Thursday, February 28, 2008

Dallas Independent School District Settles Whistleblower Case

The Dallas Independent School District has settled a false claims lawsuit that alleged the district was misusing federal funds.  A whistleblower alleged that the school district was spending grant money received from the Centers for Disease Control and Prevention on non-sanctioned activities.

The district admits no wrongdoing, but is paying $316,000 to settle the case.

Click here to read more about DISD to pay $316K settlement for false claims.

Wednesday, February 13, 2008

Aventis Pharmaceuticals Settles Medicaid Fraud Lawsuit

Aventis Pharmaceuticals has agreed to pay $22.7 million plus interest to the United States, the District of Columbia, and 38 states to settle a qui tam lawsuit that alleged Aventis’ drug pricing and marketing schemes violated the federal False Claims Act.

The lawsuit claimed that Aventis “marketed the spread” on its drug Anzemet, used in oncology patients to prevent nausea and vomiting.  The “spread” was the difference between the amount the healthcare provider was required to pay Aventis for the drug and the amount the healthcare provider was reimbursed by Medicaid.  Under the scheme, the provider billed Medicaid for the inflated average wholesale price and then kept the spread.

Click here to read the Allamericanpatriots.com article Aventis Pharmaceuticals Inc. Held Accountable for Defrauding New Mexico Medicaid Programs in a Drug Pricing Scheme.

Monday, February 11, 2008

Grainger Accused of Overcharging Government

W.W. Grainger, Inc., an international distributor of maintenance products and hand tools is facing a federal lawsuit alleging that the company repeatedly overcharged the U.S. government for products.  The lawsuit was filed by former Grainger district sales manager Brian M. Holbrook. 

In 2005, Grainger and the government had a contract allowing the company to sell Grainger products at cost plus a fixed markup of 26 percent.  Holbrook alleges that the company charged prices that exceeded these profit margins.  Additionally, Grainger Global Sourcing, Grainger’s parent company based in Hong Kong, sold items made in China, Taiwan, and other countries, violating the Buy American Act.

Click here to read Dinesh Ramde’s article in the Houston Chronicle about Grainger Accused of Overcharging Government.

Thursday, February 07, 2008

Merck to Pay More than $650M to Resolve Qui Tam Case

Merck & Company has agreed to pay more than $650 million to resolve allegations that the company failed to pay proper rebates to Medicaid and other government health care programs and paid illegal remuneration to health care providers to encourage them to prescribe Merck products.  The settlement resolves two separate lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act.

Attorney General Michael B. Mukasey said, “Not only is the combined recovery in these two cases one of the largest healthcare fraud settlements ever achieved by the Justice Department, it reflects our continuing effort to hold drug companies accountable for devising pricing schemes that deliberately seek to deny federal health care programs the same lower prices for drugs that are available to other commercial customers.”

H. Dean Steinke, a former Merck employee, alleged that the company offered deep discounts of its drugs Zocar and Vioxx to hospitals if they used large quantities of those drugs in place of competitors brands, violating the Medicaid Rebate Statute.  Steinke’s suit further alleged that Merck had approximately fifteen programs used by sales representatives to induce physicians to use Merck products.  The government found these fees to be illegal kickbacks.  Mr. Steinke will receive $44,690,000 from the federal share of the settlement for his role as whistleblower in the suit, and an additional $23.5 million from the states settlements.

In a separate suit filed by Dr. William St. John LaCorte of New Orleans, it was alleged that Merck had established a marketing scheme in which it substantially reduced prices for its Pepcid products to hospitals in exchange for primary use of the Pepcid product.  Merck allegedly offered these incentives to hospitals to obtain the benefit of spillover business when patients would continue to use Pepcid after his or her discharge from the hospital.  Pepcid excluded those discounts from the prices it reported to the government, denying the government the benefit of the lower pricing structure.  LaCorte will receive a share of the proceeds from the federal and state settlement amounts.

Click here to read the Department of Justice Press Release about Merck Settles Fraud Case for $650 Million.

Tuesday, February 05, 2008

Fraud Claim Heads to Supreme Court

A decade-old fraud claim that originated in Cincinnati will go before the U.S. Supreme Court on February 26, making it the sixth time a qui tam suit has gone before the high court.

At issue are conflicting federal appeals court interpretations of one phrase in the law.  Is it sufficient that the fraudulent claims were paid with government money, or does it require a showing that the false claims were actually presented to the federal government?

The case was filed in U.S. District Court in 1995 against Indianapolis-based Allison Engine, along with subcontractors General Tool Co. and the former Southern Ohio Fabricators Inc.

Two employees of General Tool, Roger Thacker and Rodger Sanders, alleged that the companies did not comply with the terms of government contracts, thereby defrauding the government of millions of dollars.  The companies were contracted to assemble electric generation sets for ships.  None of the electric generation sets has caused a problem for the Navy.

Click here to read Mike Boyer’s article Fraud Claim Heads to High Court.

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