Thursday, September 30, 2010

Novartis Pharmaceuticals agrees to pay $422.5 million for off-label marketing

Novartis Pharmaceuticals Corporation has agreed to pay $422.5 million in two separate settlements resulting from their alleged off-label drug marketing. According to the accusation, Novartis profited by “hundreds of millions of dollars” through their off-label promotion of Trileptal. Trileptal is a drug FDA approved for treatment of epilepsy patients, although Novartis has been accused of promoting its use for a number of other ailments and conditions.

The allegations, which Novartis has agreed to plea guilty to, contend that Novartis actively used kick-backs and other financial and gift inducements to encourage doctors to prescribe Trileptal, as well as other Novartis drugs. “Unlawful off-label promotion and providing illegal inducements to health care professionals undermine the integrity of our health care system and we will continue to pursue these types of violations,” stated Tony West Assistant Attorney General for the Civil Division of the Department of Justice.

If Novartis’s guilty plea and sentence are accepted by the court, Novartis will pay a criminal fine and forfeiture of $185 million. Additionally, it will pay $237.5 million to resolve allegations that it caused Medicare and other Federal programs to pay for Novartis drugs under fraudulent circumstance. This will additionally settle four whistleblower cases filed by former Novartis employees, who will share $25,675,035 of the Federal recovery.

Tuesday, September 28, 2010

Supreme Court accepts "state secrets" cases for review

The Supreme Court has added two cases to its docket that will examine the possible limitations of the “sate secrets” doctrine. These cases involve Navy and military contractors whose contracts have been terminated. The contractors have refused the requested return of $1.35 billion to the Navy. The government now seeks about $3 billion.

The cases, now consolidated into one, arise from a 1988 fixed-price contract to produce “an aircraft carrier-based version of the ‘stealth’ fighter plane.” While the contractors claim they were denied access to critical secret technology preventing them from successfully manufacturing the plane, the Navy claims that General Dynamics and Boeing simply failed to produce.

In the leading state secrets case, the Supreme Court ruled for the government in a case in which the government was the defendant, citing state secrets. However “the court said things might be different if the government were pressing a claim rather than defending against one.” In the current case of contractors versus the government, there is disagreement as to which party is the plaintiff and which is the defendant.

Thursday, September 23, 2010

Corporate execs can run but can’t hide from Medicare fraud penalty under House-passed bill

The House of Representatives has passed a bill that would ban corporate executives from doing business with Medicare if their companies engaged in Medicare fraud – even if they left the companies before the conviction. This would mean they could run, but there would be nowhere to hide.

Right now, executives can move from company to company, leaving behind a trail of Medicare fraud without any consequences to them personally. The Strengthening Medicare Anti-Fraud Measures Act, proposed by Rep. Pete Stark (D-CA) and Rep. Wally Herger (R-CA), would allow the Office of Inspector General for the U.S. Department of Health and Human Services to track down the former executives wherever they work and ban them from doing business with Medicare. This certainly would put a crimp on those executives’ employment prospects.

The bill (H.R. 6130) also would smash through shell subsidiaries that corporations often set up in criminal Medicare fraud cases to take a meaningless Medicare ban, which allows the parent corporation to continue to receive Medicare funds despite the fraud conviction. In those circumstances, the bill would give OIG the authority to exclude the parent companies from Medicare.

Tuesday, September 14, 2010

Whistleblowers still SEC's best weapon against fraud

While the exchanges bicker over the cost of implementing real-time market tracking systems (“Charges Bring SEC Hope for New Weapon,” Wall Street Journal, Aug. 30), on-the-ground whistleblowers remain the Securities and Exchange Commission's best "weapon" in both enforcement and deterrence. Congress recognized this when it created new whistleblower programs for the SEC and the Commodity Futures Trading Commission as part of the Dodd-Frank financial overhaul legislation.

Wednesday, September 08, 2010

Report suggests Pentagon watchdog is ignoring fraud

In a 73-page report released today, Senator Charles Grassley (R-Iowa) has accused the Pentagon’s official watchdog of complete failure in their responsibility to audit defense contracts to prevent fraud. Grassley wrote in his report that “the OIG Audit junkyard dog has been de-fanged and rendered harmless."

Grassley’s own staff launched an investigation after receiving anonymous tip-offs that the agency was ineffective and engaging in misconduct. The report indicates that Inspector General Gordon Heddell found the Pentagon’s accounting to be so “broken” that an a genuine audit was impossible.

Heddell has not denied the accusations; he admitted that Grassley’s report was “relevant” and “important,” but claimed that it was “only one piece of a much bigger transformation” that began a year ago after his Senate confirmation.

Tuesday, September 07, 2010

Cisco and Westcon to pay $48 million in False Claims Act settlement

Cisco and Westcon Group North America have agreed to pay $48 million to settle allegations that they violated the False Claims Act through misrepresentations made to the General Services Administration (GSA) and other federal agencies.

Tony West, Assistant Attorney General for the Civil Division of the Department of Justice, said that "when contractors provide incomplete and untruthful information to the government, we will take action to restore the integrity of the procurement process and protect taxpayer dollars."

The claims stated that Cisco and Westcom provided fraudulent information to GSA contract officers, resulting in improper pricing of Cisco products. As Brian D. Miller, GSA Inspector General stated, "overcharging the government results in waste of taxpayer dollars."

A toothless watchdog? Federal courts speak up when the SEC refuses

There’s a remarkable new trend in federal courts: Judges are refusing to rubber stamp deals federal agencies have worked out with financial industry defendants. Is this a sign of things to come?

The New York Times recently wrote about several judges who looked at proposed settlements and questioned whether they were in the public interest. One judge wanted to know why prosecutors weren’t getting tough with banks. Another questioned whether a settlement with Citigroup was fair and reasonable. And a third accused the Securities & Exchange Commission of going easy on Bank of America. Finally – someone is watching the watchdog.

But why is the SEC so timid? Is there pressure to get quick settlements? Are they reluctant to litigate? Or is it the result of years of entrenched complacency?

One thing is certain: Some judges are looking at settlements that they do not believe serve the public interest and demanding more accountability from regulators. Hopefully we can expect more from the SEC now that the courts are demanding more.

Wednesday, September 01, 2010

Botox makers to plea guilty and pay for “off-label” marketing

Allergen, Inc., the maker of Botox Therapeutic, has agreed to plead guilty and pay $600 million, following the criminal and civil accusations that it was actively promoting Botox for “off-label” uses between 2001 and 2008.

The criminal information filed indicates that Allergen substantially increased its efforts to market the Botox for off-label purposes, helping doctors to bill Medicaid and other health providers for the injections not covered by Botox’s limited FDA approval. Allergen also “conducted detailed audits of doctors’ billing records to demonstrate how they could make money by injecting Botox, and operated the Botox Reimbursement Hotline, which provided a wide array of free on-demand services to doctors for off-label uses,” among other illegal activities.

“The Food, Drug and Cosmetic Act protects the public from drugs and biologic products that are not proven to be safe and effective. When drug companies make unsubstantiated and misleading statements about their products, they undermine the Act’s protection of public health,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice.

As a result of the three qui tam civil lawsuits filed against Allergen under the False Claims Act, the five whistleblowers involved will receive $37.8 million from the federal portion of the settlement.