resolve civil claims as well as
pay a criminal fine of $200 million.
w
On January 3, 2003 a California False Claims Act
case against Abbott came out from under seal
charging the company with systematically defrauding California's
Medicaid program by inflating prices for various
drugs in order to "market the spread" -- a common
business plan fraud
in which drug companies report an entirely
fictitious "Average Wholesale Price" to Medicaid
while selling the drugs at deep discounts to WalMart,
CVS, Walgreens and other national chains in order to
capture market share.
|
Drug |
Abbott 2001
Red Book AWP |
DOJ
Determined Actual AWP |
Difference |
Spread |
|
Acylovir |
$1047.38 |
$349.05 |
698.33 |
200% |
|
Dextrose |
$239.97 |
$3.91 |
$236.06 |
6,037% |
|
Diazepam |
$28.50 |
$2.03 |
$26.47 |
1,304% |
|
Gentamicin
Sulfate |
$64.42 |
$0.51 |
$63.91 |
12,531% |
|
Tobramyn
Sulfate |
$150.52 |
$2.94 |
147.58 |
5.020% |
|
Vancoymycin
Hydrochloride |
$382.14 |
$4.98 |
$377.16 |
7,574% |
|
 Medco
Charges Off $163 Million
In Expectation of Settlement
Medco Health Solutions
Inc. has said it expects to
take a $163 million pretax charge in expectation of settling
three False Claims Act lawsuits previously joined by the Federal
Government. Medco has said the charges reflect a financial
agreement "in principle," but that a corporate integrity
agreement has not yet been worked out. The company says it has
already changed most of the business practices that got it in
hot water with the Government. Medco's announcement is a
one-sided statement: DoJ, the court, and relator's counsel have
not yet given final approval. >>
To read more
|May
9, 2006 |
 The
Secret Politics of Custer Battles?
Did a former
Secretary of the Navy and his special assistant help steer lucrative Iraq contracts to Custer Battles
... and then try to bail them out of their jam after they
were caught cheating U.S. taxpayers? That appears to
be the story so far, says The Wall Street Journal,
which reports Custer Battles was sold to a shadowy
holding company in Romania which, in turn, was bought by
"Windmill International," whose principles include former
Secretary of the Navy
Hansford
T.
Johnson, and his special assistant, Douglas
Combs. >>
To read more
|May
9, 2006 |
 Grassley
Says Whistleblower Provisions
Key to State Success and Recovery Bonus
Sen. Charles Grassley
(R-IA) says federal officials need to make it clear that a state
must allow whistleblower lawsuits to move forward, even in
declined cases, if states are going to benefit from a Medicaid
recovery bonus under the Deficit Reduction Act. Grassley notes
that experience has shown that the Government often prematurely
declines cases that later prevail and that the government
routinely joins cases it intitially declined. >>
To
read more (PDF) |
 Boeing
Safety Gap Exposed
A False
Claims Act lawsuit against Boeing has
exposed gaps in the way the
government inspects aircraft during manufacturing.
According to the complaint, hundreds of civilian and
military aircraft were constructed with parts that did not
meet specifications, and which had to be drilled and
hammered into place. Among the items that did not
make the grade: door frames and fuselage ribs. >>
To read more
|
April 18, 2006 |
 E-Rate
Fraud as Business Plan
E-rate fraud cases
have already
revealed
more than $200 million in waste, fraud and abuse. As
Government Computer News notes, "Opportunistic vendors
and consultants have developed a business model in which
they approach needy school districts with promises of
equipment-and, sometimes, bribes to prepare bogus
applications for E-Rate funds."
>>To
read more
|
April 18, 2006 |
|
 Custer Battles
Nailed for Fraud
A jury
has found Custer Battles liable
in the first Iraq military contract fraud case
prosecuted under the False Claims Act. The jury found
all of the U.S. funds spent under the contract were fraudulently billed. In addition, the jury
found more than 30 separate fraudulent acts, each one of which is subject to an $11,000 penalty. The
jury also awarded Pete Baldwin $230,000 for being
demoted and constructively discharged. The total
award in this case is in excess of $10 million.
>> To read
more
| March 9, 2006 |
 Bank
of America Cheats the Kids
A Florida False
Claims Act lawsuit has been filed against
Bank
of America charging the company with evading the Florida
Disposition of Unclaimed Property Act which
requires
unclaimed bank funds to be turned over to the Florida
Department of Education. Bank of America has been pocketing
the funds and placing them in an executive bonus pool.
