Recent Cases
last updated: 09/22/08
Pharmaceutical Companies
Our cases involving the pharmaceutical and device industries often involve a number issues, including whether the company has promoted a product
for a use that was not approved by the FDA (off-label marketing), paid kickbacks to providers to induce prescriptions, reported inflated prices to
federal health care programs or under-reported rebates owed to the Medicaid program. For example, we reached a civil settlement with
Bristol-Myers-Squibb for $515 million, a significant portion of which was to resolve allegations that the company off-label marketed its atypical
antipsychotic, Abilify, for uses like Alzheimer's related dementia. Likewise, we reached a $36 million settlement with InterMune to resolve
allegations that it off-label marketed its drug, Actimmune, for idiopathic pulmonary fibrosis, a fatal disease that afflicts approximately 200,000
Americans each year and for which InterMune failed in two separate Phase III trials to prove Actimmune was an effective treatment. A recent $345
million civil settlement with Merck & Company resolved claims that it failed to pay required rebates to Medicaid and other government health care
programs and paid kickbacks to induce health care providers to prescribe their drugs. Aventis Pharmaceuticals, Inc. paid $180 million to resolve
claims that it reported inflated prices for its drug Anzemet. Medco Health Solutions, Inc. paid $155 million in connection with misconduct relating
to its mail order prescription drug benefit under the Federal Employee Health Benefit Program and for receiving and paying kickbacks.
Several years ago, qui tam actions were filed alleging that many oil companies which extracted oil and natural gas from federal lands
(including fields in the Gulf of Mexico and off the Pacific coast) were under reporting the value of the oil and natural gas through a number of
practices resulting in underpayments of royalties to the Department of the Interior. The Government's investigation of these allegations confirmed
that some of them were true. With regard to oil royalty underpayments, Fraud Section attorneys, working with U.S. Attorney's offices in Texas,
recovered over $430 million. The Fraud Section currently is suing ExxonMobil for natural gas royalty underpayments and already has collected more
than $150 million from other companies.
Aaron Westrick filed a qui tam action in 2004 alleging that Second Chance Body Armor, a maker of bullet-proof vests, was selling vests to
federal law enforcement agencies, and to state and local police forces which received funding for the vests from the federal government, which
were defective in that the primary bullet stopping fabric in the vests B called Zylon B quickly degraded resulting in vests that would not protect
those who wore the vests. Westrick also sued Toyobo Corp., the company that made the Zylon fiber. The Government conducted an extensive
investigation that concluded that not only were Second Chance and Toyobo involved in making and selling vests to federal and state law enforcement
agencies that they knew were defective, but that other vest manufacturers and others involved in the production of Zylon materials also participated
in the scheme. The Government intervened in the Westrick qui tam; filed a separate lawsuit against Toyobo regarding sales of defective vests by
companies other than Second Chance; and filed another False Claims Act lawsuit against Honeywell Corp. for making a Zylon material that was used
in vests sold by Armor Holdings. We have reached settlements with some vest makers and Zylon fabric weavers.
Following a three-week trial in April 2006 in the Northern District of Illinois, the United States obtained a judgment for over $64 million based
on the court's finding that defendant Peter Rogan had participated in a kickback scheme in violation of the Stark and Anti-kickback statutes,
and caused the submission of over 1,700 false claims to the Medicare and Medicaid programs. Rogan, the former owner and CEO of Edgewater Hospital
in Chicago, Illinois, then appealed the decision to the Seventh Circuit. On February 20, 2008, the Seventh Circuit upheld the district court's
decision.
The United States and the State of Illinois partially intervened in a qui tam action alleging that Amerigroup Corporation, and its Illinois
subsidiary, systematically avoided enrolling pregnant women, and other unhealthy patients, in their managed care program in Illinois. Amerigroup
was paid by the United States and Illinois to operate a Medicaid managed care health plan in the state to provide health care to low income people.
Amerigroup was required by law to enroll all eligible beneficiaries. The United States and Illinois alleged that Amerigroup violated the federal
False Claims Act and the Illinois Whistleblower Reward and Protection Act when it discriminated against high cost patients to increase its profit
margin. In October 2006, a jury found Amerigroup liable, and the court entered a judgment against Amerigroup for $334 million. Amerigroup appealed
the judgment, and the case subsequently settled for $225 million.
The Government obtained a $90 million judgment after trial of a qui tam action filed against Harbert International, Inc.; Bill Harbert
International Construction, Inc.; Bilhar International Establishment f/k/a Harbert International Establishment, a Liechtenstein company; and Harbert
Corporation. Following a seven-week trial, a jury found the defendants liable for conspiracy to rig bids on contracts to construct wastewater
treatment facilities in Cairo, Egypt. These contracts were financed by the U.S. Agency for International Development. The jury found damages of $34
million. Pursuant to the False Claims Act, the court trebled the amount of damages and added a $10,000 penalty for each of 111 false claims. Before
trial, several other defendants had settled with the Government.
On February 11, 2008, a jury in the U.S. District Court for the District of Columbia awarded the United States a verdict against the Project
on Government Oversight (POGO) for paying, and Robert A. Berman, a senior economist with the Department of the Interior, for receiving, a
contribution to Berman's salary in compensation for his services as a federal employee, in violation of 18 U.S.C. § 209(a). Section 209(a)
prohibits contributing to an Executive Branch employee's salary in compensation for his Government service. POGO, a nonprofit that identifies
itself as a Government watchdog, was a relator in qui tam litigation against several major oil companies for underpaying royalties for oil drilled
on federal and Indian lands. After the first settlement, POGO paid Berman a third of its relator's share ($383,600) for "internal whistleblowing".
What POGO called "internal whistleblowing" was Berman's advocacy of a position within Interior that the agency pursue the oil companies for
fraudulent underpayment of royalties the same as POGO's qui tam suits. At trial, POGO and Berman contended that whistleblowing wasn't part of
Berman's job and also that Berman had no responsibilities for oil matters at the time he was paid B which was true. Berman had been taken off
oil issues two years earlier, but had a longstanding agreement with POGO to share in any award pre-dating the shift in his assignments. On April
10, 2008, the court imposed civil penalties of $383,600 against Berman and $120,000 against POGO, under 18 U.S.C. § 216(b), and the defendants have
appealed.
Oil and Natural Gas Royalty Underpayment Cases
Bullet-Proof Vest Cases (D.D.C.)
United States v. Rogan (N.D. Ill.)
United States ex rel. Tyson v. Amerigroup Illinois, Inc. (N.D. Ill.)
United States ex rel. Miller v. Holzmann (D.D.C.)
United States v. Project on Government Oversight (D.D.C.)