What’s New/Significant

The Department of Justice (DOJ) issued a press release announcing that it had obtained more than $3 billion in settlements involving fraud and false claims against the government in fiscal year ending September 30, 2019. These settlements continue to demonstrate the high priority that the government places on deterring fraud and protecting taxpayer dollars.

Scope

Of the more than $3 billion recovered, $2.6 billion relates to the healthcare industry, including drug and device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories and physicians. The amounts recovered reflect losses incurred by both federal programs and state Medicaid programs.

Pharmaceutical Settlements

The following settlements with drug and device manufacturers contributed to the recovery of the $2.6 billion from the healthcare industry:

  • Insys Therapeutics paid $195 million to settle civil allegations that it paid kickbacks (in the form of sham speaker events, jobs for prescribers’ relatives and friends, and lavish meals and entertainment) to induce physicians and nurse practitioners to prescribe Sybsys for their patients.
  • Reckitt Benckiser Group plc paid $1.4 billion to resolve criminal and civil liabilities related to the improper marketing of the opioid addiction treatment drug Suboxone. The marketing efforts included the promotion of Suboxone: i) to physicians who were writing prescriptions for uses that were unsafe, ineffective and medically unnecessary; and ii) using false and misleading claims that it was less susceptible to diversion, abuse and accidental pediatric exposure than other buprenorphine products.
  • Avanir paid over $95 million to resolve allegations that it paid kickbacks and engaged in false and misleading marketing to induce healthcare providers in long-term care facilities to prescribe the drug Neudexta for behaviors commonly associated with dementia patients, which is not an approved use of the drug.
  • Seven drug manufacturers, including Amgen Inc., Astellas Pharma US Inc., Alexion Pharmaceuticals Inc., Jazz Pharmacueticals Inc., Lundbeck LLC and US Worldmeds LLC, paid a combined total of over $624 million to resolve claims that they illegally paid patient copays for their own drugs through purportedly independent foundations that the companies in fact treated as mere conduits.
  • Three healthcare providers also paid significant settlements. Inform Diagnostics (formerly known as Miraca Life Sciences Inc.) paid $63.5 million to resolve allegations that it paid kickbacks – in the form of subsidies for electronic health records (EHR) systems and free or discounted technology consulting services – to referring physicians. Greenway Health LLC, an EHR software vendor, paid over $57 million to resolve allegations that it misrepresented the capabilities of its EHR product “Prime Suite” and provided unlawful remuneration to users to induce them to recommend Prime Suite to prospective new customers. Encompass Health Corporation (formerly known as HealthSouth Corporation), the nation’s largest operator of inpatient rehabilitation facilities (IRFs), paid $48 million to resolve allegations that some of its IRFs provided inaccurate information to Medicare to maintain their status as an IRF and to earn a higher rate of reimbursement, and that some admissions to its IRFs were not medically necessary.

Takeaways

Congress substantially strengthened the civil False Claims Act in 1986, and recoveries since then now total more than $62 billion. The number of lawsuits filed under the qui tam provisions of the Act has grown significantly, with 633 qui tam lawsuits filed in the past year.