False Claims Act Update & Alert


Taxpayers Against Fraud Education Fund | Washington, D.C. | WWW.TAF.ORG          
January 16, 2012


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Amgen to Pay $762 Million
Amgen had agreed to pay $762 million and plead guilty to illegal off-label promotion of Aranesp in order to settle ten whistleblower-driven False Claims Act cases that charged the company with a massive kickback scheme designed to drive the illegal promotion of Aranesp, Enbrel and Neulasta.   The Amgen settlement is the largest FCA cases involving a biotech firm to date, and includes a $150 million criminal penalty as well as a 5-year corporate integrity  agreement.


Sanofi to Pay $109 Million

Sanofi-Aventis has agreed to pay $109 million to settle a False Claims Act case alleging the company paid kickbacks to doctors in the form of free product given to doctors.  The free product were units of Hyalgan, a knee injection, and were designed to increase the "spread" between the reported cost of the drug and the actual cost of the drug -- a kind of pricing fraud.

Pfizer and Endo to Pay Texas $36 Million
Pfizer and Endo Pharmaceuticals have agreed to pay $36.34 million to settle a Texas Medicaid False Claims Act case filed by Ven-a-Care of the Florida Keys. Ven-a-Care charged the two companies with
misreporting the price of generic drugs to the Medicaid program by lying about "average sales price." The $36.34 million recovery for the State is in addition to attorney fees and relator share that will also be assessed against the companies.  To date, Ven-a-Care of the Florida Keys has helped returned in excess of $3 billion to state and local governments through False Claims Act and other enforcement efforts.

Healthpoint to Pay $48 Million
Healthpoint and DFB Pharmaceuticals have agreed to pay up to $48 million to settle a False Claims Act case alleging the companies were selling Xenaderm, a non-FDA approved prescription ointment sold to treat nursing home patient bed sores.
Healthpoint and DFB will pay $28 million now and up to $20 million more if there is a change in ownership of Healthpoint or DFB over the next three years

Pfizer to Pay $98 Million

Pfizer had agree to pay
$55 million to settle claims that its Wyeth unit promoted Protonix for unapproved uses. This case is the "edge of a wedge" of a much larger whistleblower-driven Protonix case where single damages are said, by DoJ, to potentially exceed $650 million.

Toyo Ink to Pay $45 Million
Japanese ink maker Toyo, has agreed to pay $45 million to settle a whistleblower-driven False Claims Act case alleging the company lied about the country of origins of one of its ink colors in order to pay antidumping and other countervailing duties. 

Lance Armstrong Faces the False Claims Act
Will DoJ join a False Claims Act lawsuit case filed against Tour de France bicyclist Lance Armstrong and his backers and managers?  The lawsuit, filed by former teammate Floyd Landis, alleges that Armstrong and his team lied to the U.S. Postal Service when they accepted money and signed a promotional contract saying the team would not use illegal performance-enhancing drugs and would take “immediate action” against individuals who did. Armstrong and his codefendants have reportedly offered to pay the federal government more than $5 million to compensate the U.S. Postal Service for violating the terms of the USPS promotional contract, but Justice Department officials have rejected that offer as inadequate.  

Victory Pharma to Pay $11.4 Million
Victory Pharma Inc., has agreed to pay $11.4 million to resolve False Claims Act charges related to kickbacks and off-label marketing of Naprelan, Xodol, Fexmid and Dolgic.  The kickbacks came in the form of tickets to professional and college sporting events; tickets to concerts and plays; spa outings; golf and ski outings; dinners at expensive restaurants, and; payments to a doctor to help him make a house payment. Victory also encouraged sales representatives to schedule paid “preceptorships,” in which sales representatives  paid to “shadow” doctors in their offices. >> To read more

Scooter Store:  Catch Me If You Can?
After being nailed for fraud in past False Claims Act actions, the Scooter Store signed a "corporate integrity agreement," in which they promised to straighten up and fly right.  As part of that corporate integrity agreement, the Scooter Store had to hire an independent auditor to review their book.  In reviewing their books, however, the independent auditor found the Scooter Store had been overpaid $87.7 million by Medicare, and had failed to report and return that money within 30 days as required. HHS OIG threatened to exclude the company from federal health care programs, and the Scooter Store then agreed to pay $19.5 million.  Now Senators Richard Blumenthal (D-CN) and Herb Kohl (D-WI) are asking why CMS agreed to settle for only $19.5 million, and why the OIG had to “take action as stringent as threatening” to exclude The Scooter Store in order to get it to make repayment.

Princeton Review to Pay $10 Million
The former owner of test preparation firm Princeton Review has agreed to pay up to $10 million to settle a False Claims Act case that alleged the company billed New York City schools for tutoring students that it never even saw.

In Other News:

w SEEDCO FraudA New York job training firm, has agreed to pay $1.725 million to settle a False Claims Act case in which it claimed  federal money for job placements it did not make.

w Gallup Fraud:  A former top official at FEMA pleads guilty to felony conflict of interest in a case related to a FCA case filed against the Gallup polling organization for pricing fraud.  DoJ has joined the FCA case against Gallup.

w Orthofix Fraud: Derrick Field, an Orthofix manager between 2005 and 2011, has been sentenced to 5 months of home confinement as part of his 2 years of probation.  Orthofix was convicted last year of "felony obstruction of a federal audit," and was hit with over $42 millions in fines ($34 million under the FCA and a criminal fine of $7.8 million.

w Crown Roofing Services Fraud:  The company was nailed for $3 million under the FCA for illegally paying kickbacks in order to get a series of roofing contracts at the Johnson Space Center in Houston.