whistleblower act

Dr. Bostwick Settles False Medicare Claims for $3.75M; Whistleblower to Get $2.5M

January 25, 2016
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Dr. David G. Bostwick, former founder, owner, and chief executive officer of Bostwick Laboratories, has agreed to pay up to $3.75 million to the United States federal government for to resolve alleged violations of the False Claims Act, the U.S. Department of Justice announced earlier this month.

The settlement announced today resolves claims that Dr. Bostwick allegedly directed Bostwick Laboratories to bill Medicare and Medicaid for expensive cancer detection tests known as Fluorescent In Situ Hybridization (FISH) tests, as well as other tests, that were not medically necessary and were performed without the treating physicians’ consent or order.  FISH tests are used to detect bladder cancer.  During the time period covered by the settlement, Medicare reimbursement for FISH tests ranged from $456 to $966 per test. 

The settlement also resolves allegations that Dr. Bostwick, through Bostwick Laboratories, offered various discounts and billing arrangements to treating physicians to induce physicians to refer business to Bostwick Laboratories in violation of the federal Anti-Kickback Statute.  The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs.  The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.

Under the settlement announced today, Dr. Bostwick has agreed to pay over $2.6 million plus an additional $1.125 million if certain financial contingencies occur within the next five years - for a total potential payment of up to $3.75 million.  On Aug. 28, 2014, Bostwick Laboratories previously agreed to pay over $6.5 million to resolve the allegations in this lawsuit.    

The allegations resolved by these settlements were originally brought by whistleblower Michael Daugherty, who works in the industry, under the qui tam provisions of the False Claims Act.  The act permits private citizens to sue on behalf of the government those who falsely claim federal funds.  The act allows the whistleblower to receive a share of any funds recovered through the lawsuit.  Daugherty will receive over $2.5 million from the government’s settlements with Dr. Bostwick and Bostwick Laboratories.

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.

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Novum Structures to Settle False Claims for $3M; Whistleblower to Get $400K

January 8, 2016
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Wisconsin-based Novum Structures LLC has agreed to plead guilty and pay $3 million to resolve criminal and civil liability arising from improper use of foreign materials on construction projects involving federal funds, the U.S. Department of Justice announced last week. Novum specializes in the design and construction of glass space frames often used in roofs and atrium enclosures.  

The agreement resolves a criminal Information alleging that Novum repackaged materials and falsified documents relating to some federally funded construction projects in order to hide that it was using noncompliant foreign materials.  According to an agreement reached with the government, Novum will plead guilty to one count of concealing a material fact, in violation of 18 U.S.C. § 1001, and pay a $500,000 criminal fine. 

In addition to the criminal fine, Novum has agreed to pay $2.5 million to resolve civil allegations under the False Claims Act that its conduct caused the submission of false claims for payment.  Specifically, the civil settlement resolves allegations that Novum caused false claims by knowingly – and in violation of its contractual obligations – using noncompliant foreign materials on several federally funded construction projects.

Construction projects funded by the U.S. government are generally subject to laws requiring the use of domestic materials, such as the Buy American Act; the Federal Transit Administration’s Buy America provision; and § 1605 of the American Recovery and Reinvestment Act.  The contracts involved in this case covered both government buildings and transit projects partially paid for with federal funds.

As part of the settlement agreement, Novum has agreed not to contest debarment from federally funded projects.

The allegations resolved by the civil settlement were originally brought by whistleblower Brenda King under the qui tam, or whistleblower, provisions of the False Claims Act.  The act permits private parties to sue on behalf of the government those who falsely claim federal funds.  The act also allows the whistleblower to receive a share of any funds recovered through the lawsuit.  King will receive approximately $400,000 as her share of the civil settlement.

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University Furnishings to Pay $15M for False Claims; Whistleblower to Get $2.25M

January 5, 2016
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University Furnishings LP and its general partner, Freedom Furniture Group Inc. (collectively, “University Furnishings”) have agreed to pay $15 million to resolve allegations that the companies knowingly submitted or caused the submission of false claims by making false statements to avoid paying duties on wooden bedroom furniture imported from China, the U.S. Department of Justice announced last month.  University Furnishings sells furniture for student housing.

