False Claims Act Update & Alert


Taxpayers Against Fraud Education Fund | Washington, D.C. | WWW.TAF.ORG          
December 7, 2012


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DoJ Hides Its Light Under a Barrel
DoJ issues press releases all year long that say one thing while, at the end of the year, they announce something else.  What’s going on? 
Simple enough: When DoJ announces a False Claim Act recovery, they put the total recovery into their headline; a recovery that includes state Medicaid recoveries and criminal penalties triggered by False Claims Act investigations.  When DoJ announces recoveries at the end of the year, however, they leave the criminal fines off the table, as well as the state recoveries.
     Why? Again, simple enough; when DoJ first started compiling FCA statistics more than 25 years ago, criminal fines associated with FCA cases were nonexistent, and there were almost no Medicaid recoveries. DoJ False Claims Act statistics keeping remains an artifact of that era.
A classic example of the described phenomenon is the GlaxoSmithKline case announced earlier this year. DoJ’s July press release states that $3 billion was recovered in this case but $1 billion of this was a criminal penalty. Of the remaining $2 billion, $1.043 billion was paid for off-label promotion of various drugs, and of this sum the federal share was $832 million, and the state share was $210 million.  In addition, GSK agreed to pay $657 million relating to false claims arising from misrepresentations about Avandia. The federal share of this settlement was $508 million, and the state share was $149 million.  Finally, GSK agreed to pay $300 million to resolve allegations of price-gouging, including $160,972,069 to the federal government, $118,792,931 to the states, and $20,235,000 to Public Health Service entities.
The bottom line: Of the $3 billion recovered to government solely due to whistleblower-initiated False Claims Act cases first filed by private attorneys, the federal government only booked $1.5 billion under the federal False Claims Act, and DoJ end-of-year statistics manage to “lose” the other $1.5 billion.
  The result is the odd scenario we saw this week, where DoJ announced they had recovered $4.959 billion under the False Claims Act when, in fact, total recoveries to taxpayers from False Claims Act cases exceed $9 billion for the top 30 FCA case alone.



Healthpoint to Pay up to $48 Million
Healthpoint Ltd. and DFB Pharmaceuticals have agreed to pay up to $48 million to settle charges Healthpoint charged Medicare and Medicaid for an unapproved prescription drug ointment called Xenaderm used which was used to treat bed sores on bed-ridden nursing home patients.  Healthpoint and DFB will pay $28 million now, plus another $20 million if Healthpoint or DFB are sold over the next three years. This settlement is part of a series of recoveries totaling over $100 million from manufacturers of unapproved drugs.

TAF-EF Files Amicus
The TAF Education Fund
has filed an amicus curiae brief (31-page PDF) in the case of U.S. ex rel. Kurt Bunk & Ray Ammons v. Birkart Globalistics, which is under appeal in the Fourth Circuit. The defendant’s arguments in this appeal included the assertion that relators do not have standing under Article III to seek or obtain only civil penalties and that the suit violates Article II of the Constitution. The TAFEF amicus brief addresses those assertions.

DaVita Faces Massive Fraud Case
Two Georgia whistleblowers have brought a False Claims Act case against DaVita, charging the dialysis company with bilking Medicare and Medicaid out of hundreds of millions of dollars by billing for Vitamin D and Iron supplements that company clinics routinely threw down the drain.  The case was the subject of a CNN report on Anderson Cooper 360.  After the fraud cases was filed, Medicare changed the rules so that dialysis providers can no longer bill for individual drug doses; they are now bundled reimbursement into a reimbursement system that pays for the overall care provided to a patient.