—Delaney Kester LLP announces that the firm’s client has received a multimillion-dollar whistleblower reward in connection with the U.S. government’s $18 million settlement with Johnson & Johnson and its subsidiary Acclarent, Inc. The settlement resolves claims that Acclarent defrauded the federal government by fraudulently concealing the true intended use of the MicroFlow Spacer. The MicroFlow Spacer was approved as a device to deliver saline into the sinuses, but the complaint alleged that the true intended use was to deliver Kenalog 40, a corticosteroid.
Delaney Kester’s client, Melayna Lokosky, is a former employee of Acclarent and Johnson & Johnson. During her employment, Ms. Lokosky learned that Acclarent was marketing the MicroFlow Spacer as a drug delivery device and, she alleged, internal company documents showed that drug delivery was always the goal.
Ms. Lokosky’s complaint alleged that, once the MicroFlow Spacer was cleared by the FDA, Acclarent ignored both the limited scope of clearance to expand the cleared use and proceeded to market the products as drug delivery devices to be used with Kenalog-40. The companies settled claims that the false and misleading marketing of MicroFlow Spacer for off-label uses caused the government to pay millions in claims that would not have been paid had Acclarent truthfully disclosed the intended use. When Ms. Lokosky complained about the illegal marketing, Acclarent’s management team terminated her.
The settlement brings an end to the nearly five-year qui tam lawsuit against Johnson & Johnson and Acclarent. Ms. Lokosky is represented in the FCA matter by the attorneys of Delaney Kester LLP, including Royston H. Delaney and Ilyas J. Rona of Boston, Massachusetts; and Charles F. Kester of Calabasas, California.
(currently in litigation)
This case alleges the wholesale upcoding of reimbursement claims to Medicare and Florida Medicaid by a chain of skilled nursing facilities in Florida. The relator, a nurse who worked at the defendants' skilled nursing facilities, alleges that the facilities provided substandard medical care and inflated billing codes submitted to government health care programs.
The defendants moved to dismiss the case and the Court denied the motion and lifted the stay on discovery. Discovery will now proceed on the relator's allegations that:
- Defendants falsified paperwork (MDS Assessments) for residents covered by Medicare and TRICARE by overstating residents’ medical needs and the amount of care provided to them.
- Defendants fraudulently inflated the Resource Utilization Group ("RUG") levels reported in MDS Assessments in order to increase their Medicare and TRICARE reimbursement rates.
- Defendants routinely falsified MDS Assessments to report that they had completed care plans for their Medicaid residents, when in fact no such care plans even existed.
- To avoid detection of this fraudulent scheme, Defendants would routinely create generic, boilerplate care plans for residents many months after their admission, but shortly before scheduled audit periods.
- Defendants routinely falsified the identities of the persons submitting MDS Assessments to facilitate their fraudulent scheme.
United States ex rel. Westmoreland v. Amgen Inc., et al. (Civil Action No. 06-10972-WGY) (settled in December 2012)
After two years of scorched-earth litigation, Amgen reached an agreement with the federal government to settle the Westmoreland case and several other sealed cases. Amgen ultimately paid $762 million to the federal government in 2012.
The amended complaint was filed pursuant to federal and state False Claims Acts by a former Amgen employee. The suit alleges, among other claims, that Amgen engaged in a variety of illegal kickback schemes, the effect of which was to cause millions of dollars of overbillings to government health insurance programs. It was alleged, for example, that Amgen illegally induced physicians to prescribe its anti-anemia drug Aranesp by encouraging physicians to bill insurers for the “overfill” placed in the pre-packaged vials of the drug.
The suit also alleges that in some instances patients were given more Aranesp than medically indicated, because of the “overfill” billing potential, not withstanding a “black box warning” from the FDA about the health risks of Aranesp, and the need for minimal dosing.
