Thursday, March 31, 2011

Do state false claims acts meet HHS OIG standards?

Under the 2005 Deficit Reduction Act states were given a financial incentive to enact false claims acts that targeted Medicaid fraud. If a state false claims act meets certain requirements, the state is entitled to a greater percentage of any recovery of fraudulently obtained Medicaid funds. The state law must be at least as effective as the federal FCA.

Changes to the federal law made in 2009 and 2010 amended the bases for FCA liability and expanded the rights of qui tam relators and the state laws must reflect those changes.

The Health and Human Services Office of the Inspector General will be reviewing all of the state laws previously deemed compliant. This can have huge financial consequences as states with compliant laws get an additional 10 percent of the recovery. Luckily, there's a grace period and the states have until March 31, 2013 to amend and resubmit their laws.

Tuesday, March 08, 2011

Two companies pay for overcharging government for phone systems

Two companies have paid over $16.5 million to resolve whistleblower allegations that they systematically overcharged the US government for desktop telephone services.

Avaya Inc. paid over $13 million to resolve the fraud allegations brought by two former managers of the company that became aware of the illegal scheme. The lawsuit alleges that beginning in the mid 1990s and until as recently as 2006, the company was charging state and federal offices for services that were dysfunctional or non-existent.

The second company, CIT Group, Inc., paid over $3 million to resolve allegation that, after purchasing a portion of Avaya’s customer base, CIT continued the fraudulent billing scheme.

The qui tam case was brought under the False Claims Act by two whistleblowers in 2004. The whistleblowers will receive approximately $3.3 million.

Pharma company receives additional fines for myriad violations of law

Forest Pharmaceuticals has been ordered to pay a criminal fine of $150 million and forfeit assets of $14 million, resulting from their guilty plea last year.

In November of 2010, the drug company admitted to obstructing justice, distributing an unapproved new drug in interstate commerce, and distributing a misbranded drug in interstate commerce.

Additionally, Forest pleaded guilty to charges relating to obstruction of an FDA regulatory inspection, to the distribution of Levothroid – during a time which the drug was unapproved – and to the illegal promotion of the anti-depressant drug Celexa for use in treating children.

The most recent fines complete a global resolution totaling more than $313 million in penalties resulting from Forest and its parent company’s illegal marketing of the drugs Levothroid, Celexa and Lexapro.

Tony West, Assistant Attorney General for the Justice Department’s Civil Division, spoke on the necessity of penalizing companies such as Forest. “As the court’s stiff sentence demonstrates, not only is such conduct unacceptable, taxpayers should not foot the bill for practices that violate the law.”