On February 1, 2022, the United States Department of Justice (DOJ) announced the second-largest amount of False Claims Act settlements ever recorded (and the largest since 2014). The $5.6 billion in settlements and judgments all came rom civil cases involving fraud and false claims against the government in the Fiscal Year ending September 30, 2021. The total of settlements and judgments obtained through the False Claims Act since 1986 now total more than $70 billion.
Of the more than $5.6 billion, more than $5 billion directly relate to the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians. These amounts reflect recoveries only from federal losses. In many cases, the DOJ secured additional recoveries for state Medicaid programs, too.
The Opioid Epidemic
One of the major contributors to the recoveries was significant resolutions with prescription opioid manufacturers Indivior and Purdue Pharma. For its part, Indivior Inc. and Indivior plc agreed to pay $209.3 million to the federal government, resolving allegations that the companies promoted Suboxone to physicians who would write prescriptions that were not for a medically accepted indication and were often diverted; allegations that the companies made false and misleading claims that Suboxone Film was less susceptible to diversion and abuse and to accidental pediatric exposure than other buprenorphine products; among other things. In total, Indivior reached a $600 million global resolution of criminal and civil liability.
In October 2020, Purdue Pharma agreed to an allowed, unsubordinated, and general unsecured bankruptcy claim for $2.8 billion to resolve civil allegations that it promoted its opioid drugs to health care providers it knew were prescribing opioids for uses that were not safe, not effective, and medically unnecessary. These prescriptions often led to abuse and diversion. The civil settlement also resolved allegations that Purdue paid kickbacks to doctors, certain specialty pharmacies and an electronic health records developer to increase prescriptions of Purdue’s opioid products. However, Purdue incorporated the civil settlement into its plan of reorganization but the district court reversed a bankruptcy court order confirming the plan, and litigation over the plan continues.
Individual members of the Sackler family (prominent shareholders and board members of Purdue) reached a $225 million settlement to resolve False Claims Act allegations that they approved a new marketing program that ramped up OxyContin marketing to high-volume prescribers, resulting in opioid prescriptions being written for uses that were unsafe, ineffective, and medically unnecessary.
Kickbacks
Kickbacks have long been a popular source of False Claims Act settlements and kickbacks in the healthcare industry are particularly looked after “because of their potential to subvert medical decision-making and to increase healthcare costs.”
Pharmaceutical companies Taro, Sandoz, and Apotex, all paid a collective $447.2 million to resolve allegations that they paid and received compensation through pricing arrangements, supply and allocation of customers with other pharmaceutical manufacturers, as part of a conspiracy to fix prices of certain generic drugs.
Arrival Medical LLC and its parent company, Alere Inc., agreed to a $160 million settlement to resolve allegations that Arriva paid kickbacks to Medicare beneficiaries through providing free or no-cost diabetic testing glucometers and routinely waiving copayments for glucometers and diabetic testing supplies.
Electronic health records (EHR) technology vendor Athenahealth Inc. paid $18.25 million to resolve allegations that it invited prospective and current customers to all-expense-paid events to generate sales of its EHR product.
Medicare
Sutter Health agreed to pay $90 million to resolve allegations that it knowingly submitted diagnosis codes that were unsupported for certain patient encounters. The submissions caused inflated payments to be made to both Medicare Advantage Plans and Sutter Health. This settlement was the largest False Claims Act Settlement reached against a hospital system for alleged Medicare Advantage fraud.
That’s Not All
The report issued by the DOJ can be found here and the press release summarizing additional settlements and judgments can be found here.