Posts Tagged ‘medicare fraud’
Wednesday, December 19th, 2012
Philadelphia, December 19, 2012 – Amgen used illegal interlocking off-label marketing and pricing schemes to promote its multi-billion dollar anemia drug Aranesp. “It really was an ingenious, comprehensive, and very well coordinated series of marketing schemes that unfortunately endangered patients while enriching doctors for writing off-label prescriptions. There is no doubt that the schemes were wildly successful and significantly spiked Aranesp sales.
“What Amgen didn’t know after it launched the Aranesp schemes was that our client, Jill Osiecki, a long-time marketing rep, recognized the danger to patients and, on her own, reported her concerns to the Government. Later, Department of Health and Human Services Office of Inspector General Special Agents asked her to work undercover for them,” said qui tam whistleblowers’ attorney Brian Kenney, of Kenney & McCafferty, P.C.
“Jill has a master’s degree, spent 15 years at Amgen and before leaving the company, was a top performer in the biotech giant’s top-performing district. In August 2004 she was so troubled by the Amgen schemes, which she feared were putting patients at risk, that she promptly contacted the Government and went undercover at special agents’ request to make numerous recordings in five different states at national, regional, and district meetings,” said Tavy Deming of Kenney & McCafferty, P.C., who also represents Ms. Osiecki.
“At the 13 sales and marketing meetings I secretly recorded over 18 months at the request of federal authorities I’d hear speakers jokingly tell participants to turn off their tape recorders, or express the hope that no one was recording their session. Those comments were always followed by uproarious laughter. I laughed too, outside and inside, knowing the wire I wore was bringing that guilty comment directly to the Government,” Ms. Osiecki said in a personal statement.
Now, after eight years, her undercover work and the breadth of the evidence and information she provided in her case became a key to the federal Government’s global settlement with Amgen for $762 million. The global settlement is comprised of a $612 million civil settlement, a $14 million criminal forfeiture payment and a $136 million criminal fine.
“We know of the many hundreds of hours she devoted at personal risk to advance this investigation and her years of hiding in plain sight as the Government investigated all the Amgen allegations,” according to Deming.
Under the federal False Claims Act (“FCA”) qui tam actions allow private citizens with knowledge of fraud to help the Government recover ill-gotten gains and additional civil penalties. The FCA allows the Government to collect up to three times the amount it was defrauded, in addition to civil penalties from $5,500 to $11,000 per false claim.
In successful qui tam whistleblower cases in which the Government intervenes, whistleblowers are entitled to receive a percentage of qui tam recoveries, typically 15-to-25 percent, generally known as, “the relator’s share.”
While six drugs are identified in Osiecki’s Complaint, the most egregious allegations concern Aranesp, an “ESA” (Eythropoesis Stimulating Agent), FDA-approved to increase red blood cell production to treat anemia in dialysis and cancer patients undergoing chemotherapy.
Off-Label Marketing Opportunity
In 2003 Amgen perceived an off-label marketing opportunity for Aranesp when arch competitor Johnson & Johnson halted studies of its “Procrit” branded ESA in cancer patients after the patients developed a higher-than-expected number of blood clots. Ironically, Amgen had licensed Epogen to Johnson & Johnson to help fund the drug’s development. Amgen had initially agreed to restrict its own use for dialysis, while Johnson & Johnson’s Procrit had broader cancer-related Medicare coverage, including, “Anemia of Chronic Disease.”
The market for the treatment of anemia in cancer patients who are not receiving chemotherapy was three times the size of the market for Aranesp’s lone FDA-approved oncology use: chemotherapy-induced anemia. To exponentially grow Aranesp’s sales and market share, Amgen developed a scheme to permeate this lucrative market from which Johnson & Johnson removed Procrit by promoting Aranesp for this off-label use, a condition that Amgen branded “Anemia of Cancer” (“AOC”).
To execute its Aranesp scheme Amgen sponsored a small pilot study purporting to show that Aranesp was effective for this condition, although that study’s parameters were clinically inadequate to substantiate the safety or efficacy of Aranesp for this off-label use. Next, Amgen gamed Medicare reimbursement regulations by using the study to obtain coverage of Aranesp for AOC in an influential medical publication that lead to Medicare coverage for what, in fact, was an untested use.
Profiting From “The Spread”
Physicians were only too happy to switch to Aranesp when they were shown a “cost calculator” by Amgen marketing reps detailing how much they could profit from the spread between what Medicare reimbursed physician practices for the drug and the doctors’ far cheaper acquisition cost. Additionally, through its false price reporting scheme, Amgen was able to create the spread so that medical practices profited handsomely from on- and off-label overuse of Aranesp, Kenney, who is a former federal prosecutor, explained.
The ugly truth about Amgen’s AOC scheme became public in January 2007, when Amgen was forced to reveal that its own Aranesp clinical studies demonstrated that Aranesp increased the risk of death when used to treat certain cancer patients.
“When it launched the Aranesp scheme Amgen already was on notice of the potential dangers from using Aranesp in cancer patients based upon the unfavorable results of the Procrit study, but Amgen put profits first,” Kenney said. The global settlement does not identify any patient deaths but, “it’s safe to assume that many terminally ill patients not only failed to have the quality of their remaining lives improved but could have died earlier than necessary,” he added.
