Elan Corp. agreed to plead guilty to introducing misbranded drugs into interstate commerce, in violation of the federal Food Drug and Cosmetic Act, and pay criminal fines and forfeitures of just over $100 million. Elan also paid $102,890,517 plus interest, in civil damages for violations of the False Claims Act resulting from improper billings to federal and state health insurance programs such as Medicare and Medicaid. The Elan criminal and civil settlements combined exceeded $203 million. Elan also entered into a Corporate Integrity Agreement with the HHS- OIG.
This whistleblower case involved allegations of improper “off-label” marketing and billing of the anti-seizure drug Zonegran®, first by Irish pharmaceutical manufacturer Elan Corporation and then later by Japanese pharmaceutical company Eisai, Inc., which bought the rights to the drug from Elan in 2004. Eisai earlier agreed to pay $11 million in civil damages under the False Claims Act to the federal and state governments for the period of time the off-label marketing continued after it acquired the rights to the drug (see related Eisai settlement).
The relator’s False Claims Act qui tam complaint alleged that the defendant companies marketed Zonegran, which was approved by the U.S. Food and Drug Administration (FDA) only for reducing seizures, for weight loss and mood stabilization as well. The drug was not approved for either of those uses and thus marketing the drug for those indications constituted “off- label” marketing.
The increase in drug prescriptions resulting from this off-label marketing not only caused improper billings to the federal and state governments, but it also undercut the authority of the FDA, which determines the safety and efficacy of drug products and approves (and limits) their uses.
United States, et al. ex rel. Relator v. Elan Corporation, PLC, and Eisai Inc., Civil Action No. 04-11594-RWZ (D. Mass.)
Forest Pharmaceuticals, Inc. (Forest) paid more than $313 million to resolve its criminal and civil liability and entered into a Corporate Integrity Agreement with the HHS-OIG. The settlement included Forest pleading guilty, paying a criminal fine of $150 million, and forfeiting an additional $14 million in assets for charges relating to obstruction of justice, the illegal promotion of Celexa, an anti-depressant drug for use in treating children and adolescents, and the distribution of Levothroid, an unapproved new drug used to treat hypothyroidism. Forest also paid over $149 million to the United States and the states to resolve allegations under the False Claims Act that Forest caused false claims to be submitted to federal health care programs for the drugs Celexa®, Lexapro®, and Levothroid.
In his qui tam complaint, our whistleblower client alleged that Forest Pharmaceuticals, Inc., a subsidiary of New York City-based Forest Laboratories, Inc., and Forest Laboratories, violated federal and state False Claims Acts by engaging in off label marketing of the anti-depressant drugs Celexa and Lexapro for use in children and adolescents, and paying kickbacks to physicians that resulted in illegal billings to federal health care programs.
After a lengthy government investigation and the Department of Justice filing a complaint in intervention in our client’s case, Forest reached an agreement with the Department of Justice and several state Attorneys General to resolve its criminal and civil liabilities for a total of over $313 million.
The relator further alleged that Forest had illegally retaliated against him by firing him after he raised questions about Forest’s illegal behavior. The court ruled that his claim could proceed. See United States ex rel. Gobble et al. v. Forest Labs, et al., 729 F.Supp.2d 446 (D. Mass. 2010).
We were co-counsel with attorneys Marlan Wilbanks and Ty Bridges in this case which was styled as
Japanese pharmaceutical company Eisai, Inc. agreed to pay $11 million in civil damages under the False Claims Act to the United States and the States for the improper “off-label” marketing and billing of the anti-seizure drug Zonegran®, for the period of time after Eisai acquired the rights to the drug from Elan Corporation. A few months after Eisai settled, Elan settled its civil and criminal liabilities for its off label marketing for over $203 million (see related Elan settlement).
Our whistleblower client alleged that first Irish pharmaceutical manufacturer Elan and then later Japanese pharmaceutical company Eisai, which bought the rights to the drug from Elan in 2004, were liable for the off- label marketing. Zonegran, which was approved by the U.S. Food and Drug Administration (“FDA”) only for reducing seizures, was marketed for weight loss and mood stabilization as well. The drug was not approved for either of those uses, thus marketing the drug for those indications constituted off-label marketing.
The increase in drug prescriptions resulting from this off-label marketing not only caused improper billings to the federal and state governments, but it also undercut the authority of the FDA, which determines the safety and efficacy of drug products and approves (and limits) their uses.
