Posternak Blankstein & Lund LLP is now Arent Fox. Read the press release

Pharmaceutical Company Agrees to Pay $12.6 Million to Settle FCA Allegations Involving Kickbacks

Headlines that Matter for Companies and Executives in Regulated Industries

Pharmaceutical Company Agrees to Pay $12.6 Million to Settle FCA Allegations Involving Kickbacks

On Tuesday, the Department of Justice announced a $12.6 million settlement with Incyte Corporation, a Delaware pharmaceutical company, to resolve False Claims Act allegations relating to Incyte’s drug Jakafi, a drug approved to treat myelofibrosis. The qui tam claims were brought by a former compliance executive at Incyte, who will receive approximately $3.59 million of the recovery.

According to the government, between November 2011 and December 2014, Incyte allegedly pressured an independent foundation to pay copays of Medicare and TRICARE beneficiaries using Jakafi who were ineligible for fund assistance because they did not have myelofibrosis. The government further alleged that an Incyte contractor assisted ineligible beneficiaries in completing and submitting applications to the fund for copay assistance. The Anti-Kickback statute prohibits a pharmaceutical company from offering or paying any remuneration to induce a federal beneficiary to purchase its drugs, including payment of copay obligations.

The DOJ press release is here.

$4.4 Million Settlement with Neurosurgeon and Medical Device Distributors Brings DOJ’s Total Recovery on Kickback Scheme to $33 Million

On Monday, the Department of Justice announced a $4.4 million False Claims Act settlement with Wilson Asfora, a South Dakota neurosurgeon, and medical device distributorships Medical Designs LLC and Sicage LLC. Asfora and the medical device distributors allegedly engaged in three kickback schemes over nearly ten years, whereby: (1) Medical Designs and Sicage allegedly paid Asfora profit distributions in exchange for Asfora using their devices in his spine surgeries; (2) Medical Designs allegedly resold other manufacturers’ spinal devices and split the profits with Asfora if he used those devices in his spine surgeries; and (3) Asfora allegedly solicited and received kickbacks, in the form of “lavish meals and alcohol,” from Medtronic USA, Inc., in exchange for using Medtronic’s medical devices. The government also alleged that Asfora submitted false claims for payment of medically unnecessary procedures using devices in which he had a financial interest.

The government announced that as a result of this most recent settlement, it has recovered a total of more than $33 million resulting from Asfora’s misconduct, including an FCA settlement for $20.25 million in October 2019 with Sanford Health entities and a $9.21 million settlement in October 2020 with Medtronic.

The DOJ press release is here.

Government Charges Three Florida Men in $46 Million Health Care Fraud, Kickback, and Money Laundering Scheme

Three telemarketing company owners were charged in an indictment unsealed on Monday in the U.S. District Court for the Southern District of Florida for allegedly participating in a $46 million health care fraud, kickback, and money laundering scheme. According to the indictment, two of the defendants allegedly induced Medicare beneficiaries to accept cancer genetic tests whether or not the tests were medically necessary or eligible for Medicare reimbursement. These two defendants allegedly convinced telemedicine companies to have their doctors write orders for expensive cancer genetic tests in exchange for kickbacks and bribes, even though the doctors had never conducted a proper telemedicine visit with the beneficiaries, were not treating the beneficiaries for cancer or symptoms of cancer, and did not use the test results for further treatment.

According to the indictment, all three defendants signed doctors’ orders for the tests in return for over $14 million in kickbacks, and as a result, caused the submission by one lab of approximately $46 million in claims to Medicare, of which over $27 million was paid. The two defendants who allegedly induced the telemedicine companies to participate in the scheme were each charged with one count of conspiracy to commit health care fraud, one count of conspiracy to pay and receive kickbacks, multiple counts of substantive health care fraud and kickback charges, conspiracy to commit money laundering, and substantive counts of money laundering charges. An information unsealed the same day charged the third defendant with one count of conspiracy to pay and receive kickbacks and one count of receipt of kickbacks.

The DOJ press release is here.

Judge Awards Sanofi $17.2 Million in Fees and Expenses for Frivolous FCA Suit

California Magistrate Judge Shashi H. Kewalramani ordered Amphastar Pharmaceuticals Inc. to pay Sanofi-Aventis $17.2 million in attorney fees, expenses, and interest after a court dismissed its False Claims Act lawsuit against Sanofi alleging that Lovenox, a blood thinner, was improperly patented. In July 2015, the district court dismissed the FCA lawsuit holding that the suit was “clearly frivolous” because Amphaster knew or should have known that it was not an original source of information, and as a result, the court lacked jurisdiction over its claims. The Ninth Circuit affirmed the dismissal in May 2017.

The case is Amphastar Pharmaceuticals Inc. v. Aventis Pharma SA et al., case number 5:09-cv-00023, in the U.S. District Court for the Central District of California.


Continue Reading