The government alleged that University Furnishings knowingly misclassified or conspired with others to misclassify wooden bedroom furniture on documents presented to U.S. Customs and Border Protection (CBP) to avoid paying antidumping duties on imports of wooden bedroom furniture manufactured in the People’s Republic of China.  Specifically, University Furnishings allegedly classified the furniture as office and other types of furniture not subject to duties while selling the furniture in the student housing market for use in dormitory bedrooms.  The Department of Commerce assesses and CBP collects antidumping duties to protect U.S. businesses by offsetting unfair foreign pricing and foreign government subsidies.

The allegations resolved by the settlement were originally brought by University Loft Company under the qui tam or whistleblower provisions of the False Claims Act.  The act permits private parties to sue on behalf of the United States those who falsely claim federal funds or, as in this case, those who avoid paying funds owed to the government or cause or conspire in such conduct.  The act also allows the whistleblower to receive a share of any funds recovered through the lawsuit.  University Loft Company will receive $2.25 million as its share 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.

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21st Century Oncology Settles False Medicare Claims for $19.75M; Whistleblower to Get $3.2M

December 28, 2015
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21st Century Oncology LLC has agreed to pay $19.75 million to the federal government to resolve allegations that it knowingly submitted or caused the submission of false claims to federal health care programs, the U.S. Department of Justice announced earlier this month.  21st Century is a nationwide provider of integrated cancer care services that is headquartered in Fort Myers, Florida. 

The settlement announced today resolves allegations that 21st Century submitted claims to Medicare and Tricare for fluorescence in situ hybridization, or “FISH,” tests that were not medically necessary.  FISH tests are laboratory tests performed on urine that can detect genetic abnormalities associated with bladder cancer.  The government alleged that 21st Century submitted claims for unnecessary FISH tests that were ordered by four of its urologists, Dr. Meir Daller, Dr. Steven Paletsky, Dr. David Spellberg and Dr. Robert Scappa, all of whom practiced in the Fort Myers area.  The government also alleged that 21st Century encouraged these physicians to order unnecessary FISH tests by offering bonuses that were based in part on the number of tests referred to 21st Century’s laboratory.  Today’s settlement resolves the civil liability of 21st Century only. 

The settlement resolves allegations originally brought in a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  The whistleblower, a former 21st Century Oncology LLC medical assistant, will receive $3.2 million as her share of the recovery in this case.

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.

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Dynasplint Settles False Medicare Claims for $10.3M; Whistleblower to Get $2M

December 21, 2015
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Dynasplint Systems Inc. and its founder/president George Hepburn have agreed to pay $10.3 million to resolve allegations that they knowingly submitted or caused the submission of false claims to federal health care program Medicare for splints provided to patients in skilled nursing facilities, the U.S. Department of Justice announced last week.

The government alleged that Hepburn and Dynasplint knowingly mischarged Medicare for splints used by patients in Medicare-certified skilled nursing facilities.  Patients staying in skilled nursing facilities, or their insurers such as Medicare, pay a bundled payment to these facilities that cover all of a patient’s needs, including such items as splints, and thus no separate Medicare reimbursement for such devices is permitted.   To circumvent Medicare rules, defendants allegedly mispresented that patients were in their homes or other places that were not skilled nursing facilities.   

The settlement resolves allegations originally brought in a lawsuit filed by Meredith Deane, a former sales executive for Dynasplint, under the whistleblower, or qui tam, provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  The United States may intervene in such an action as it did here.  Ms. Deane will receive at least $1.98 million for the settlement.

In August 2013, the U.S. Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services (CMS) suspended payments to Dynasplint based upon credible allegations of fraud.  As part of the settlement, defendants are agreeing to forfeit all funds held by this payment suspension, approximately $8.5 million. 

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.

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DOJ Recovered Over $3.5B in False Claims in 2015

December 9, 2015
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The federal government recovered more than $3.5 billion taxpayer dollars in fraud and false claims cases in the 2015 fiscal year, the U.S. Department of Justice announced last week.  This is the fourth year in a row that the department has exceeded $3.5 billion in cases under the False Claims Act and brings total recoveries from January 2009 to the end of the fiscal year to $26.4 billion.

Of the $3.5 billion recovered last year, $1.9 billion came from companies and individuals in the health care industry for allegedly providing unnecessary or inadequate care, paying kickbacks to health care providers to induce the use of certain goods and services, or overcharging for goods and services paid for by Medicare, Medicaid, and other federal health care programs.  The $1.9 billion reflects federal losses only.  In many of these cases, the department was instrumental in recovering additional millions of dollars for consumers and state Medicaid programs.  

