As of October 01, 2009
 

FY 2009 False Claims Act Settlements
 

FY 2009 has been a record year in False Claims Act recoveries, with well over $5.6 billion in overall recoveries announced.  (See partial list, below).

Why do "offficial" DoJ numbers show only $2.4 billion in False Claims Act recoveries?

 

Simple:  DoJ does not count criminal recoveries (in the Pfizer matter alone, this was $1 billion), nor do they count money disbursed to the states in settlements (about 45% of all money collected in Medicaid cases), nor do they count money not actually collected this Fiscal Year.  

 

Bottom line:  Total "official" False Claims Act recoveries in 2009 were $2.4 billion, though more than $5.6 billion in False Claims Act case recoveries were announced by Uncle Sam and the States.

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The cases below represent a "running tally" of False Claims Act cases over $15 million compiled by the Taxpayers Against Fraud Education Fund for Fiscal Year 2009. 

Major False Claims Act Cases Resolved in Fiscal Year 2009:

• Pfizer to Pay Record Payment of $2.4 billion
  This is the largest FCA recovery in history. Of the $2.3 billion settlement, $1.3 billion is a criminal fine and forfeiture related to the fraudulent off-label marketing of Bextra.  This $1.3 billion criminal fine is the largest ever imposed in the U.S.  A total of $1 billion will be paid to settle civil False Claims liabilities involving the following drugs:
  * Bextra (an anti-inflammatory drug)
  * Geodon (an anti-psychotic drug)
  * Lipitor (a cholesterol drug)
  * Norvasc (anti-hypertensive drug)
  * Viagra (erectile dysfunction)
  * Zithromax (antibiotic)
  * Zyrtec (antihistamine)
  * Zyvox (an antibiotic)
  * Lyrica (an anti-epileptic drug)
  * Relpax (anti-migraine drug)
  * Celebrex (anti-inflammatory drug)
  * Depo-provera (birth control)
  
  Of the $1 billion paid to settle False Claims Act claims, $668,514,830 will go to the Federal Government, and $331,485,170 will go to the states.  Of the $1 billion paid under the FCA (Federal and States), the sums work out as follows:
  * Bextra: $502,524,316
  * Geodon: $301,462,065
  * Zyvox: $97,945,019
  * Lyrica: $48,223,886
  * Other Kickback Drugs: $49,844,714
  
  A total of six whistleblowers and their attorneys will receive payments totaling more than $102 million from the federal share of the civil recovery, with additional money to flow as a result of parallel False Claims Act cases filed at the state level.

• Lilly Pays $1.4 Billion
  In the second largest settlement with a False Claims Act component, Eli Lilly has agreed to pay $1.4 billion to settle charges it defrauded Medicare and Medicaid by off-label marketing of Zyprexa   Of the $1.4 billion settlement, $800 million was paid under the FCA ($438 million under Federal FCA, $362 million to the states), and $615 million was a criminal penalty.  A special note is needed here:  Zyprexa is only one of several atypical anti-psychotics marketed the same way, with the same side-effects (diabetes), and sold at approximately the same sales volume ($3 to $4 billion a year).  Look for Seroquel and Risperdal settlements of a similar size to come sometime in the future. |

• NY State and NY Pay Record $540 Million
  New York State and City agreed to pay $540 million to settle a false claims case in which the state and city were accused of improperly billing Medicaid for student speech, physical and occupational therapy, psychological counseling and transportation costs. This is the largest Medicaid False Claims Act case in history.

• Northrop Pays $325 Million
  Northrop Grumman has agreed to pay $325 million to settle a False Claims Act lawsuit that alleged TRW (now owned by Northrop) made defective parts for spy satellites that resulted in serious malfunctions and expensive fixes, all charged to U.S. taxpayers. The Northrop settlement is the largest military-procurement fraud qui tam case to date.  

• Quest Diagnostics Pays $302 Million
  Quest Diagnostics has agreed to pay $302 million to settle civil and criminal charges related to a Quest subsidiary which sold a parathyroid hormone immunoassay test which reported elevated results.  The inaccurate diagnostic test kit resulted in medical providers submitting false claims for reimbursement to federal health programs. The settlement includes $262 million paid under the federal FCA, $6.2 million paid to the states, and a criminal fine of $40 million. 

• Network Appliance Pays $128 Million
  Network Appliance Inc. has agreed to pay $128 million to settle a False Claims Act case involving best price violations.  This settlement is the largest corporate fraud settlement in Government Services Administration (GSA) history.

