Articles Posted in Qui Tam

Stomach sickness and a strange smell forced Johnson and Johnson (J&J) division McNeil Consumer Healthcare to finally recall from market a total of 27 products, including Tylenol, Benadryl, Rolaids and Motrin, their second recall this month. The company claims the recalled medicines, manufactured in a Puerto Rico plant, became tainted by the wood storage pallets where it was stored. Pallet manufacturers have openly and aggressively challenged this claim that chemical treatment 2,4,6-tribromoanisole (TBA) could, as J&J claims, permeate the boxes, packaging, and bottles to taint the recalled medication.

Moldy-smelling, musty bottles of Tylenol Arthritis Relief caplets were first reported 20 months ago, and since people have complained of digestive problems, including nausea, vomiting and stomach pain. Apparently FDA officials knew about the odor in 2008, having received over 100 complaints by August 2009, but only took critical action recently.

Kickbacks were the cause of a False Claims lawsuit against nursing home pharmaceutical provider Omnicare for which J&J was implicated. The $98 million settlement was based on allegations that the nursing home pharmacists were unnecessarily, and dangerously, prescribing nursing home residents with dementia the antipsychotic drug Risperdal. Unfortunate for the nursing home resident, Risperdal isn’t approved to treat agitated patients with dementia, but, according to the Justice Department (DOJ), this kickback scheme worked extremely well for J&J, tripling Omnicare’s sales of J&J drugs, from $100 million to $280 million with Risperdal making up $100 million of the latter sales figure.
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Pzifer’s off-label marketing of their anti-inflammatory drug Bextra will cost the pharmaceutical company a record-breaking $2.3 billion, $102 million of which will be split by five qui tam relators (whistleblowers). This most recent whistleblower lawsuit is the fourth illegal marketing lawsuit Pzifer’s settled since 2002. Of the $2.3B, $1B is in civil penalties with the remaining $1.195B as the largest criminal fine in U.S. history. This settlement is part of a four-year federal investigation into the business practices of the world’s largest pharmaceutical company.

At issue, this and previous lawsuits against the drug company allege marketing Bextra for “off-label,” or non FDA-approved, uses. In 1991, Bextra received FDA approval as a treatment for arthritis and menstrual cramps. In April 2005, Bextra was recalled after FDA officials received mounting evidence that the painkiller increased risks of heart attack, stroke, pulmonary embolism, and Stevens-Johnson Syndrome, a serious and sometimes fatal skin reaction.

During these nearly 14 years of distribution, Pfizer allegedly marketed the drug to doctors as a treatment for acute pain, a treatment the FDA never approved and one which required large doses of Bextra, an increase that would accordingly raise the health risks posed by Bextra. While it is not illegal for doctors to treat patients with drugs as they see fit, it is illegal for drug companies to market off-label uses.

Costco employees have filed a unpaid wages lawsuit in California stating the company had repeatedly violated the state’s wage and labor law. Costco faces allegations similar to those Tennessee Law Blog reported last year in the nationwide unpaid overtime lawsuits against Wal-Mart stores. Specifically, Costco has allegedly required employees to work off the clock by locking employees in the store after their shifts and not paying them for this time or overtime as required under state employment laws.

Unlike earlier Wal-Mart lawsuits, Costco has apparently claimed that keeping employees after they clocked out was for security reasons. Apparently managers forced employees to remain after their shifts while they performed closing tasks, such as removing valuables from display cases and emptying cash registers. Costco employees were unpaid for this time off-the-clock during which they were not permitted to leave.

Tennessee labor law requires employees be paid for their time, including required training and, in some cases, travel time. If something similar to what California Costco employees faced is happening at your Tennessee place of employment, you may have the opportunity to recover unpaid wages under Tennessee’s wage and hour law.

To ensure stimulus package moneys are properly used, the False Claims Act may see its greatest expansion since the False Claims Act Amendments of 1986.

The False Claims Act, also known as Lincoln’s Law for the laws established to reduce the rampant fraudulent billing during the Civil War, was created to punish misuse of government funds and recover lost government moneys by establishing a financial incentive for whistleblowers. These whistleblowers, known as relators, receive special protections under the False Claims Act and are allowed up to 30% of government recoveries under what is known as qui tam provisions.
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Johnson & Johnson executives received bad news last week when the U.S. Justice Department (DOJ) stated it would pursue two False Claims Act (whistleblower) lawsuits regarding the heart drug Natrecor. These government fraud whistleblowers’ lawsuits claim Natrecor was illegally marketed for off-label use. According to the qui tam provisions of the False Claims law, these whistleblowers (known as “relators”) stand to receive a percentage of damages recovered by the government for the big pharm company’s alleged corporate fraud.

The False Claims lawsuits allege that Scios, J&J’s parent company, marketed the intravenous drug Natrecor for uses other than the FDA-approved treatment shortly and continuously after its 2001 approval as a cardiac drug for acutely decompensated congestive heart failure (CHF) with shortness of breath (dyspnea). In doing so, the pharmaceutical company defrauded Medicare and other U.S. health programs to the tune hundreds of millions of dollars. While a doctor’s prescribing a pharmaceutical drug for off-label use is not illegal, the marketing of prescription drugs for unapproved uses is.