The next largest recoveries were made in connection with government contracts.  The government depends on contractors to feed, clothe, and equip our troops for combat; for the military aircraft, ships, and weapons systems that keep our nation secure; as well as to provide everything that is needed to fund myriad programs at home.  Settlements and judgments in cases alleging false claims for payment under government contracts totaled $1.1 billion in fiscal year 2015.   

The False Claims Act is the government’s primary civil remedy to redress false claims for government funds and property under government contracts, including national security and defense contracts, as well as under government programs as varied as Medicare, veterans’ benefits, federally insured loans and mortgages, highway funds, research grants, agricultural supports, school lunches, and disaster assistance.  In 1986, Congress strengthened the Act by amending it to increase incentives for whistleblowers to file lawsuits on behalf of the government.

Most false claims actions are filed under the Act’s whistleblower, or qui tam, provisions that allow individuals to file lawsuits alleging false claims on behalf of the government.  If the government prevails in the action, the whistleblower, also known as the relator, receives up to 30 percent of the recovery.  Whistleblowers filed 638 qui tam suits in fiscal year 2015 and the department recovered $2.8 billion in these and earlier filed suits this past year.  Whistleblower awards during the same period totaled $597 million. 

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.

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Education Management Corp. to Settle False Claims for $95.5M; Whistleblowers to Get $11.3M

November 20, 2015
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Education Management Corp. (EDMC), the second-largest for-profit educational company in the United States of America, will pay $95.5 million to settle allegations that EDMC knowingly submitted or caused the submission of false claims by falsely certifying that it was in compliance with Title IV of the Higher Education Act (HEA) and parallel state statutes. 

The primary allegation was that EDMC unlawfully recruited students, in contravention of the HEA’s Incentive Compensation Ban (ICB), by running a high pressure boiler room where admissions personnel were paid based purely on the number of students they enrolled.  In addition to resolving these and other FCA claims, the global settlement also encompasses an investigation by a consortium of state Attorneys General, of consumer-fraud allegations involving deceptive and misleading recruiting practices.

EDMC, which is headquartered in Pittsburgh, Pennsylvania, operates nationwide under four post-secondary school brands: the Art Institutes, South University, Argosy University and Brown-Mackie College.  Student enrollment across EDMC’s school brands exceeds 100,000 students.   

The settlement resolves four separate FCA lawsuits filed in federal court in Pittsburgh, Pennsylvania, and Nashville, Tennessee, under the qui tam, or whistleblower, provisions of the act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.    

The United States and five states intervened and actively litigated one of those four whistleblower lawsuits, United States ex rel. Washington, in the Western District of Pennsylvania.  The United States’ complaint in intervention alleged systemic violations of Title IV of the HEA’s ICB and parallel state provisions, which prohibit schools from paying recruiters based on their success in securing enrollments.  Specifically, the United States and the plaintiff states claimed that EDMC falsely certified to the U.S. Department of Education and various state offices of higher education that it was complying with the ICB, in order to be eligible to receive the federal grant and loan dollars that compose the majority of EDMC’s revenue.  In reality, according to the United States’ complaint in intervention, EDMC was running a high pressure sales business and paid its recruiters based only on the number of students they enrolled.  As a result of these allegedly false certifications, EDMC improperly enriched itself for more than 10 years with federal and state grant and loan dollars.  More broadly, EDMC’s alleged conduct resulted in exactly the problems that Congress sought to curtail when it enacted the ICB:  the enrollment of students in programs for which they lacked the necessary skills and qualifications, unsustainable student debt and default rates, and schools’ pursuit of profits ahead of a legitimate educational mission. 

The global settlement with EDMC also resolves three additional federal FCA lawsuits in which the government did not intervene, all involving various violations of Title IV of the HEA by EDMC. 

Finally, the global settlement resolves a consumer fraud investigation by a consortium of 40 state Attorneys General, into EDMC’s deceptive and misleading recruiting practices.  The consumer fraud settlement requires EDMC to undertake various compliance obligations, including detailed disclosure obligations to students; prohibitions on deceptive or misleading recruiting practices and oversight by an administrator to ensure compliance. 

