False Claims Act Update & Alert


Taxpayers Against Fraud Education Fund | Washington, D.C. | WWW.TAF.ORG          
January 10, 2012


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Actavis to Pay Over $202 Million
After losing at trial in Texas last year, Actavis Group has agreed to settle and pay  $202 million which will release the company from price-gouging charges in other states as well as Texas. Though the U.S. Department of Justice did not join Texas or the other state cases, it will recover $108 million from the settlement while the relator, Ven-A-Care of the Florida Keys, will collect $15.6 million. Notes Ven-A-Care counsel Jim Breen: "The U.S. declined to intervene, which means the Justice Department didn’t invest any resources in this case. Ven-A-Care and its legal team funded and pursued the case, and took all the risks.”



GE Healthcare to Pay $30 Million

GE Healthcare has agreed to pay $30 million to settle a False Claims Act lawsuit in which a whistleblower alleged a GE Healthcare company marketed a cardiac diagnostic drug as one that could be diluted and extended to more patients than intended.


J&J's FCA Risperdal Liabilities

Johnson & Johnson will reportedly pay more than $1 billion to settle civil charges with the U.S. and most states over off-label marketing of the antipsychotic drug Risperdal, with another $400 million reportedly earmarked for a criminal plea.  Those payments do not clear the deck for J&J, however. The company goes to trial this week in Texas on the same, and additional, charges, with the state seeking $1 billion. Johnson & Johnson has already lost state judgments on the marketing of Risperdal in South Carolina and Louisiana for sums totaling almost $600 million. South Carolina judge
Roger L. Couch noted in his damages decision that J&J's profits on Risperdal were 97 percent of sales, or $28.9 billion, between 1994 and 2010. 

Shipper to Pay $32 Million
Norfolk, Virginia-based Maersk Line and its Danish parent company have agreed to pay $31.9 million to settle charges they submitted inflated cargo invoices for goods shipped to U.S. troops in Afghanistan and Iraq.

DoJ Targets 11 Swiss Banks

DoJ is pursuing 11 Swiss banks, telling them they must hand over thousands of client names and pay $3 billion in fines to avoid tax evasion prosecution in the United States.

Merck to Pay $24 Million
Merck has agreed to pay $24 million to the state of Massachusetts for price-gouging the state on Medicaid drugs.

Ranbaxy to Pay $500 Million

Indian generic drug maker Ranbaxy Laboratories says it has signed an agreement with the U.S. FDA to pay
$500 million to settle charges that the company
fabricated bioequivalency and stability data in order to sell HIV/AIDS drugs to the President’s Emergency Plan for AIDS Relief program (PEPFAR).

Denver Hospital to Pay $6.3 Million

Denver Heath Medical Center has agreed to pay $6.3 million to settle charges it overbilled Medicare and Medicaid by misclassifying "outpatients" or "observation" patients as inpatients.

Serious Trouble at BNY Mello
Documents filed as part of a whistleblower lawsuit in Florida show the extent of the problems faced by
Bank of New York Mellon, which has been charged with cheating state pension funds in currency exchange transactions. The court documents include a step-by-step guide to how currencies were traded and internal profits were racked up, and even details where documents were stashed in a central repository. When one employee learned BNY Mellon, as well as State Street Bank, was under investigation for currency-trading, she reportedly told her co-workers that, "It's over, it's all over."

Success and the SEC
Securities and Exchange Commission
Chairman Mary Schapiro says the SEC's new whistleblower program is already yielding results, and that lawmakers should not try to "fix" a program that is not broken. "Making significant changes in the program before it has had an opportunity to demonstrate its full value seems premature, particularly in the absence of any evidence of problems with the current program" said Schapiro in a letter to Rep. Barney Frank (D-MA).

Record Whistleblower Recoveries

In FY 2011, the Justice Department secured
more than $3 billion in settlements and judgments in civil cases involving fraud against the government.  Of this amount, a record $2.8 billion was under the whistleblower provisions of the False Claims Act.  FY 2011 was also a big year for pharma fraud recoveries, with prescription dugs accounting for $2.2 billion in civil claims against drugmakers, including $1.76 billion in federal civil recoveries and $421 million in state Medicaid recoveries.

What Could Go Wrong?

Kaiser Health News reports that
hospitals are adopting drug industry sales strategies, by hiring employees to make "sales calls" on doctors in the hope that this will result in more patient referrals. Tenet Healthcare, for example, has doubled its sales force in the past two years. Tenet, of course, is a repeat player in the fraud arena, racking up record health care frauds on multiple occasions.

Medtronic to Pay $23.5 Million

Medtronic has agreed to pay
$23.5 million to settle cardiac defibrillator and pacemaker cases. This is just one more in a series of False Claims Act settlements made by Medtronic. Previous cases were settled for $40 million (2006, kickbacks) and $75 million (2008, spinal implants).

SEC Chases Big Mortgage Fraudsters

Mortgage giants Freddie Mac and Fannie Mae are under the gun for massive fraud.  Six former top executives at the companies are being sued by the SEC which says executives misled investors over the mortgage finance companies' exposure to risky home loans. Since 2008, the two companies have only stayed above water thanks to $169 billion in federal loans.  In related news, New York Attorney General Eric Schneiderman and Steve Linick, the inspector general of the Federal Housing Finance Agency, have signed an agreement to share documents and findings related to Fannie and Freddie.


Bomb Case Settled for $4.75 Million

The Kaman Corporation has agreed to pay $4.75 million to settle a False Claims Act case alleging the company sold untested fuses to the U.S. Government for BLU-109 and BLU-113 "bunker buster" bombs.