Three companies providing remote cardiac monitoring services, and one of their owners, agreed to pay more than $13.4 million to the government to settle a False Claims Act case brought by our client. The cardiac monitoring fraud settlement is a direct result of our client’s False Claims Act complaint against Medi-Lynx Cardiac Monitoring, LLC, AMI Monitoring, Inc., and Spectocor, LLC. The complaint alleged that defendants concocted a scheme to cause unwitting physicians to order the most lucrative services regardless of medical necessity or reasonableness.
Defendants utilized an online enrollment portal to steer physicians to select the highest reimbursing monitoring service. This happened, even when physicians intended to select less expensive monitoring services. Through this scheme, defendants caused Medicare to pay false claims to Medicare for unnecessary and unreasonable telemetry services. Under the terms of the settlement, defendants have agreed to pay over $13.4 million to resolve these claims.
Our client, Eben Steele, an employee of AMI/Spectocor, worked in the industry for many years. Mr. Steele believes that health care companies should serve their patients’ needs, not line their own pockets. He explained:
I was offended by this underhanded scheme. Not only was it overriding the doctor’s judgment about what the patient needed, but it was lining the Defendants’ pockets at the expense of the taxpayer. I am very grateful to Bob Thomas and Suzanne Durrell for helping me right this wrong and guide me through the process.
Mr. Steele approached us in late 2013 to see if, together, we could do something to stop this fraud. We investigated his allegations, compiled his evidence, and researched the law. Then, in March 2014, we filed and served his Complaint along with a statement detailing his evidence on the government. We then worked with the government over the course of the next three plus years until the settlement.
The cardiac monitoring fraud settlement resulted from a successful partnership between the government and our client. One of the most important factors in ensuring success for a whistleblower case is filing it in a district where the government prosecutors have the expertise and enthusiasm to ensure success. We filed Mr. Steele’s complaint in the district of New Jersey, permitting us to work with the excellent office there.
Whistleblowers like Mr. Steele are vitally important in the fight against government fraud. Under the FCA, a private citizen-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. If the case is successful, as it was here, the relator is entitled to a share of the government’s recovery.
In this case, after several years of hard work by Mr. Steele, his attorneys, and government prosecutors, our client will receive some $2.43 million for his part in stopping an ongoing fraud against the government and helping to ensure that government victims were compensated.
We offer Mr. Steele our congratulations and deep gratitude for his efforts on behalf of the government.
MedNet Healthcare Technologies, Inc. (MedNet), a subsidiary of BioTelemetry, Inc., paid more than $1.35 million to the United States to settle allegations that it acted and conspired to establish a fraudulent billing scheme through which it provided kickbacks to physicians and health care providers as an inducement to gain referrals for cardiac monitoring services reimbursed by Government Health Care Programs such as Medicare.
Our client was a former employee of MedNet, which operated as an Independent Diagnostic Testing Facility (IDTF) providing remote cardiac monitoring services under exclusive supplier agreements with health care providers such as physicians and hospitals. He alleged that MedNet aggressively marketed to providers the financial advantage of what it called “Split Bill Medicare and Fee for Service for Private Payors” — arrangements intended to induce doctors to use MedNet’s cardiac monitoring services because it would be more profitable to the provider than using the services of a competitor of MedNet.
The government contended that MedNet acted and conspired to establish a fraudulent billing scheme through which it provided kickbacks to physicians and health care providers as an inducement to gain referrals for cardiac monitoring services reimbursed by Government Health Care Programs such as Medicare, in violation of the Medicare-Medicaid Anti-Kickback Statute. As a result, MedNet violated the federal False Claims Act when the services were charged to Medicare. This scheme enabled MedNet to gain market share from its competitors and realize greater profits.
Bechtel and Parsons Brinckerhoff, the management consultants to the United States and the Commonwealth of Massachusetts on the so-called “Big Dig” project, a massive $14.6 billion reconstruction of downtown Boston’s roadways, tunnels, and bridges, agreed to pay over $407 million to resolve their civil and criminal liabilities to the government in connection with the “Big Dig.” This included liability stemming from their failure to institute concrete testing protocols at the construction site as well as in the materials lab to determine that all concrete delivered to the Big Dig by Aggregate Industries, Inc. met specifications and was placed pursuant to procedures
In his whistleblower suit, the relator (who worked on the Big Dig project) alleged, among other things, that defendants Bechtel and Parsons Brinckerhoff failed to properly oversee the construction and as a result false or fraudulent claims for payment of out –of-specification or non-conforming concrete supplied by defendant Aggregate Industries were submitted to the government and paid.
Relator’s claims (and those of other whistleblowers) were resolved as part of this $407 million settlement (and the related $50 million settlement with Aggregate).