The global settlement amount of $95.5 million reflects EDMC’s financial condition and current ability to pay.  The settlement proceeds will be shared among the United States, the co-plaintiff states and the whistleblowers and their counsel in the four FCA cases, and includes funds allocated for the compliance expenses of the state consumer fraud settlement, including the costs of the administrator and the acquisition and use of a sophisticated voice analytics system to record and analyze recruiters’ calls with students.  The United States will receive $52.62 million from the settlement, and will pay $11.3 million collectively to the relators in the four qui tam cases. 

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.

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Tech Companies Settle False Contract Claims for $12.75M; Whistleblower to Get $2.4M

November 16, 2015
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NetCracker Technology Corp. has agreed to pay $11.4 million and Computer Sciences Corp. has agreed to pay $1.35 million to resolve allegations that the companies knowingly submitted or caused the submission of false claims by sending individuals without security clearances on a Defense Systems Information Agency (DISA) contract, the U.S. Department of Justice announced earlier this month.  NetCracker is a telecom software and services company headquartered in Waltham, Massachusetts, and CSC is an information technology services company with its headquarters in Falls Church, Virginia. 

NetCracker and CSC implemented software used to help manage the telecommunications network used by the U.S. Department of Defense.  The work was done pursuant to a contract with DISA, under which CSC was the prime contractor and NetCracker was a CSC subcontractor.  NetCracker allegedly used employees without security clearances to perform work when it knew the contract required those individuals to have security clearances, resulting in CSC recklessly submitting false claims for payment to DISA. 

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The civil lawsuit was filed in the District of Columbia by John Kingsley, a former NetCracker employee.  Mr. Kingsley will receive $2,358,750 as his share of the recovery in this case.

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.

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400+ Hospitals Settle False Medicare Claims for $250; Whistleblowers to Get Over $38M

November 9, 2015
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The U.S. Department of Justice announced last month that 457 hospitals in 43 states have agreed to a settlement of $250 million to resolve allegations that they knowingly submitted or caused the submission of false claims to federal health care program Medicare.

An implantable cardioverter defibrillator, or ICD, is an electronic device that is implanted near and connected to the heart.  It detects and treats chaotic, extremely fast, life-threatening heart rhythms, called fibrillations, by delivering a shock to the heart, restoring the heart’s normal rhythm.  It is similar in function to an external defibrillator (often found in offices and other buildings) except that it is small enough to be implanted in a patient’s chest.  Only patients with certain clinical characteristics and risk factors qualify for an ICD covered by Medicare. 

Medicare coverage for the device, which costs approximately $25,000, is governed by a National Coverage Determination (NCD).  The Centers for Medicare and Medicaid Services implemented the NCD based on clinical trials and the guidance and testimony of cardiologists and other health care providers, professional cardiology societies, cardiac device manufacturers and patient advocates.  The NCD provides that ICDs generally should not be implanted in patients who have recently suffered a heart attack or recently had heart bypass surgery or angioplasty.  The medical purpose of a waiting period--40 days for a heart attack and 90 days for bypass/angioplasty--is to give the heart an opportunity to improve function on its own to the point that an ICD may not be necessary.  The NCD expressly prohibits implantation of ICDs during these waiting periods, with certain exceptions.  The Department of Justice alleged that each of the settling hospitals implanted ICDs during the periods prohibited by the NCD.  

The 70 settlements, representing over 400 hospitals, are listed on a chart at the Department of Justice website.  Most of the settling defendants were named in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant.  The lawsuit was filed in federal district court in the Southern District of Florida by Leatrice Ford Richards, a cardiac nurse, and Thomas Schuhmann, a health care reimbursement consultant.  The whistleblowers have received more than $38 million from the settlements.  The Department of Justice is continuing to investigate additional hospitals and health systems.

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.

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Warner Chilcott Pleads Guilty to Felony Health Care Fraud, Pays $125M; Whistleblowers to Get $22.9M

November 2, 2015
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Warner Chilcott U.S. Sales LLC, a subsidiary of pharmaceutical manufacturer Warner Chilcott PLC, has agreed to plead guilty to a felony charge of health care fraud, the U.S. Department of Justice announced last week.  The plea agreement is part of a global settlement with the United States in which Warner Chilcott has agreed to pay $125 million to resolve its criminal and civil liability arising from the company’s illegal marketing of the drugs Actonel®, Asacol®, Atelvia®, Doryx®, Enablex®, Estrace® and Loestrin®

Warner Chilcott agreed to plead guilty in the District of Massachusetts to criminal charges that the company committed a felony violation by paying kickbacks to physicians throughout the United States to induce them to prescribe its drugs, manipulating prior authorizations to induce insurance companies to pay for prescriptions of Atelvia® that the insurers may not have otherwise paid for, and making unsubstantiated marketing claims for the drug Actonel®.