>>
To read more
|March
21, 2006 |
 CMS
Fails at Accountability
A new report
from the Office of the Inspector General of HHS concludes
that Medicare "Program Safeguard Contractors" can quantify
little more than their own bills to the government. As the
OIG report notes, "The majority of results-oriented comments
did not address outcomes of fraud and abuse work, and only
one evaluation report contained the number of open and
pending proactive fraud cases."
The OIG finds "limited
quantitative data" in the performance evaluation reports
that CMS issues to its program safeguard contractors.
The Government is spending $160 million a year on
PCS companies -- money that is apparently doled out with
very little oversight. >>
To read the HHS OIG report
|March
21, 2006 |
 Grassley
Defines State Success
Sen. Charles
Grassley has sent a letter to US Attorney General Alberto
Gonzales and HHS Inspector General Daniel Levinson, urging
them to help states qualify for an increased share of money
when Medicaid False Claims Act cases are settled. Sen.
Grassley outlines the four requirements states have to meet
for increased money, calling specific attention to the
whistleblower or qui tam provisions of the Deficit
Reduction Act (DRA). Some states, rushing to pass FCA
legislation, are not paying attention to the language and
standards of the DRA. >>
To read the letter |March
21, 2006 |
 The
FCA: Not Quick or Easy Cash
Filing a False
Claims Act case is not a quick, easy, or sure path to
riches. A few statistics illustrate the point. Of the
8,869 False Claims Act cases filed between 1987 and 2005,
5,129 were whistleblower-initiated cases. Of these qui
tam cases, 704 have resulted in a judgments or
settlements to date. The median relator's share in these
cases was $123,885. Because the relator's share is shared
with counsel and taxes are paid on it as well, a relator can
expect to take home about half of what is actually awarded
to him or her. The median length of time before a
government-intervened case is concluded is 38 months. >>
For more statistics from the GAO
|March
21, 2006
|
|
Calling
All U.S. Attorneys
In response to a series of questions from Senate Finance
Committee Chairman Charles Grassley (R-IA),
Paul McNulty,
the acting Deputy Attorney General, reports that the
Department of Justice has increased
the number of attorneys at main Justice from 69 to 77, and
that the Agency recently
brought 140 Assistant U.S. Attorneys from around the country
to the National Advocacy Center to train them
exclusively on heath care fraud.
James Moorman,
 President
of Taxpayers Against Fraud, applauded the move. "The
best chance of bringing more resources to bear in the fight
against fraud lies in getting more
U.S.
Attorney's on board. If Mr. McNulty can get this ball
rolling, it will be a political win
for the Bush Administration, and an economic win for U.S.
taxpayers." >>
To read the Grassley / McNulty's Q&A
| February 21, 2006
|
 One
Click Statistics Sheet
A simple one-click presentation (6
PDF pages) of
official Department of Justice False Claims Act Statistics for
FY 1987-2005 can be found >>
here
(note that this
table does not include recoveries to the states in Medicaid
cases, nor does include the $1 billion in recoveries in the
first three months of FY 2006).
| February 21, 2006 |
New Tools to Fight Medicaid Fraud
With passage of the
Deficit
Reduction Omnibus Reconciliation Act of 2005 (S.1932),
Congress has forged two new tools to combat Medicaid fraud.
 n
Incentives
for State FCA's:
Section
6031 of the new budget reconciliation bill would increase
state awards from False Claims Act litigation by 10
percentage points if
the state has adopted a state False Claims Act law as strong as the federal
version. For example, if a state's federal matching
rate is 57 percent, it would typically receive only 43
percent of the amount recovered from the fraud feasor.
However, if the State has enacted a qualifying False Claims
Act, its share of any recovery would increase by 10
percentage points, to 53 percent of any amount received
under its False Claims Act. (In this example, the states
share of the recovery effectively increases by 23 percent!)
n
Required False Claims
Act Education:
Section
6032 of the
new budget reconciliation bill
requires any entity that receives or
makes annual Medicaid payments of $5 million or more to include in their employee handbook a
detailed discussion of the
provisions of the federal and state False Claims Acts,
including the rights of whistleblowers.
Jim Moorman, President of Taxpayers Against Fraud, praised Congress,
and Senator Charles Grassley (R-IA) in particular, for
providing new tools to fight fraud.
