Healthcare Fraud Cost Pharmaceutical Almost $150 Million in Settlements

Healthcare Fraud Cost Pharmaceutical Almost $150 Million in Settlements
January 06 01:00 2016

It was four days before Christmas when a major, multimillion-dollar settlement was announced in a California healthcare fraud whistleblower lawsuit involving alleged kickbacks and other incentives to doctors in exchange for additional business.

Healthcare Fraud Cost Pharmaceutical Almost 0 Million in SettlementsThe Insurance Commissioner for the State of California announced the $23.2 million state settlement on December 21.

The whistleblower healthcare fraud lawsuit against Warner Chilcott was brought in 2012 by three former employees of the pharmaceutical firm. The lawsuit was brought amidst allegations that Warner Chilcott induced doctors to write prescriptions to patients for medications manufactured and marketed by the defendant – over other manufacturers – in an effort to gain a competitive advantage that was deemed, following an investigation, to be illegal.

Amongst the allegations were claims that Warner Chilcott funneled kickbacks and other inducements to physicians under the premise of physician education. Such events were allegedly staged at high-end hotels and spas but carried little to no educational value. Rather, it was alleged that Warner Chilcott was pampering physicians, with the intent of encouraging them to support Warner Chilcott by increasing the issuance of prescriptions for their products.

Such a practice was deemed as healthcare fraud and violated the California Insurance Code False Claims Act. “Whistleblowers alleged that Warner Chilcott put profit margins ahead of patient needs by using illegal kickbacks to influence physicians’ treatment decisions,” said Commissioner Dave Jones, in a statement released December 21. “The alleged kickback payments and other inducements amounted to a pay-for-play scheme in order to gain an illegal competitive advantage and defraud insurers out of tens of millions of dollars.”

Warner Chilcott appears to have been down this road before. A federal healthcare fraud lawsuit against the pharmaceutical company last year alleging violations of the federal False Claims Act was settled prior to the California case. At the end of October, the US Department of Justice announced a settlement following a guilty plea of healthcare fraud by Warner Chilcott. The plea and settlement resolved both federal civil and criminal liability for alleged activities that violated the federal anti-kickback and HIPAA statutes, and for false claims submitted to Medicare and Medicaid.

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