Monday, December 28, 2009

Chevron settles royalties underpayment qui tam suit for $45 million

Chevron Corp., Texaco, Unocal and affiliated companies will pay the federal government $45.6 million to resolve claims that they violated the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal and Indian leases.

The settlement resolves claims that the companies improperly deducted from royalty values the cost of boosting gas up to pipeline pressures, used affiliate transactions to falsely reduce the reported value of gas taken from federal and Indian leases, and improperly reported processed gas as unprocessed gas to reduce royalty payments.

The lawsuit begain as a whistleblower suit filed under the qui tam provisions of the False Claims Act. The whistleblower is deceased but his heirs will receive $12.3 million as his relator's share.

Tuesday, December 22, 2009

Whistleblower Kopchinski named most influential person in business ethics for 2009

Ethisphere, a think tank that focuses on business ethics, corporate social responsibility, anti-corruption and sustainability, has named Pfizer whistleblower John Kopchinski the most influential person in business ethics for 2009.

Kopchinski received a relator's share of $51.1 million, part of the $2.3 billion penalty that Pfizer paid for illegally marketing some of its drugs.

In our blog post on the Pfizer settlement, we noted that this was the largest health care fraud settlement ever.

Kopchinski was represented by Phillips & Cohen LLP. Erika Kelton of Phillips & Cohen said, "John Kopchinski wasn't seen as a team player and ultimately lost his job at Pfizer. But the happy ending to his story and the recognition this honor bestows should give other whistleblowers hope."

Three home health agencies settle whistleblower suits for $24 million

Attorney General Andrew M. Cuomo and U.S. Attorney Benton J. Campbell today announced a settlement with three home health agencies resolving qui tam lawsuits that alleged violations of the federal and New York State False claims acts.

The settlement arises from the agencies’ use of hundreds of home health aides who had received little or no required training. The aides were sent to the homes of New York’s elderly, frail and indigent to provide sensitive medical care. As a result, these aides caused Medicaid to be billed for millions of dollars for services they were not qualified to provide.

B&H Health Care Services, Inc., known as Nursing Personnel Home Care (“Nursing Personnel”), Excellent Home Care Services, LLC (“Excellent”) of Brooklyn, and Extended Nursing Personnel CHHA, LLC (“Extended”) of Manhattan will return $23,963,100 to Medicaid. New York State's share is $14,377,860.

U.S., Calif. and Florida recover $69 million from Schering-Plough

Schering-Plough has agreed to pay a total of $69 million to the federal government and the states of California and Florida to settle allegations that it deliberately inflated the cost of drugs, causing Medicaid to overpay pharmacy reimbursements.

The press release from the California Attorney General's Office (which includes a copy of the settlement agreement) notes that this is one of several whistleblower suits filed by Ven-A-Care of the Florida Keys, Inc.

The settlement resolves allegations that Warrick Pharmaceuticals, a subsidiary of Schering-Plough, deliberately inflated the Average Wholesale Prices (AWPs) it reported for Albuterol and other drugs. Medicaid sets the reimbursement rates for pharmacies for many of the drugs dispensed to their patients based on the AWPs reported by drug manufacturers. By reporting falsely inflated AWPs, some drug manufacturers caused Medicaid to overpay millions of dollars in pharmacy reimbursement.

University of Phoenix settles qui tam suit for $78.5 million

The University of Phoenix has agreed to pay $78.5 million to resolve allegations that it violated the False Claims Act. The suit, which was pursued by the qui tam plaintiffs after the government declined intervention, alleged that the university defrauded the government by paying counselors incentives for enrolling students. Under Title IV of the Higher Education Act, universities that qualify for student aid are barred from paying incentives to recruiters to boost enrollment.

The Recorder said that settlement is notable because in qui tam cases where the government declines to get involved the win rate is very low.

Thursday, December 10, 2009

Florida will receive $8.5 million in whistleblower suit

Florida Attorney General Bill McCollum announced that the state will receive $8.5 million from a settlement with Roxane Laboratories, Inc., and its corporate affiliates. The settlement resolves allegations that Roxane set and reported false and inflated prices for drugs, leading to overpayments by the Florida Medicaid program.

The suit was initially filed by whistleblower Ven-A-Care of the Florida Keys, Inc. on behalf of the State of Florida. The state is one of those that has a qui tam provision in its False Claims Act, allowing private individuals to bring suit on behalf of the state.

Thursday, December 03, 2009

Qui tam cases made up nearly $2 billion of FY 2009 FCA recoveries

The Justice Department announced that settlements and judgements in cases involving fraud against the government reached $2.4 billion in fiscal year 2009. Of that amount, nearly $2 billion was attributable to cases brought by whistleblowers under the qui tam provisions of the federal False Claims Act.

The Act was strengthened by amendments made in 1986 that reduced the barriers to citizens suing on behalf of the government and increased the incentives to filing such suits. More recent amendments that were part of the Fraud Enforcement and Recovery Act of 2009 have clarified Congressional intent as to when a qui tam suit can be pursued. Assistant Attorney General Tony West noted that several courts had narrowed the scope of the False Claims Act and the amendments corrected that narrowing.

Health care fraud recoveries totaled $1.6 billion, two-thirds of the year’s total. The largest health care recoveries came from the pharmaceutical and medical device industries, which accounted for $866.7 million in settlements. In addition to federal recoveries, these pharmaceutical and medical device fraud cases returned $402 million to state Medicaid programs.

In fiscal year 2009, relators were awarded $255 million.

Tuesday, December 01, 2009

Supreme Court hears oral arguments in False Claims Act case

The U. S. Supreme Court heard oral arguments on November 30 in the case of Graham County Soil & Water Conservation District v United States ex rel Wilson.

The question before the court concerns the False Claims Act's public disclosure bar, 31 USC § 3730(e)(4)(A), which bars suits based on public disclosures “in a criminal, civil or administrative hearing, in a congressional, administrative, or [GAO] report, hearing, audit, or investigation, or from the news media.” The Fourth Circuit had held that the language refered to federal reports, audits or investigations and not those of state or local governments.

The briefs submitted in the suit are available at the ABA website.

Nation's largest nursing home pharmacy settles qui tam suit

The U.S. Dept. of Justice announced on November 3, 2009 that the nation’s largest nursing home pharmacy, Omnicare Inc., will pay $98 million, and drug manufacturer, IVAX Pharmaceuticals of Weston, Florida, will pay $14 million to resolve allegations that Omnicare engaged in kickback schemes with several parties, including IVAX.

The company allegedly received kickbacks from Johnson & Johnson in exchange for recommending that physicians prescribe Risperdal, a J&J antipsychotic drug, to nursing home patients. J&J’s kickbacks to Omnicare took multiple forms, including rebates, payments disguised as data purchase fees, educational grants, and fees to attend Omnicare meetings. It was also alleged that Omnicare regularly paid kickbacks to nursing homes by providing below market rate consultant pharmacist services in order to induce the homes to refer their patients to Omnicare for pharmacy services.

One of the whistleblowers in the case, Adam Resnick, was represented by lawyers from Phillips & Cohen LLP.