False Claims Act

Johnson & Johnson (J&J) will pay more than $2.2 billion to resolve criminal and civil liability allegations relating to the prescription drugs Risperdal, Invega and Natrecor, including promotion for uses not approved as safe and effective by the Food and Drug Administration (FDA) and, payment of kickbacks to physicians and to pharmacy providers, the U.S. Department of Justice announced earlier this week.  The global resolution is one of the largest health care fraud settlements in U.S. history, including criminal fines and forfeiture totaling $485 million and civil settlements for False Claims Act violations totaling $1.72 billion.

The government alleged that Janssen Pharmaceuticals Inc., a J&J subsidiary, introduced the antipsychotic drug Risperdal, which was approved by the FDA only to treat schizophrenia, into interstate commerce for an unapproved uses. Janssen’s sales representatives allegedly promoted Risperdal to physicians and other prescribers who treated elderly dementia patients by urging the prescribers to use Risperdal to treat symptoms such as anxiety, agitation, depression, hostility and confusion. 

Janssen also allegedly created written sales aids for use by their ElderCare sales force that emphasized symptoms and minimized any mention of the FDA-approved use, treatment of schizophrenia.  The company also provided incentives for off-label promotion and intended use by basing sales representatives’ bonuses on total sales of Risperdal in their sales areas, not just sales for FDA-approved uses. The settlement also resolves allegations that, in furtherance of their efforts to target elderly dementia patients in nursing homes, J&J and Janssen paid kickbacks to Omnicare Inc., the nation’s largest pharmacy specializing in dispensing drugs to nursing home patients. 

The government alleged that J&J and Janssen caused false claims to be submitted to federal health care programs by promoting Risperdal for off-label uses that federal health care programs did not cover, making false and misleading statements about the safety and efficacy of Risperdal and paying kickbacks to physicians to prescribe Risperdal.

In addition to imposing substantial monetary sanctions, the resolution will subject J&J to stringent requirements under a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  This agreement is designed to increase accountability and transparency and prevent future fraud and abuse.

The lawsuit was originally filed by former employees across multiple states under the whistleblower provisions of the False Claims Act.  The False Claims Act allows private parties with knowledge of fraud against the government to sue on behalf of the government and share in the recovery.  Whistleblowers in the Eastern District of Pennsylvania will receive $112 million while whistleblowers in the Districts of Massachusetts and the Northern District of California will receive $28 million as their portion of the settlement.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who uncover fraud of every kind perpetrated against our government including, health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

Infosys Corporation has agreed to pay $34 million to settle allegations of systematic visa fraud and abuse of immigration processes, the U.S. Attorney’s Office announced earlier this week.  The $34 million payment made by Infosys, an Indian company involved in consulting, technology, and outsourcing, represents the largest payment ever levied in an immigration case.

Infosys brings foreign nationals into the United States in order to perform work and fulfill contracts with its customers under two visa classification programs, H-1B and B-1. The government alleged that Infosys knowingly circumvented the requirements, limitations and governmental oversight of the H-1B visa program by unlawfully using B-1 visa holders to perform skilled labor that would otherwise be performed by United States citizens or require legitimate H-1B visa holders.  The government also alleged that Infosys did so in order to increase profits, minimize costs of securing visas, increase flexibility of employee movement, obtain an unfair advantage over competitors and avoid tax liabilities.

The settlement agreement also requires additional auditing for I-9 forms; a reporting requirement for B-1 usage; an agreement to continue to use only detailed invitation letters and the continued use of corporate disciplinary processes for employees that violate the immigration laws of the United States.

The lawsuit was originally filed by Jack Palmer, a former Infosys employee in America, under the whistleblower provisions of the False Claims Act.  The False Claims Act allows private parties with knowledge of fraud against the government to sue on behalf of the government and share in the recovery.  Palmer’s case was dismissed last year by a federal judge but spurred federal investigation, and he could receive $5 million to $8 million as his share of this settlement.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who uncover fraud of every kind perpetrated against our government including, health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

John Lombardi has filed a lawsuit against his previous employer, George Washington University (GW), for unlawful termination in connection with his attempts to blow the whistle on GW’s contract fraud on the Department of State.

