October 3, 2013 False Claims Act Legal News
Recently Unsealed Qui Tam Cases Reveal Surge in Health Care Fraud
Under the provisions of the False Claims Act, all lawsuits alleging fraud against the government are filed under seal. The information contained in the complaint is strictly confidential and may only be discussed with government officials directly involved in the litigation. In fact, the defendants are usually not aware the case is pending until the government decides to join in the action. The purpose behind this requirement is to allow the government to conduct an investigation without interference or legal maneuvering from defense counsel.
Once the U.S. has decided whether to intervene, whistleblower pleadings are served on the defendant and are unsealed to allow the public the opportunity to review the allegations. It often takes a number of years for a whistleblower case to be unsealed. Below, we have provided information about three recently unsealed complaints and the allegations contained therein. These cases have reached a settlement agreement and the defendants admit no wrongdoing.
United States ex rel. Theis v. Northwestern University: Fraud in Applying for Federal Grant Money
The case against Northwestern University was unsealed in July of this year and contains allegations of fraudulent misrepresentations in applications for federal grant money from the National Institute of Health (NIH). Specifically, the U.S. government sought reimbursement for expenditures not allowed under NIH grant guidelines, including “unbudgeted and excessive vendor and consultant services,” as well as unnecessary personal travel expenses. The university recently settled with multiple federal agencies for a sum of $2,930,000. The relator is set to receive close to $500,000.
United States ex rel. Campbell v. Wyeth, Inc.: Marketing drugs for uses not approved by the FDA
Another case against repeat-defendant Wyeth, Inc. was unsealed in July, 2013 after a nearly four-year investigation. The government initially declined to become involved in this case, but later joined with the relator for settlement purposes. The facts of this case allege that Wyeth marketed its anti-rejection drug Rapamune for purposes other than its approved use as an anti-rejection drug specifically for kidney transplant patients. Alarmingly, the relator alleged that in 2008, Wyeth, Inc. made over $348 million from Rapamune with 90 percent of sales from off-label use. In a July settlement, Wyeth agreed to pay almost $500 million in civil fines and criminal penalties stemming from its off-label marketing of Rapamune and a similar FCA lawsuit. It has admitted no wrongdoing.
United States ex rel. Prieve v. Mallinckrodt, Inc.: Violations of anti-kickback laws
Defendant Mallinckrodt, Inc., a pharmaceutical manufacturer, is alleged to have induced doctors and healthcare providers to order prescriptions for its drugs Tofranil-PM and Restoril in exchange for generous kickbacks to physician “consultants.” The company is also alleged to have marketed its drug Tofranil-PM for uses other than its approved use to treat depression. Mallinckrodt settled the case in July of this year for $3.5 million and has admitted no wrongdoing. The relator is to receive a $600,000 reward.
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