In a criminal information filed today in the District of Massachusetts, the government charged that Warner Chilcott, through its employees acting at the direction of members of the company’s management team, knowingly and willfully paid remuneration to physicians in order to induce those physicians to prescribe Warner Chilcott drugs.  Under the law, it is illegal to offer or pay remuneration to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs for which payments are made in whole or in part under a federal health care program.  The information alleges that Warner Chilcott employees, at the direction of company management, provided payments, meals, and other remuneration associated with so-called “Medical Education Events,” which included dinners, lunches and receptions.  These events, which were often held at expensive restaurants, often contained minimal or no educational component and were instead used to pay prescribing physicians in an attempt to gain a “competitive advantage” over other companies.  Warner Chilcott also enlisted high-prescribing physicians as “speakers” for the company.  In fact, the “speakers” often did not actually speak about any clinical or scientific topics, and the payments were primarily intended to induce prescriptions.  For instance, Warner Chilcott informed “speakers” who were not prescribing at a high volume that they would not be paid for subsequent events unless their prescribing habits increased.      

The information also alleges that Warner Chilcott employees knowingly and willfully submitted false, inaccurate, or misleading prior authorization requests and other coverage requests to federal health care programs for the osteoporosis medications Atelvia® and Actonel®.  The false, inaccurate and misleading information was provided to certain insurance companies in order to overcome formulary restrictions that favored less expensive osteoporosis drugs.  For instance, Warner Chilcott was aware that many insurers only paid for Atelvia® if a physician submitted an individualized request explaining why the patient could not be treated with less-expensive medications approved to treat the same conditions.  As detailed in the information, Warner Chilcott sales representatives filled out numerous prior authorizations for Atelvia®, using “canned” medical justifications which often were inconsistent with the patients’ medical conditions.  In some instances, according to the information, Warner Chilcott sales representatives submitted these prior authorizations directly to insurance companies, holding themselves out to be physicians.  In other cases, sales representatives coached physicians and staff about which medical justifications would result in an approved prior authorization, whether or not the justification was true for a particular patient.  

Finally, the information alleges that Warner Chilcott employees were instructed by members of the company’s management team to make unsubstantiated superiority claims when marketing the drug Actonel®.  The management team instructed the sales representatives to tell physicians that Actonel® was superior to other bisphosphonates due to its supposedly unique “mechanism of action.”  According to the information, Warner Chilcott managers also encouraged sales representatives to use props to visually support this false claim, including pouring water and syrup onto two sponges while telling physicians that Actonel, like water, penetrated and exited the bone more quickly than its competitors, represented by the syrup.  Warner Chilcott management directed the sales representatives to make the superiority claim even though the claim was not supported by clinical evidence.

Under the terms of the plea agreement, Warner Chilcott will pay a criminal fine of $22.94 million.    

Warner Chilcott also entered into a civil settlement agreement under which it agreed to pay $102.06 million to the federal government and the states to resolve claims arising from its conduct, which allegedly caused false claims to be submitted to government health care programs.  The civil settlement resolved allegations that Warner Chilcott violated the federal Ant-Kickback Statute by paying illegal remuneration to prescribing physicians in connection with the so-called “Medical Education Events” and speaker programs and caused the submission of false prior authorization requests for Atelvia® and Actonel®.  The federal share of the civil settlement is approximately $91.5 million, and the state Medicaid share of the civil settlement is approximately $10.6 million.

The civil settlement resolves a lawsuit filed under the whistleblower provisions of the False Claims Act, which permits private individuals to sue on behalf of the government for false claims and to share in any recovery.  The civil lawsuit was filed in the District of Massachusetts and is captioned United States ex rel. Alexander, et al. v. Warner Chilcott plc, et al., Civil Action No. 11-CA-1121 (D. Mass.).  As part of today’s resolution, the whistleblowers will receive approximately $22.9 million from the federal share of the civil recovery.

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.

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