November 4, 2015
In our recent post about the tentative Novartis settlement we questioned if it would be business as usual at the Department of Justice despite the Yates Memo earlier this year. The answer came swiftly. DOJ and the Boston U.S. Attorney’s Office announced last week a $125 million criminal and civil health care fraud settlement with the Allergan unit of Warner Chilcott and the indictment and arrest of its President, W. Carl Reichel.
Maybe the handwriting was on the wall when three former Warner Chilcott district managers pleaded guilty or agreed to plead guilty to conspiracy to commit health care fraud and criminal violations of HIPAA. Or when DOJ indicted a Springfield, Mass. physician for taking kickbacks, violating HIPAA, and obstruction of justice. But it is a big step to haul in the President of a company.
The settlement with the company included a criminal plea agreement and criminal fine of almost $23 million. It also included a $102 million civil settlement agreement under the whistleblower provisions of the federal and state False Claims Acts. See also criminal information. The whistleblowers who initiated the False Claims Act case will receive a reward of over $23 million.
The settlement resolved charges that the company used various means to illegally promote the use of its drugs. These drugs including Actonel®, Asacol®, Atelvia®, Doryx®, Enablex®, Estrace®, and Loestrin®. The illegal activities included paying kickbacks to influence doctors to prescribe these drugs; using protected patient health information to fill out prior authorization forms; employees holding themselves out as doctors in submitting such forms to insurance companies so that the more expensive Warner Chilcott osteoporosis drugs (Atelvia® and Actonel®) would be authorized instead of their competitor’s less expensive drugs; and, making false statements about the superiority of the drug Actonel®.
The company’s President, Mr. Reichel, was indicted on one count of conspiracy to pay kickbacks. According to the indictment, 2009-2012, he masterminded a sales and marketing strategy that provided lavish kickbacks to doctors. If convicted, he faces a sentence of five years in prison, and a fine of $250,000. No doubt he will vigorously fight the charges, and we shall wait and see if the DOJ can make the charges stick in a jury trial where the burden of proof on the government will be beyond a reasonable doubt.