Posts Tagged ‘Department of Justice’

Pfizer Settles Whistleblower Case on Heartburn Med Protonix for $785M

protonixPfizer has agreed to pay $784.6 million to settle claims that it overcharged Medicaid for its heartburn medicine Protonix. The agreement marks one of the biggest settlements to date from drugmakers facing similar allegations, according to FiercePharma.

In the case, in which the US Department of Justice joined a whistleblower lawsuit against Wyeth in 2009, the drugmaker was accused of failing to provide state Medicaid programs with the same discounts that were afforded to certain non-governmental customers, in violation of federal law. The Department of Justice estimated that as a consequence, Wyeth avoided paying hundreds of millions of dollars in rebates to Medicaid programs.

A physician and a former AstraZeneca  sales rep filed the two earlier whistleblower suits against Wyeth, according to a Wall Street Journal story. The U.S. False Claims Act allows individuals to file suits accusing companies or individuals of defrauding the government, and potentially get some money back for doing so.

The settlement “does not include an admission of liability” by Pfizer, and it is still subject to a final settlement agreement and court approval, the company said in a statement. But the agreement does mark the end of a long chapter for Pfizer, which inherited the case after buying Wyeth in 2009.

Pfizer, the largest U.S.-based drugmaker, said it is charging the payment to its fourth-quarter results, which it restated on Tuesday. That left the New York-based company with a loss of $172 million, or 3 cents per share, in the last quarter, compared with a net profit of $613 million, or 10 cents per share, initially reported on Feb. 2.



James Hoyer Part of Global Whistleblower Settlement with For-Profit College EDMC

Jason Sobek - EDMC Whistleblower

Jason Sobek – EDMC Whistleblower

The Department of Justice announced it has reached a landmark, global settlement with Education Management Corporation, the 2nd largest for-profit education company in the country. EDMC agreed to pay $95.5 million to settle allegations that the company violated federal and state False Claims Act laws.

James Hoyer client Jason Sobek, a former EDMC Project Associate Director of Admissions, was one of several whistleblowers who came forward to expose issues regarding how the schools recruited students and reported job placement numbers.

EDMC was accused of using predatory techniques to lure students to sign up, misrepresenting its job placement statistics, and paying employees incentives based on the number of students recruited. EDMC runs several for-profit colleges, including South University, The Art Institutes, Arogsy University, and Brown Mackie College.

“We are gratified that information Jason provided helped lead to the resolution of this case with a landmark, global settlement,” said Chris Casper, James Hoyer Managing Partner. “We are hopeful this will prompt much needed change in practices used by the for-profit college industry.”

The Department of Justice news release explains:

The primary allegation was that EDMC unlawfully recruited students, in contravention of the HEA’s Incentive Compensation Ban (ICB), by running a high pressure boiler room where admissions personnel were paid based purely on the number of students they enrolled.  In addition to resolving these and other FCA claims, the global settlement also encompasses an investigation by a consortium of state Attorneys General, of consumer-fraud allegations involving deceptive and misleading recruiting practices.

In addition to offering information and help to federal investigators, Sobek shared his story with the public to help shed light on EDMC practices, warn students and bring about change.   Among those reports were a story with ABC Network News, WTAE TV in Pittsburgh, and WFTS TV in Tampa.

Sobek’s portion of the settlement amounts to $2.5 million which will be paid out over the course of several years. Under the False Claims Act, whistleblowers are entitled to a percentage of a settlement as a reward for bringing forward information that leads to the recovery of money on behalf of taxpayers.

Click here to read more on the settlement in the Pittsburgh Post-Gazette.

Click here to read more on the settlement in the Pittsburgh Tribune Review.

Click here to read more on the settlement from WTAE TV in Pittsburgh.

Click here to read more on the settlement from CBS News.


Millennium Labs Settles for $256 Million in Whistleblower Case

Tampa, FL— A James Hoyer law firm client is among several whistleblowers who came forward to expose wrongdoing by Millennium Health, formerly Millennium Laboratories, which led to a $256 million settlement with the United States government. The company was accused of violating the False Claims Act by billing Medicare, Medicaid and other federal health care programs for medically unnecessary lab tests and offering doctors inappropriate incentives for using its services.

The client worked for Millennium in 2012, as an internal auditor with more than 10 years of experience as a medical coder. As a compliance expert, the client quickly noticed discrepancies with the company’s billing practices. The client’s effort to correct the problems fell on deaf ears, which led to the client filing one of the eight False Claims Act whistleblower cases that ultimately led to the settlement.

“Being a whistleblower is never easy,” said James Hoyer Partner Elaine Stromgren, “It takes courage and conviction to come forward, but it is always gratifying to see those efforts lead to a successful resolution for taxpayers.”

A Department of Justice news release, explained the key allegations against Millennium:

“Millennium caused physicians to order excessive numbers of urine drug tests, in part through the promotion of “custom profiles,” which, instead of being tailored to individual patients, were in effect standing orders that caused physicians to order large number of tests without an individualized assessment of each patient’s needs. This practice violated federal healthcare program rules limiting payment to services that are reasonable and medically necessary for the treatment and diagnosis of an individual patient’s illness or injury. The United States also alleged that Millennium’s provision of free point of care urine drug test cups to physicians—expressly conditioned on the physicians’ agreement to return the urine specimens to Millennium for hundreds of dollars’ worth of additional testing—violated the Stark Law and the Anti-Kickback Statute. The Stark Law and the Anti-Kickback Statute generally prohibit laboratories from giving physicians anything of value in exchange for referrals of tests.”

The head of DOJ’s Civil Division said this case should send a message to companies who violate the rules. “We will not tolerate practices such as the ordering of excessive, non-patient specific tests and the provision of inducements to physicians that lead to unnecessary costs being imposed upon our nation’s health care programs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer.