• Bayer Healthcare Pays $97.5 Million
  Bayer HealthCare has agreed to pay $97.5 million to settle an FCA case in which the company was charged with paying kickbacks to several diabetic suppliers, causing those suppliers to submit false claims to Medicare.  The cash-for-patient scheme involved 11 diabetic supply companies which were paid kickbacks to convert their patients from other suppliers to Bayer products.  It is believed that other, smaller, suits are attached to this case, which is why the complaint remains under seal.
   
• Aventis Pays $95.5 Million
  Aventis (now Sanofi-aventis) has agreed to pay $95.5 million to settle charges the company knowingly cheated Medicaid by overcharging for anti-inflammatory nasal sprays.  Aventis sold the nasal spray to Kaiser Permanente for less than it sold it to Medicaid -- a violation of Medicaid best price rules.
   
• WellCare Pays $80 Million
  WellCare Health Plans has agreed to pay $80 million to settle charges the company inflated Medicaid charges in Florida. The settlement only applies to Florida, and does not settle any other state or federal investigations of WellCare.  WellCare has other FCA litigation still outstanding.
   
• Westchester County Pays $50 Million
  Westchester County, N.Y., has agreed to spend $50 million of County funds to ensure the development of 750 housing units in areas with low racial and ethnic diversity in order to settle a FCA lawsuit which charged the County with taking large amounts of money from HUD under an agreement that required the County to take action to end discrimination in local low-income housing.  Westchester took the money, but did not address its discrimination problems. 
   
• Healthways Pays $40 Million
  Healthways Inc. agreed to pay $40 million to settle an FCA lawsuit filed 15 years ago by A. Scott Pogue, a former employee of Diabetes Treatment Center of America. The lawsuit alleged Diabetes Treatment Centers illegally paid doctors for referrals.  The U.S. Government did not join the suit, but will collect more than $28 million. 
   
• Armor Pays $30 Million
  Armor Holdings Products, a division of BAE Systems, has agreed to pay $30 million to settle a False Claims Act case in which the company was accused of knowingly manufacturing and selling defective Zylon bullet-proof vests with material manufactured by Toyobo Industries.
   
• Condell Pays $36 Million
  Condell Medical Center, a hospital in Libertyville, IL, has agreed to pay $36 million to settle an FCA lawsuit in which it is alleged the company paid kickbacks to doctors in the form of leases of medical office space at rates below fair market value; improper loans to physicians; and improper hospital reimbursements.  Condell's self-admitting violations were triggered by the sale of the hospital to Advocate Health Care.
   
• APL Shipping Pays $26 Million
  APL Ltd, a shipping firm in Oakland, California, has agreed to pay $26 million to settle a FCA case in which the company is accused of knowingly overcharging and double-billing the Department of Defense in order to transport thousands of containers from ports to inland delivery destinations in Iraq and Afghanistan.
   
• Boeing to Pay $27 Million
  Boeing has agreed to pay $25 and $2 million to settle two False Claims Act cases.  In the smaller case, Boeing allegedly cheated taxpayers by falsifying billing records at a San Antonio plant that maintains Air Force planes.  In the larger case, brought by the same set of lawyers, Boeing is alleged to have performed defective work on the aerial refueling fleet used in Iraq and Afghanistan.
   
• Biovail Pays $25 Million
  Biovail has agreed to pay $22.2 million in criminal fines and $2.4 million in civil charges to settle allegations it was engaged in a kickback scheme in which the company paid or caused to be paid up to $1,000 to thousands of physicians and others in order to induce them to prescribe and/or recommend the hypertensive drug, Cardizem.
   
• SouthernCare Hospice Pays $25 Million
  SouthernCare Inc., an Alabama-based hospice company, has agreed to pay $24.7 million to settle charges it billed Medicare for ineligible patients.  The company operates 99 locations in 15 states.
   
• Leo Burnett Ad Agency Pays $15 Million
  Leo Burnett, a Chicago ad company, will pay $15.5 million to settle a False Claims Act case in which the company was charged with overbilling the U.S. Army for a recruitment campaign when it submitted invoices from affiliates as if they were independent contractors.
   
• Dynamics Pays $15 Million
  Dynamics Research Corporation, a defense contractor in Andover, Massachusetts, has agreed to pay $15 million, plus interest, to settle charges that two of its executives steered Air Force contracts for computer equipment and services to companies they owned. In a related criminal proceeding in 2001, the two executives pleaded guilty to fraud, and were sentence to prison and ordered to pay restitution.