GW obtained subcontracts through Science Applications International Corporation (SAIC) for orders related to the federally funded Global Anti-Terrorism Training Assistance project, for which Lombardi was to be the Principal Investigator.  According to the complaint, GW allegedly attempted to engage in a “bait-and-switch” on SAIC and the federal government by replacing Lombardi as the Principal Investigator on certain contracts without notifying SAIC or the government that other, unqualified individuals would be performing the tasks.  The scheme would have resulted in federal tax dollars being used to pay a Principal Investigator that was not qualified, nor agreed upon in the contract.  Lombardi claims that when he tried to bring the matter to the attention of GW’s General Counsel, he was ignored, then his pay reduced, and finally his employment was terminated.

Lombardi filed the suit under the whistleblower provisions of the False Claims Act, which allows private parties with knowledge of fraud against the government to sue on behalf of the government and share in the recovery.  The False Claims Act also prohibits retaliation against the whistleblower.  Lombardi will be eligible for a share of the recovery should he prevail.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

The owners of Global Medical Direct, LLC and Global Medical Inc., have agreed to pay $7 million to resolve allegations against them in connection with a scheme to submit false claims to the federal Medicare and Tricare healthcare programs, the United States Attorney’s Office announced yesterday. Global Medical, Inc. and its parent company, Global Medical Direct, LLC, are mail-order diabetic supply companies. 

The United States alleged that owners Robert Shea and Mark Franz caused Global Medical and Global Medical Direct to enter into numerous marketing contracts with insurance brokerage and other companies with customer bases likely to have a high percentage of diabetes patients and paid these companies based on the number of patients referred for diabetic supplies.  The Anti-Kickback Statute makes it unlawful to pay or receive remuneration for patient referrals because of the high potential for billing abuse to federal programs, such as Medicare, resulting from these types of arrangements. 

The companies have agreed to pay to the United States $5 million in proceeds from the sale of all of the companies’ assets to settle civil allegations under the False Claims Act.  Owners Shea and Franz will also receive twenty-year exclusions from participation in any federal healthcare program as part of the settlement. 

Under the False Claims Act, private parties with knowledge of fraud against the government may sue on behalf of the government and share in the recovery.  Had there been a whistleblower in this case, their portion of the settlement may have been anywhere from 15 to 30 percent.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who uncover fraud of every kind perpetrated against our government including, health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

The U.S. Attorney’s Office has intervened in a lawsuit against Pinnacle Bank (Pinnacle) in the U.S. District Court for the District of Wyoming, the U.S. Department of Justice announced last month.  The complaint alleges that Pinnacle made false statements to the United States Small Business Administration (SBA) regarding a loan under the SBA’s “504 Loan Program.”

Pinnacle Bank provided the Columbine Group, LLC, (developer of the hotel) with an interim construction loan for the AmericInn Lodge and Suites located in Laramie, Wyoming.  The government alleges that Pinnacle falsely certified to the SBA that it had no knowledge of any un-remedied substantial adverse change in Columbine’s financial condition since the date of the application for the SBA loan, that Columbine was current on its payments to Pinnacle and not otherwise in default of the loan, and that Pinnacle had disclosed to the SBA all material information known to it. Columbine later defaulted on its loans and the United States was required to use taxpayer dollars to repurchase the debenture pursuant to its guarantee.

The lawsuit was originally filed by Hospitality Management, Inc. (HMI), business operations manager for the hotel, under the False Claims Act.  The False Claims Act allows private parties with knowledge of fraud against the government to sue on behalf of the government and share in the recovery.  Should the United States government and HMI prevail in court, HMI will receive 15 to 30 percent of the settlement.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.