As part of the settlement, Millennium, which is one of the largest drug testing laboratories in the country, has entered into a corporate integrity agreement (CIA) with the Department of Health and Human Services-Office of Inspector General.

Under the False Claims Act, whistleblowers who expose problems which lead to a successful recovery on behalf of U.S. taxpayers can receive a portion of the recovery as a reward.


DOJ To Whistleblower Attorneys: Go After Individuals!

DOJ Whistleblower Attorneys

DOJ Whistleblower AttorneysLast month, Deputy Attorney General Sally Q. Yates issued a memorandum on behalf of the Department of Justice (DOJ) that should help whistleblowers nationwide. The memorandum instructs DOJ attorneys investigating criminal and civil corporate misconduct to zero-in on the individual wrongdoers rather than just the corporate entity.  The guidance will hopefully lead to larger, quicker settlements of False Claims Act qui tam cases brought by whistleblowers and their attorneys.

Yates identified six key steps to bring about her goal of providing “effective enforcement of the civil and criminal laws that protect our financial system and, by extension, all our citizens.”  The key steps’ common thread is a focus on individual accountability for the people who actually perpetuated the fraud.  According to Yates, such accountability “deters future illegal activity, … incentivizes changes in corporate behavior, … ensures that the proper parties are held responsible for their actions, and … promotes the public’s confidence in our justice system.”

The six steps in full are:

  1. In order to qualify for any cooperation credit, corporations must provide to the DOJ all relevant facts relating to the individuals responsible for the misconduct;
  2. Criminal and civil corporate investigations should focus on individuals from the inception of the investigation;
  3. Criminal and civil attorneys handling corporate investigations should be in routine communication with one another;
  4. Absent extraordinary circumstances or approved departmental policy, the [DOJ] will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation;
  5. DOJ attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize any declinations as to individuals in such cases; and
  6. Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.

The aforementioned guidance applies “to all future investigations of corporate wrongdoing” so whistleblowers considering whether to come forward should be able to rely on the might of the DOJ to be behind them seeking to hold individuals accountable for corporate misconduct.

Each step should help qui tam cases brought by whistleblowers.

In explaining the first step, the DOJ states its position that “‘full cooperation’ under the False Claims Act, 31 U.S.C. § 3729(a)(2), will be that, at a minimum, all relevant facts about responsible individuals must be provided,” in order to get any “cooperation credit.” The DOJ attorneys are further encouraged to be proactive in the discovery process — one that is usually fraught with obstacles and objections that whistleblowers often have to overcome on their own.

Second, the memo recognizes that because “a corporation only acts through individuals, investigating the conduct of individuals is the most efficient and effective way to determine the facts and extent of any corporate misconduct.” For years, whistleblower attorneys have attempted to bring individuals into the fray in order to hold them accountable for their corporation’s misdeeds.  Having skin in the game often enhances an officer or director’s motivation to resolve the issue.  Naturally, whistleblowers should be encouraged by the DOJ advocating the same tactic.

Third, whistleblower attorneys have seen cases stalled for years while the civil and criminal DOJ attorneys take turns investigating, sometimes to the case’s detriment as facts become stale over time. Here, Yates advocates for full cooperation between the civil and criminal divisions in order to promote the “most thorough and appropriate resolution in every case.”

The fourth and fifth steps combine to require attorneys to not release individuals from liability as a part of a corporate whistleblower settlement unless it has been “personally approved in writing by the relevant Assistant Attorney General or United States Attorney.” Further all decisions to not pursue individuals must be explained in writing.

This is perhaps the most significant portion of the memo as it should decrease the possibility of individual officers and directors escaping liability based on the company’s willingness to cut a small check. Barring individual releases and requiring DOJ attorneys to explain why they didn’t pursue an individual may change the way qui tam lawsuits are defended and will hopefully lead to better results for whistleblowers and their attorneys.

Finally, Yates emphasizes that an ability to pay should not compromise the pursuit of individuals. The memo explains that short term monetary returns can be far outweighed by the “significant long-term deterrence” of individual accountability. This step will likely prompt officers and directors to authorize larger payouts in order to attempt to provide both a short term monetary return for the Government and the deterrence that the DOJ seeks in the memo.

In sum, Yates is directing the attorneys charged with prosecuting whistleblower cases to hotly pursue the individuals responsible for corporate misconduct. Hopefully, we will see an increased willingness for companies to come to the settlement table with generous offers for whistleblowers to try to avoid the individual liability advocated by DOJ attorneys.


Quest Diagnostics Pays $1.8 Million in Whistleblower Case

The United States Department of Justice announced today that Quest Diagnostics Inc. and Quest Diagnostics Clinical Laboratories Inc. (collectively “Quest Diagnostics”) have paid the United States $1.79 million to settle claims that it violated the False Claims Act.

This settlement resolves allegations that Quest Diagnostics submitted duplicative claims to Medicare for certain venipuncture services and diagnostic tests and certain panel tests and select components of those panels. The United States alleged that these payments violated the False Claims Act.

“We are committed to fighting fraud and abuse to help preserve scarce Medicare funds for those who need it the most, the sick and the elderly.” said U.S. Attorney Benjamin Wagner.

The settlement announced today resolves a lawsuit filed in the Eastern District of California under the qui tam, or whistleblower, provisions of the False Claims Act. These provisions allow private citizens to bring civil actions on behalf of the United States and share in any recovery. The whistleblower in this case will receive $358,000 of the recovery proceeds.

This case was investigated by the United States Attorney’s Office for the Eastern District of California. Assistant United States Attorney Catherine Swann handled the matter for the United States. The claims settled by this agreement are allegations only, and there has been no determination of liability.