Despite its illegality, J&J marketers began pushing doctors to use Natrecor in less serious CHF patients, even though FDA had not reviewed the drug’s safety of such uses and although J&J released study results for Natrecor that showed no substantial benefits for off-label uses. Regardless, illegal marketing continued.

Subprime loan fraud litigation continues to find new classes of plaintiffs. In the latest class actions, lenders are being sued by their investors. People who bought stock in Countrywide Home Loans and New Century Mortgage have brought class action lawsuits against the lenders for their reckless lending activities, according to an article by Alison Frankel of The American Lawyer. The Federal District Judges who oversee these cases have recently denied the lender’s motions to dismiss the actions. Cited in the ruling in the Countrywide case, the plaintiffs have made a preliminary showing that the lender recklessly changed its lending procedures with a goal to not deny any mortgages, despite knowing that these loans were incredibly risky. The crux of plaintiff’s action is that the giant lender continued to loosen its loan underwriting standards to the point of near non-existence, all the while holding out to investors that their underwriting standards had not changed. In December, 2007, the lender admitted that billions of dollars in loans made during 2005 and 2006 would not have been possible under their old underwriting standards. According to the opinion and article, Countrywide went so far as to create an “Exception Processing System” to address loan applications that did not meet the standard for prime loans. Through this system, Countrywide would approve loans as “prime” based on exceptions designed wholly to allow them to issue and fund the loans. The problem this creates for the investors is that there are loans that are deemed by Countrywide as “prime” loans that share many of the characteristics of “subprime” loans, which would discount the value of the loan to an investor. To accommodate these loans in the short run, Countrywide would simply charge the borrower higher fees. Therefore, Countrywide took greater earnings on these subprime loans immediately while knowing they had a much higher default rate.

If you are a member of a group that has invested in mortgage backed securities, you may have a cause of action on your own or you may be a part of a class action already underway. At Higgins, Himmelberg and Piliponis, we represent individuals who have been harmed by loan fraud, predatory lending, and fraud through investments. Our firm has lawyers licensed in Tennessee, Kentucky and Georgia.

The 2008 fiscal year concluded with $694.5 million settlements from medical device manufacturers and drug pharmaceutical companies accused of misusing government moneys. Of this $694.5 million, $644.5 million came from False Claims lawsuits. These qui tam-driven lawsuits are designed as an incentive for whistleblowers to report their employers’ abuse of federal moneys, whether through fraudulent billing, outright theft, or other misuse of federal funds by corporations. Often, and in the case of these three medical companies, these false claims lawsuits involve Medicaid or Medicare.

(Click to read more on Tennessee qui tam/false claim lawsuits.)

The three drug and medical device companies who paid settlements for their illegal influence in garnering government funds were: Merck for illegal incentives to persuade healthcare providers to prescribe its products to Medicaid patients ($361 million), Cephalon for off-label marketing with some of these charges to Medicaid/Medicare ($258 million), and Kyphon (now Medtronic Spine) for coercing hospitals to perform costlier and inappropriate invasive surgery on their patients than the typical outpatient treatment ($75 million).

Medtronic, the major medical device maker who has appeared numerous times this year in Tennessee Law Blog’s defective drugs and medical device blogs, now finds itself in a whistleblower (False Claims) lawsuit filed by a former Tennessee employee Ami Kelley, a Nashville, TN Medtronic attorney.

The whistleblower lawsuit alleges Medtronic falsely filed Medicare claims in violation of the False Claims Act, paid kickbacks to over 130 medical doctors, including orthopedic spine surgeons and neurosurgeons, and promoted off-label use (non-FDA approved uses, including INFUSE bone grafts) of Medtronic products, as well as other violations.

Previously in 2006, Medtronic settled for $40 million after a government lawsuit found that Medtronic promoted its medical devices and other products to surgeons by providing such incentives as lap dances at strip clubs like the Platinum Plus in Memphis (whose owner was sentenced for prostitution-related charges in December 2006). The present qui tam lawsuit alleges similar misconduct in “educational” seminars that were more Bacchean than Socratic with women “provided” to attending doctors.

News 4 in Nashville ran a story that Wackenhut has billed the government for security services that were not provided. If this is true they have billed us as tax payers for nothing. I think we would all agree that billing someone for work you do not perform is nothing more than stealing.

The state and federal government has now given us a powerful tool to punish companies that defraud the government. It is commonly known as the false claims act. The false claims act allows people, whether affiliated with the government or not, to file actions against federal and state contractors claiming fraud against the government. The act of filing such actions is informally called “whistle blowing”. Persons filing under the Act stand to receive a portion of any recovered damages. More importantly it deters any company from cheating us all.

If you have a potential whistle blower claim, feel free to contact our office.

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