Aranesp (darbepoetin alfa) is an erythropoiesis-stimulating agent (ESA) and injectable drug product developed and manufactured by Amgen to stimulate and boost the production of red blood cells in the body. It was approved by the FDA in 2001 to treat anemia associated with chronic renal failure and in 2002 to treat chemotherapy-induced anemia in certain types of cancer patients.
Aranesp has been a lucrative product for Amgen with total sales reaching over $11 billion dollars since the drug was first introduced into the marketplace. To date, the federal Medicare program and the state Medicaid programs have paid billions of dollars for Aranesp. However, Aranesp is not without risk to patients. In 2007, the FDA issued “black box” warnings (the most serious warning on a drug’s label) that Aranesp treatment could increase the risk of death, serious cardiovascular events and increased tumor growth, and cautioned physicians to use the lowest effective dose to achieve blood counts in a range to avoid blood transfusions, but not higher.
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United States v. Elan Corporation, PLC, et al. (Civil Action No. 04-11594-RWZ).
(Settled December 14, 2010)
The US Department of Justice announced the resolution of the False Claims Act investigation of Irish pharmaceutical manufacturer Elan Corporation, PLC (Elan) and its U.S. subsidiary. The companies have paid over $203.5 million to resolve criminal and civil liability arising from the illegal promotion of the epilepsy drug Zonegran. In a separate civil settlement, Japanese drug marketer Eisai, Inc. which purchased the drug from Elan, has already paid $11 million to resolve civil liability for off-label marketing of Zonegran.
Zonegran was approved by the Food and Drug Administration (FDA) as an adjunctive therapy for the treatment of partial seizures in epilepsy for adults over the age of 16, and was not approved for any other uses, including for example, seizures in children under the age of 16.
Pursuant to the agreement, Elan Pharmaceuticals, Inc. pled guilty to an information charging it with misdemeanor misbranding of Zonegran, in violation of the Food, Drug and Cosmetic Act. In addition, the company paid a criminal fine of $97,050,266. Elan paid $102,890,517 to resolve civil allegations under the False Claims Act that the company illegally promoted Zonegran for a variety of uses that were not medically accepted indications.
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United States ex rel. Blair Collins v. Pfizer Inc. (Settled in September, 2009)
The United States, the Commonwealth of Massachusetts and numerous other states announced September 2, 2009, that Pfizer Inc. will pay approximately $2.3 billion dollars to settle claims that, among other things, the company misbranded one of its pain killer drugs, promoted the off label use of numerous drugs, and paid kickbacks to doctors to induce or reward the prescription of Pfizer drugs.
As part of the settlement, Pfizer subsidiary Pharmacia & Upjohn Company, Inc. (“Pharmacia”) entered a guilty plea to a criminal information charging that the company “misbranded” the painkiller Bextra (valdecoxib) by promoting the drug for variety of conditions and at dosages other than those for which its use was approved by the Food and Drug Administration. Bextra was withdrawn from the market in 2005 after concerns about its safety profile, especially for cardiovascular risks in long term users of the drug.
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United States ex rel. Dan Johnston v. Aggregate Industries Inc. (Settled in July, 2007)
The United States and the Commonwealth of Massachusetts settled a case brought by whistleblower Dan Johnston against Aggregate Industries Northeast Region, Inc. ("Aggregate").
Aggregate paid over $42 million to resolve a criminal and civil investigation into Aggregate supplying 5,700 loads of out-of-specification or non-conforming "10-9" concrete to the Big Dig. As part of this "Big Dig" concrete settlement, Aggregate pled guilty to criminal charges that it conspired to submit false or fraudulent claims to the Government for that concrete and will pay a criminal fine.
Aggregate also settled the Government's civil claims, initiated by whistleblowers, by paying over $15.5 million to the Government under the federal and state False Claims Acts. Together the Big Dig whistleblowers who filed qui tam suits under the False Claims Acts received close to 18% of that recovery. Aggregate also contributed over $27 million to a fund to be used for future repairs on the Big Dig and Aggregate has entered into a Compliance Agreement with the federal Department of Transportation.
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