Whistleblower News & Articles
January 23, 2023
In 2022, the top Whistleblower Law Collaborative False Claims Act and SEC matters returned over $300 million to the government in settlements and recoveries. These cases involved serious fraudulent schemes violating state and federal law. These include fraud against government Health Care programs such as Medicare, Medicaid, and TRICARE. One involved financial fraud in violation of federal securities laws and SEC rules. In many of the cases, the settlements also impose multi-year compliance programs with required reporting to the government. We are proud to have represented our clients in achieving these top Whistleblower successes in 2022.
Many of our top 2022 False Claims Act settlements involved healthcare fraud. In particular violations of the anti-kickback statute and other anti-self-referral laws. Other 2022 False Claims Act settlements involved fraud against specific health care programs. Finally, one matter returned millions of dollars improperly obtained in violation of federal securities laws and SEC regulations.
Our client James Landolt brought a qui tam action under federal and state False Claims Acts against his former employer Mallinckrodt for knowingly underpaying hundreds of millions of dollars in Medicaid rebates for its drug Acthar. The United States and the states intervened in the case, and eventually settled. We believe Mallinckrodt was the top 2022 False Claims Act Settlement in a government intervened case. Mallinckrodt agreed to pay a total of $233,707,865 (plus interest) to the federal government and states. Our client’s relator’s share under the False Claims Act exceeds $42 million.
Mallinckrodt also entered a 5-year Corporate Integrity Agreement (CIA) with Department of Health and Human Services. That CIA contains several unique drug price transparency and monitoring provisions focused on Medicaid rebate practices. These will help ensure Mallinckrodt’s future compliance with its rebate obligations. And, as a result of the settlement, Mallinckrodt began to report accurately Acthar pricing information as of June 2020. This reporting change should save Medicaid approximately $100 million annually.
It is easy to feel powerless in these types of situations. But individuals have a voice and the power to do something about wrongdoing, thanks to whistleblower laws like the False Claims Act.
– James Landolt, Mallinckrodt Whistleblower
The Securities and Exchange Commission (SEC) awarded more than $17 million to our client who submitted a tip under the SEC Whistleblower Program. The tip and subsequent information and assistance (described as “exemplary” by the Chief of the Program) led to monetary sanctions in an SEC enforcement action and a related action. The SEC awarded our client 30% of the monetary sanctions collected (which exceeded $50 million). That was the highest percentage award allowed under the SEC Whistleblower Program.
Our clients, former Cardinal executives, were concerned that Cardinal was paying physician practices purported “rebates” in advance of the practice making any drug purchases and not in connection with specific purchases. This arrangement violates the Anti-Kickback Statute, because it represents an illegal inducement to alter physicians’ decision-making. So we helped them bring valuable knowledge about the fraud to the attention of government prosecutors. Together with our clients we helped government prosecutors put a stop to the illegal conduct.
In January, Cardinal Health agreed to pay the United States and the states $ 13.125 million plus interest in settlement. In August, one of the physician practices agreed to pay $1 million to resolve its liability for accepting these kickbacks.
We are grateful to our attorneys at Whistleblower Law Collaborative and to the government investigators and attorneys. Together they were able to help and protect a very vulnerable patient population and will set a good precedent for the industry.
-Our Cardinal Clients
Our client provided government prosecutors with information that BioReference, a clinical laboratory induced physician practices to send their laboratory business to BioReference by paying them above-market rent. The payments were for BioReference to lease space for its Patient Service Centers. In 2019, we filed a qui tam complaint under federal and state False Claims Acts. In July, the Defendants agreed to settle the case. They paid $10 million, plus interest to the United States, Massachusetts and Connecticut. Defendants also entered into a Corporate Integrity Agreement (“CIA”) with the HHS Office of Inspector General (HHS-OIG).
Compounded drugs are drugs created by a pharmacy pursuant to a doctor’s order. Compound pain creams were very lucrative. Government-backed health insurance programs such as TRICARE (for the military) and the Federal Employees Health Benefits Program (for federal workers) would often reimburse thousands of dollars for these prescriptions. But the government programs imposed certain restrictions to limit spending. Most importantly, these programs require that pharmacies charge them no more than the “usual and customary” price. In other words, the price it would charge to cash-paying, uninsured patients. The programs also require patients to make co-pays. This ensures patients have some sensitivity to drug prices.
Our client was hired by State Mutual Insurance Company to provide accounting services for Dermatran. While there, she repeatedly expressed concerns about Dermatran’s practices including waiving co-pays and charging the government higher prices than permitted. However, after being repeatedly ignored by her employers she approached our firm to ask for assistance in providing government prosecutors with information about the alleged fraud. In 2017, we filed a complaint under the federal False Claims Act.
In October 2022, the United States settled our case against DermaTran Health Solutions, LLC, its parent State Mutual Insurance Company, President Delos Yancey, and other defendants. These Defendants agreed to pay over $6.5 million to resolve allegations that they violated the False Claims Act by waiving copays, charging the government higher prices than permitted, and trading federal healthcare business with other pharmacies. DermaTran was sold to a third-party, the proceeds of that sale were also turned over to the government as part of the settlement. Legends Pharmacy will pay $59,293. TRIAD Rx, Inc. will pay $166,547. Lake Side Pharmacy is no longer in business, but former owners of Lake Side Pharmacy will pay $110,724. In total the government received $6.87 million under this case.
In this case, our client will receive $1,434,775 or nearly 21% of the funds received by the government in addition to a payment from defendants as compensation for their retaliation against her.
The process of this suit was long, stressful and sometimes scary – but it was necessary. When you see people in business who take advantage of the system, without regard to the harm it causes to veterans, hard-working citizens, and taxpayers, you can’t stand by silently. I am grateful to my amazing legal team, for standing by my side throughout.
– DermaTran Whistleblower
Whistleblower Law Collaborative represented the former regional medical director of CleanSlate, a nationwide chain of opioid treatment centers. She brought a False Claims Act qui tam complaint against her former employer and its founder Dr. Amanda Wilson for false claims related to unnecessary and illegal drug testing practices as well as retaliation she raised concerns.
At the end of 2021, CleanSlate settled with the Commonwealth of Massachusetts and the United States as to its Massachusetts treatment centers for $4.5 million and agreed to a compliance program with Massachusetts with annual audits. CleanSlate however tried to litigate Relator’s remaining claims alleging improper practices in other states and retaliation. The court largely rejected CleanSlate’s position and CleanSlate ultimately settled the remaining non-intervened claims on behalf of the U.S. and the State of Indiana and Relator’s retaliation claims for $1.5 million in 2022.
This case was an important victory in the opioid fraud space and is the “first of its kind” under the Massachusetts clinical laboratory anti-self-referral law which prohibits referrals between clinical laboratories and any entity with a direct or indirect ownership interest in the laboratory and vice versa. The related federal settlement similarly covers allegations under the federal anti-self-referral law known as the Stark law.
The Whistleblower Law Collaborative LLC, based in Boston, devotes its practice entirely to representing clients in bringing actions under the federal and state False Claims Acts and other whistleblower programs. 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. 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 $465 million settlement with Mylan for failing to pay the correct Medicaid rebates on its high–priced drug EpiPen, and the governments’ $885 million settlement with AmerisourceBergen a pharmaceutical drug wholesaler, for illegal repackaging of injectable drugs into pre-filled syringes.
For more information, contact the Whistleblower Law Collaborative LLC at 617.366.2800