"At a time when federal deficits are
soaring, and approximately 25% of all state budgets are
being spent on Medicaid, everything possible needs to be
done to
discourage and ferret out fraud against this important
health care program," said Moorman. "We hope these two
new provisions
will result in more states suiting up to bring Medicaid
cheats to justice."
In anticipation of the law's passage, Taxpayers Against
Fraud has produced a model state False Claims Act statute,
which can be downloaded from its web site. >>
To read the model law (PDF)
| February 2, 2006
|
 Colorado
FCA Is Introduced
State
legislators
Terence Carroll and Liane
McFadyen have
introduced a Colorado False Claims Act. The
legislation provides for up to treble damages.
Kansas and Missouri have recently introduced FCA legislation,
while legislation is pending, in New York, New Jersey,
Mississippi, Nebraska, Pennsylvania, Alabama, Oklahoma,
Connecticut, Alaska, and Minnesota.
>>
To read the legislation
| February 28, 2006
|
 Pediatrix
to Pay $25.1 Million
The
Pediatrix Medical Group has
said it has agreed to pay the U.S. Government $25.1 million to
settle charges
the company was overbilling
Medicaid. Pediatrix has previously settled similar Medicaid
billing investigations with state attorneys general from
Florida, Arizona, Nevada and Colorado.>>
To read more
| February 14, 2006 |
|
 Caremark:
The TV Show
Michael Moore is making a movie called "Sicko" about the health
care industry, but he's unlikely to have tape as compelling as
KHOU-TV in Houston
which put Caremark patients and their doctors on TV talking
about how the company cancels, changes and switches
prescriptions and medicines. Former Caremark employees explain
the system and how it is done. >>
To see this "must see TV"
| February 7, 2006 |
 $70
Million in Double Bill at
UMDNJ
Auditors have found evidence suggesting that the
University of Medicine and
Dentistry of New Jersey may have double-billed as much as $70
million for mental health services over the last
decade.
Up to now, UMDNJ
has avoided prosecution by placing itself under
the oversight of a federal monitor.
Bruce C. Vladeck, a
former head of Medicare and Medicaid for the U.S. Government,
has agreed to become the new interim president of the school. >>
To read more
| March 10, 2006 |
Winning
and Not Collecting
In 1999, Jim Stone won a $4.2
million False Claims Act jury verdict against Rockwell
International which was defrauding the U.S. Government
concerning hazardous waste disposal at the
Rocky Flats Nuclear Weapons
Plant in Colorado. Rockwell appealed the verdict, lost again in
2002, asked for a rehearing, and lost for the third time in 2004.
Rockwell filed a second rehearing request in 2004, which is
pending. Meanwhile, almost 20 years after first blowing the
whistle, and despite winning his case, 80-year old
Jim Stone has yet to see a dime,
and his case is going to the Supreme Court. >>
To read more
|
November 29, 2005
|
 $704
Million Serono Settlement
A False Claims Act lawsuit against
Swiss-based Serono for the marketing of their Serostim human
growth hormone was settled for $704 million, making it the
largest civil prescription drug settlement to date. The
Serono scam involved three key components:
gNon-FDA
approved computer
software and machines to calculate body mass to falsely diagnose
AIDS wasting;
gOff-label
marketing of Serostim,
which costs over $20,000 for a
three-month regime;
gKickbacks
to physicians and specialty pharmacies to get them to prescribe
or recommend Serostim. >>
To
read more |
October 16, 2005 |
 King
Pharma Settles for $124 Million
King Pharmaceuticals has settled a False Claims Act case for
$125 million. The case involves violation of Medicaid
prescription drug "best price" regulations and the underpayment
of rebates for the drugs Altace, Aplisol, Lorabid, and Fluogen.
King Pharmaceutical was giving price breaks to pharmacy benefit
management companies (PBMs) that it was not giving to the U.S.
Government. >>
To read more
| November 01, 2005 |
GSK
Settles Pricing Suit for $150 Million
GlaxoSmithKline has agreed to settle charges it violated the
False Claims Acts in
a scheme to increase market share by reporting false and
misleading information about the price of
two anti-nausea drugs, Zofran and Kytril, with
the full
knowledge that the government would rely on the reported data in
setting Medicare and Medicaid reimbursements for covered drugs.
GSK also instructed doctors how to double-bill Medicare for
drugs.
