In the single largest criminal and civil fraud settlement against a biotechnology company, Amgen Inc. pled guilty to illegally introducing a misbranded drug (Aranesp®) into interstate commerce, paid $150 million in criminal fines and forfeitures, and paid $612 million to resolve claims brought by our client (and other whistleblowers) under the federal and state False Claims Act, for a combined total recovery of $762 million.
Our whistleblower client’s case centered around allegations that Amgen, in manufacturing single use vials of its drug Aranesp, had intentionally manipulated the amount of “overfill” to increase the vial volume beyond that needed to ensure delivery of the labeled dosage. Amgen then encouraged doctors to bill Medicare and Medicaid for the overfill, which typically was more than the indicated or prescribed dose, and thereby increase their reimbursement from government insurers. By providing extra Aranesp in every vial and encouraging doctors to bill insurers – including Medicare and Medicaid and other government programs– for that overfill, Amgen presented an economic inducement for doctors to purchase Aranesp rather than the competing drug Procrit. This scheme constituted a kickback funded unknowingly by the government, and increased Aranesp’s market share and profits. This kind of economic inducement, designed to alter a physician’s medical judgment, violates the federal and Anti‐Kickback laws.
The qui tam case was unsealed by the court in 2009, at which time several States intervened. However, the United States indicated it was “not intervening at that time” but was nevertheless continuing its civil and criminal investigation of the company, an investigation which ultimately resulted in the record settlement. But, this meant that relator and her legal team had to “carry the ball” as the government prosecutors continued to investigate.
The relator, with the assistance of her attorneys, alleged that Amgen (and co-defendant International Nephrology Network (“INN”), a subsidiary of AmerisourceBergen Corporation), had systematically promoted “overfill billing” in order to change doctors’ prescribing patterns. During discovery, documents and deposition testimony confirmed that Amgen, in conspiracy with INN, had used overfill to entice physicians to choose Aranesp based on the promise of increased Medicare and Medicaid reimbursement for the overfill. Five Amgen employees at different levels of the company – from sales representative to National Sales Director – elected to stand on their Fifth Amendment rights against self‐incrimination rather than provide any testimony regarding these practices at Amgen. (When witnesses assert the Fifth in a civil case, a presumption arises that the testimony would be adverse to the party whose interests are aligned with the witnesses.)
After over two years of intense litigation in the trial and appellate courts resulting in four published federal court opinions, the case was scheduled to go to trial in the United States District Court in Boston on October 17, 2011. Just prior to trial, Amgen reached agreement with the United States and the States for a global $762 million criminal and civil settlement. The settlement resolved relator’s case on the eve of trial, as well as other whistleblower suits that had remained under seal while her case was being litigated.
Several co-counsel assisted in the litigation, which was styled as:
This $465 million EpiPen® settlement among the United States, the States, and pharmaceutical companies Mylan Inc. and Mylan Specialty L.P. was the largest False Claims Act settlement of 2017. This case was one of the reasons attorneys Bob Thomas and Suzanne Durrell were named Lawyers of the Year (2017) by the Taxpayers Against Fraud Education Fund. The settlement resolved allegations that Mylan violated the federal and state False Claims Acts by knowingly misclassifying EpiPen®, a branded epinephrine auto-injector drug, as a generic drug, to avoid paying rebates owed to Medicaid.
Our client worked with the government, and in August 2017, just over a year after we filed the qui tam complaint, Mylan entered into the settlement with the United States and the States. The company agreed to pay $465 million to resolve allegations that it violated the False Claims Act. The government contended that it improperly misclassified EpiPen as a generic drug to avoid paying state Medicaid programs the higher rebates for branded drugs, even though EpiPen had no FDA approved therapeutic equivalents and was marketed and priced as a brand name drug. Mylan raised the price of EpiPen by approximately 400% between 2010 and 2016.
Mylan also entered into a five-year Corporate Integrity Agreement with HHS-OIG that requires, among other things, an independent review organization to annually review multiple aspects of the company’s practices relating to the Medicaid drug rebate program. Mylan further agreed that going forward it would properly classify EpiPen®, meaning that the Medicaid program will receive much higher rebates in the future.
The United States Attorney was especially grateful that our client, another pharmaceutical company, chose to be a relator, stating:
“We will continue to root out fraud and abuse to protect the integrity of Medicaid and ensure a level playing field for pharmaceutical companies. We commend Sanofi for bringing this matter to our attention.”
In May 2023, the United States settled a False Claims Act case that our client brought against Massachusetts Eye and Ear Infirmary (“MEEI”) and other defendants in 2018. Our client alleged that some of the physicians working for Massachusetts Eye and Ear received kickbacks to induce referrals to MEEI for outpatient procedures in violation of the Stark Law, the Anti-Kickback Statute (“AKS”), and False Claims Act. The False Claims Act settlement requires Massachusetts Eye and Ear to pay $5.7 million, plus interest. A portion of MEEI’s payment will be paid to our client.
