Whistleblowers Help Federal Government Recover $694.5 Million from Drug and Device Manufacturers’ Fraud in 2008

The 2008 fiscal year concluded with $694.5 million settlements from medical device manufacturers and drug pharmaceutical companies accused of misusing government moneys. Of this $694.5 million, $644.5 million came from False Claims lawsuits. These qui tam-driven lawsuits are designed as an incentive for whistleblowers to report their employers’ abuse of federal moneys, whether through fraudulent billing, outright theft, or other misuse of federal funds by corporations. Often, and in the case of these three medical companies, these false claims lawsuits involve Medicaid or Medicare.

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The three drug and medical device companies who paid settlements for their illegal influence in garnering government funds were: Merck for illegal incentives to persuade healthcare providers to prescribe its products to Medicaid patients ($361 million), Cephalon for off-label marketing with some of these charges to Medicaid/Medicare ($258 million), and Kyphon (now Medtronic Spine) for coercing hospitals to perform costlier and inappropriate invasive surgery on their patients than the typical outpatient treatment ($75 million).

Over two decades, Congress strengthened the qui tam provisions through its False Claim Act of 1986, allowing recoveries of abused uses of federal funds, ranging from disaster recovery projects to underpayment of royalties on leased federal land. The False Claims Act also increased qui tam whistleblowers’ incentive to 15% – 25% (and up to 30% if the case is pursued by a private qui tam lawyer) of the moneys recovered.

The $694.4 million amount recovered by these three qui tam/false claim lawsuits was published last Monday. A total of $1.34 billion was recovered during the 2008 fiscal year, the majority (78%) from False Claims lawsuits. The other half of the False Claims recoveries involved engineering firms, hospitals, and insurance companies. This additional $1.34 billion brings the total recoveries from qui tam/False Claim lawsuits to $21 billion since 1986.

Whistleblowers filing a False Claims violation with the government or with a private qui tam attorney are afforded certain protections, including confidentiality during the initial phases of an investigation and retaliation protections. These whistleblower protections are only available, though, if proper legal action is taken in the False Claims case. Contact Higgins Firm today to speak confidentially with an experienced qui tam attorney.