GSK is one
of more than 40 companies sued under the False Claims Act by
Ven-A-Care of the
Florida Keys.
>>
To read more
| September 20, 2005 |
|
|
 Pharma
Lies for Pharma
Profits
How lucrative are the
lies told by prescription drug manufacturers? Very!
The table below, assembled from the recent
State of Florida's False Claims Act complaint against Mylan,
Teva, and Watson pharmaceuticals, shows how drug companies
capture market share at the expense of U.S. taxpayers. >>
To learn more about "marketing the spread" frauds.
|
Drug and Company |
Reported Wholesale
Acquisition Cost (WAC) |
Florida Medicaid cost
based on WAC |
Actual pharmacy cost
of buying drugs |
Difference in $ |
Spread as percent of
actual |
|
Rantidine, 150mg tablet (Mylan) |
$14.00 |
$14.98 |
$2.88 |
$12.10 |
420% |
|
Clonazepam, .5mg tablet
per 100 (Teva) |
$9.31 |
$9.96 |
$4.49 |
$5.47 |
122% |
|
Carisoprodol,350mg tablet
(Watson) |
$363.40 |
$388.84 |
$113.10 |
$275.74 |
244% |
|
|
|
A Tally of FCA
Fraud Cases by Pharmaceutical Manufacturers
|
Company |
Settlement Date |
Product |
Total Recovery |
Fraud Type |
Whistleblower |
|
AstraZeneca |
6/20/03 |
Zoladex |
$355 million |
Marketing the spread
and concealment of best price |
Sales exec from
competitor at TAP Pharmaceuticals |
|
Baxter International |
6/13/06 |
Generic drugs made by
Baxter |
8.5 million |
Marketing the spread |
Independent pharmacy |
|
Bayer l |
1/23/01 |
Kogenate, Koate-HP,
Gamimmune |
$14 million |
Marketing the spread
and concealment of best price |
Independent pharmacy |
|
Bayer II |
1/23/01 |
Adelat CC, Cipro |
$257 million |
Concealment of best
price |
Bayer marketing
executive |
|
Dey I |
6/11/03 |
Albuterol |
$18.5 million |
Marketing the spread |
Independent pharmacy |
|
Dey 2 (Connecticut FCA) |
8/7/04 |
Albuterol |
$2.5 million |
Marketing the spread |
Independent pharmacy |
|
GlaxoSmithKline I |
4/16/03 |
Paxil, Flonase |
$88 million |
Concealment of best
price |
Derived from Bayer
marketing executive allegations. |
|
GlaxoSmithKline II |
9/17/05 |
Zofran, Kytril |
$150 million |
Marketing the spread |
Independent pharmacy |
|
King Pharmaceutical |
10/30/05 |
Altace,
Aplisol, Lorabid, and Fluogen |
$124 million |
Concealment of best
price |
Executive of King
Pharmaceuticals |
|
Pfizer l |
10/28/02 |
Lipitor |
$49 million |
Concealment of best
price |
National account
manager for Pfizer subsidiary |
|
Pfizer ll |
5/13/04 |
Neurontin |
$430 million |
Off-label marketing |
Medical liaison to
physicians for Pfizer subsidiary |
|
Roxane Labs,
Boehringer
Ingelheim Pharmaceuticals, and Ben Venue
Laboratories (Texas FCA) |
11/25/05 |
Albuterol |
$10 million |
Marketing the spread |
Independent pharmacy |
|
Schering-Plough
l |
5/3/04 |
Albuterol |
$27 million |
Marketing the spread |
Independent pharmacy |
|
Schering-Plough ll |
7/29/04 |
Claritin |
$345 million |
Concealment of best
price |
Three employees of
Schering-Plough subsidiary |
|
Schering-Plough ll |
8/26/06 |
Temodar,
Intron-A, K-Dur, Claritin RediTabs |
$435 million |
Concealment of best
price, Marketing the spread |
Three employees of
Schering-Plough |
|
Serono |
10/17/05 |
Serostim |
$704 million |
Off-label marketing
and kickbacks |
Five Serono employees
in two states. |
|
TAP Pharmaceuticals |
10/3/01 |
Lupron |
$875 million |
Marketing the spread
and concealment of best price |
HMO Physician and TAP
sales executive |
|
TOTAL |
|
|
$3.844 billion |
|
|
|
|
