Monday, January 25, 2010

Florida congressman introduces "Defund the Crooks Act"

Rep. Alan Grayson (D-Fla.) has introduced a bill (H.R. 4444) that would impose new restrictions on the award of government contracts to organizations that have violated state or federal law.

The bill would amend the Federal Acquisition Regulations to prevent the award of contracts to and require the termination of contracts with "covered organizations."

The bill defines "covered organizations" as:

(1) An organization that has been convicted ofa violation of any Federal or State law.
(2) An organization that had its corporate charter revoked by a State or other issuing authority due to the failure of the organization to comply with Federal or State laws.
(3) An organization that has filed, submitted, or transmitted a fraudulent claim with or to any Federal or State agency authorized by law to promulgate regulations.
(4) An organization that knowingly employs an individual who has been convicted of a violation of Federal or State law.
(5) Any organization that is the parent company of, subsidiary of, or subsidiary of the parent company of, and any other company that owns 50 percent or more of, an organization dscribed above.

Friday, January 22, 2010

Dental fraud suit settled for $24 million

The Dept. of Justice announced that it has settled a False Claims Act suit against a dental management company.

The company, FORBA Holdings LLC, agreed to pay $24 million to resolve allegations that it provided medically unnecessary dental services to children insured by Medicaid. These services included pulpotomies (baby root canals), placing crowns, administering anesthesia, performing extractions, and providing fillings and/or sealants. The company provides management and administrative services to 69 clinics nationwide.

The government's investigation was initiated by three whistleblower suits filed under the qui tam provisions of the False Claims Act. The whistleblowers will receive a relator's share of over $2.4 million.


Friday, January 15, 2010

Feds join whistleblower suit against Johnson & Johnson

The U.S. Dept. of Justice has joined a whistleblower suit alleging that pharmaceutical manufacturer Johnson & Johnson violated the False Claims Act.

The complaint alleges that J&J paid millions of dollars in kickbacks to Omnicare, the nation’s largest pharmacy specializing in dispensing drugs to nursing home patients. Omnicare had entered into an agreement with the federal government and many state governments in November 2009, paying $98 million to resolve the company's civil liability for taking kickbacks from J&J.

In its complaint against J&J, the United States alleges that the company paid kickbacks to Omnicare to induce the nursing home pharmacy company to purchase and recommend J&J drugs, including the anti-psychotic drug Risperdal, for use in nursing homes.

A Wall Street Journal article says that the complaint sheds light on how middlemen like Omnicare can drive the sales of prescription drugs. The middlemen commonly receive rebates from drug manufacturers and such payments are legal unless government programs (like Medicare and Medicaid) don't get the benefits of the rebates. In its quarterly reports to the government, J&J tried to disguise the rebates, prosecutors allege.