Massachusetts Eye and Ear made improper incentive payments to certain physicians. As a result, these financial relationships violated the Physician Self-Referral Law (commonly known as the Stark Law) and the Anti-Kickback Statute (“AKS”). Therefore, when the physicians referred their patients to MEEI for procedures and MEEI submitted claims to government health care programs such as Medicare, it violated the False Claims Act.
Under the terms of the False Claims Act settlement, MEEI will pay $5.7 million plus interest to the settlement.
Our client provided government prosecutors with information about the alleged fraud. In 2018, we filed a qui tam complaint under the federal False Claims Acts. Under the False Claims Act, a private citizen (known as a “relator”) who suspects or knows of fraud against the government can act as a whistleblower and file a sealed complaint on behalf of the government. For successful cases, the government pays a share – between 15% and 30% – to the relator. In this case, our client will receive 17 percent of the recovery.
Here, the United States contended that MEEI’s incentive payments created a financial relationship between MEEI and those physicians. Because of that financial relationship, referrals by those physicians to MEEI were improper and violated the Stark Law.
Stark Act violations drive up the overall costs of the health care system due to fraud and abuse. We will continue to vigorously investigate False Claims Act violations arising out of improper financial relationships between hospitals and physicians.
–Acting United States Attorney Joshua Levy.
We all rely on our health care providers to make treatment decisions based on clinical needs, not financial ones arising out of improper relationships between physicians and hospitals. Today’s settlement with Massachusetts Eye and Ear demonstrates the FBI’s ongoing commitment to ensure that publicly funded health care programs to which we all contribute and on which we all depend are not abused.
— Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division.
In announcing the settlement, Phillip M. Coyne, Special Agent in Charge of the Department of Health and Human Services, Office of Inspector General (HHS-OIG) said:
This settlement is a warning to other health care entities that seek to boost their profits by entering into improper financial arrangements with referring physicians. Working with our law enforcement partners, we will continue to investigate such deals to prevent financial arrangements that could undermine impartial medical judgement, drive up health care costs, and corrode the public’s trust in the health care system.
As this case illustrates, whistleblowers are a critical part of fraud enforcement. Last year, according to DOJ, qui tam cases resulted in over $2.2 billion in False Claims Act recoveries.
Whistleblower Law Collaborative LLC, based in Boston, devotes its practice entirely to representing clients nationwide in bringing actions under the federal and state False Claims Acts and other whistleblower programs. Among the firm’s many successes is a $234 million settlement with Mallinckrodt under federal and state False Claims Acts for Medicaid rebate fraud.
In January 2021, Athenahealth Inc. (Athena) settled two False Claims Act qui tam cases for $18.25 million. The settlements resolved allegations that Athena paid illegal kickbacks to generate sales of its electronic health record (EHR) product, athenaClinicals.
In announcing the settlement, United States Attorney Andrew E. Lelling said:
“Across the country, physicians rely on electronic health records software to provide vital patient data. Kickbacks corrupt the market for health care services and risk jeopardizing patient safety. We will aggressively pursue organizations that fail to play by the rules; EHR companies are no exception.”
Athena is a medical software company based in Watertown, Massachusetts. It offers cloud-based electronic health record technology and services to health care providers nationwide. Athena’s EHR platform, athenaClinicals, can be purchased as a standalone service or as part of a suite of EHR, billing, and patient engagement products known as athenaOne. Athena serves more than 160,000 healthcare providers across the United States.
The United States and the relators contend that Athena offered and provided illegal remuneration to generate sales of athenaClinicals, either on its own or as part of athenaOne. In doing so, Athena violated the Anti-Kickback Statute. Those violations in turn rendered claims submitted by providers to federal health care programs false or fraudulent under the False Claims Act.
The Government’s complaint in intervention describes three kickback programs. Athena has now ceased all of them.
First, Athena provided hundreds of existing and potential clients with all-expense paid trips to sporting, entertainment, and recreational events. These “Concierge Events” included the Masters golf tournament, the Kentucky Derby, NFL, NBA, and MLB games, the NCAA “Final Four,” the Indy 500, and New York Fashion Week.
Joseph R. Bonavolonta, Special Agent in Charge of the FBI’s Boston Division, stated:
“It is illegal for companies to extend invitations to all-expense-paid sporting, entertainment, and recreational events, and other perk-filled offers to its prospective customers to win business and boost their bottom line through illegal kickback schemes. Today’s agreement by Athena to pay $18.25 million should send a strong message to anyone thinking about engaging in this type of illegal activity.”
Second, Athena ran a “Client Lead Generation” program. Athena paid existing clients for referring potential new clients. Athena paid up to $3,000 for referrals, regardless of how much (if any) time the existing client spent with the lead. This program enabled Athena to sign up hundreds of new healthcare provider clients.
Third, Athena entered into “Conversion Deals” with competing Health Information Technology (“HIT”) companies that were discontinuing their EHR products. Under this program, Athena paid companies to recommend that their clients transition to Athena’s EHR platform. Athena based the amount of payments on the number and value of clients successfully converted to athenaOne or athenaClinicals.
Federal law provides financial incentives for health care providers to adopt and use EHR technology. Our health care system relies heavily on this technology to accurately record and transmit vital patient information. As DOJ’s press release notes:
“If the benefits of Electronic Health Records are to be fully realized, patients must be confident providers have selected the most effective system – not the one paying the largest kickbacks. Time and again, we’ve seen fraudulent activity undermine the integrity of medical decisions, subvert the health marketplace, and waste taxpayer dollars. We will continue to hold accountable those who provide illegal incentives in order to influence the decision-making of health care providers.”
Phillip M. Coyne, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services
The Government contended that Athena provided kickbacks to increase its sales while causing healthcare providers to submit false claims. As a result, the Medicaid and Medicare programs paid millions of dollars in false claims for incentive payments for adoption and “meaningful use” of Athena’s EHR technology.
This is the Government’s fourth False Claims Act settlement with an EHR company. In the announcement, the Department of Justice underscored its commitment to pursuing kickback cases involving the EHR industry:
“This resolution demonstrates the department’s continued commitment to holding EHR companies accountable for the payment of unlawful kickbacks in any form. EHR technology plays an important role in the provision of medical care, and it is critical that the selection of an EHR platform be made without the influence of improper financial inducements.”
Brian Boynton, Acting Assistant Attorney General for the DOJ’s Civil Division.
The United States previously settled cases against EHR providers eClinicalWorks ($155 million), Greenway Health LLC ($57.25 million), and Practice Fusion, Inc. ($145 million) for violating the False Claims Act, including through illegal kickback programs.
An oncology physician practice who did business with Cardinal Health paid the United States and the State of Michigan agreed to pay $1 million to resolve allegations that the practice accepted kickbacks from Cardinal in connection with the purchase of specialty pharmaceutical products from Cardinal. The physician practice was one of several such practices sued along with Cardinal Health. In January 2022, Cardinal Health agreed to pay the United States and the states $13.125 million plus interest to resolve allegations that it induced physician practices such as this one to purchase specialty pharmaceutical products from it by paying customers remuneration in advance of the practice making any drug purchases and not in connection with specific purchases. The practices in turn submitted claims for payment to Medicare and Medicaid programs that were tainted by these kickbacks. Litigation is ongoing as to several other named physician practice defendants.
Under the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), both sides of a kickback arrangement bear liability. It is important to hold both sides of the alleged kickback scheme (here, the payor/Cardinal and the payees/physician practices) accountable. Using the False Claims Act to do so protects the public fisc from paying claims tainted by kickbacks and protects patients. As the U.S. Attorney for the District of Massachusetts said at the time of the Cardinal settlement:
Kickback schemes, such as this one, have the potential to pervert clinical decision-making and are detrimental to our federal health care system and taxpayers.
Special Agent in Charge of the FBI Boston office added at the time: “Kickbacks cost health benefit programs millions of dollars in potentially fraudulent claims.”
Whistleblower Law Collaborative LLC is based in Boston. It devotes its nationwide practice to representing whistleblowers bringing actions under the federal and state False Claims Acts and other whistleblower programs. Under the False Claims Act, a private citizen who knows of fraud against the government can file a sealed complaint on behalf of the government. If the case is successful, the relator is entitled to a share of the government’s recovery. Among the firm’s many successes is the government’s $885 million settlement with AmerisourceBergen, another pharmaceutical drug wholesaler, for illegal repackaging of injectable drugs into pre-filled syringes.
Jewish Hospital & St. Mary’s Healthcare, Inc., d/b/a Pharmacy Plus and Pharmacy Plus Specialty paid the United States over $10.1 million to settle liability under the False Claims Act for multiple fraudulent Medicare schemes.
These schemes included submitting claims that violated requirements ensuring Medicare paid only for reasonable and necessary drugs. The government also alleged that Jewish Hospital illegally gave patients free items and waived co-payments and deductibles for insulin. These items and waivers violate the Anti-Kickback Statute.
Our client, Robert Stone, a licensed pharmacist who worked at Jewish Hospital, brought the fraud to the attention of the government by filing a qui tam complaint under the False Claims Act in 2017.
For over two years before filing his complaint, Mr. Stone had tried in vain to raise these concerns to his superiors, but his efforts at compliance were fruitless. Together, however, we were able to bring his concerns to the attention of government prosecutors at DOJ and the United States Attorney’s Office in the Western District of Kentucky and successfully put the practices to rest. “When they failed to make corrections, I filed my qui tam lawsuit so the United States whose Medicare program was being defrauded could take action,” Mr. Stone explained.
“I am very grateful to my attorneys Bob Thomas, Suzanne Durrell, and David W.S. Lieberman for their expertise, guidance, and support, and to the government attorneys and investigators for their commitment to my case.”
Under the False Claims Act, a private citizen who knows of fraud against the government can file a sealed complaint on behalf of the government. If the case is successful, the whistleblower is entitled to a share of the government’s recovery. In this case, Mr. Stone received $1.85 million from the government for his help in ending this fraud.
United States ex rel. Stone v. Jewish Hospital, Civil Action No. 3:17-CV-294-RGJ (W.D. Ky.)