Marketing Off-Label Prohibited
While physicians are free to prescribe drugs for off-label uses, pharmaceutical companies are prohibited from marketing the drugs for uses that have not been FDA approved. Generally, government-funded healthcare programs such as Medicare and Medicaid preclude reimbursement for off-label prescriptions. When a pharmaceutical company’s illegal marketing practices cause off-label prescriptions to be written by doctors, and those prescriptions are paid for by federal Medicare and Medicaid dollars, the payment becomes an actionable FCA violation.
In addition to agreeing to pay a $612 million civil settlement and to plead guilty to criminal charges of misbranding of Aranesp, as part of the Settlement Agreement Amgen agreed to be bound by a Corporate Integrity Agreement (“CIA”) with the Office of Inspector General of the United States Department of Health and Human Services (“OIG-HHS”).
The federal investigation into Amgen’s marketing practices was conducted through a collaborative effort of the U.S. Department of Justice, and the U.S. Attorney’s Offices for the Eastern District of New York. The New York State Assistant Attorney General’s Office led the investigation on behalf of the states and the National Association of Medicaid Fraud Control Units (“NAMFCU”).
To read a statement by Ms. Osiecki, click here.
To read the complaint filed on behalf of Ms. Osiecki, click here.
To read the Settlement Agreement, click here.
About Kenney & McCafferty, P.C.:
Kenney & McCafferty, PC is the one of the most successful national law firms specializing in representing qui tam, tax, and SEC whistleblowers.
If you have knowledge of fraud or a false claim made against the government, please contact our qui tam lawyers today. Kenney & McCafferty attorneys will consult with you about your case, without obligation. All communications with Kenney & McCafferty attorneys during these consultation services are confidential and protected by the attorney-client privilege.
Monday, June 11th, 2012
As the world’s largest purchaser of prescription drugs under Medicare, Medicaid, the Veterans Administration, and other government healthcare programs, the United States government has a vested interest in ensuring that prescription drugs are safe and effective.
Current Good Manufacturing Practice (“cGMP”) regulations outline the requirements that drug manufacturers must follow for the manufacture, processing, packing, and holding of a drug. The regulations, which are enforced by the U.S. Food and Drug Administration (“FDA”), provide for systems that assure proper design, monitoring, and control of manufacturing processes and facilities. Adherence to the cGMP regulations assures the identity, strength, quality, and purity of drug products by requiring that manufacturers of medications adequately control manufacturing operations.
If a company is not complying with cGMP regulations, any drug it makes is considered “adulterated” under the law. The government has taken the position that adulterated drugs, those whose strength materially differs from, or the purity or quality falls below, the strength, purity, or quality specified in the drug’s FDA-approved New Drug Application, the drug’s labeling, and/or the standards set forth in official compendium, are not eligible for payment by the government. Consequently, any claim for payment submitted for an adulterated drug may give rise to liability under the False Claims Act.
In October 2010, the Department of Justice announced its largest cGMP settlement to date, as SB Pharmco Puerto Rico – a subsidiary of GlaxoSmithKline – pleaded guilty to the manufacture and distribution of adulterated drug products. The company settled the False Claims Act allegations for $750 million, resulting in a $96 million payment to the whistleblower in the case.
Most recently, at an ABA conference, the government affirmed its position that cGMP violations can give rise to violations of the False Claims Act, particularly if the resulting drug products are unsafe, ineffective, and/or substandard.
If you have knowledge of cGMP violations and would like to discuss the possibility of a whistleblower award under the False Claims Act, please contact our whistleblower attorneys today. Kenney & McCafferty will consult with you about your case, without obligation. All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege.
Wednesday, May 4th, 2011
A long time corporate investigator recently shared his concern that whistleblowers look to corporate investigators and attorneys for help and protection when they blow the whistle. Nothing could be further from the truth. “There’s nothing I can do,” said the investigator. “I’ve seen it over and over again. They are going to get their heads cut off.”
The investigator said he knew that whistleblowers, no matter the merit of their report, would be skillfully and systematically terminated with a substantial paper trail to support management’s actions.
“They look to me for help,” he said. “I work for the company. I tell them that, but they don’t seem to understand.”
Neither did CEO Ian Norris of Morgan Crucible Company. Morgan Crucible came under government investigation for an international price fixing conspiracy. CEO Norris began a campaign to obstruct a grand jury investigation, and he shared details of his campaign with Morgan Crucible’s attorney. When the government learned of Norris’s obstruction, it charged Norris with corruptly persuading, and attempting and conspiring to corruptly persuade, others with intent to influence their testimony in grand jury proceedings. Morgan Crucible waived its attorney client privilege and granted permission for corporate counsel to testify. Norris fought the testimony, saying the corporate attorney also represented Norris in his individual capacity and was prohibited from testifying.
The Third Circuit disagreed, but found that communications about scope of representation were ambiguous. Ultimately, the court ruled that Morgan Crucible, alone, held the right to waive attorney client privilege, and the attorney testified.
The attorney testified that Norris, in front of counsel, disseminated a false cover story and scripts about the price fixing and encouraged everyone, including counsel, to relay the false information to investigators. The attorney said he did not know the information was false.
Attorneys and investigators should provide employees with explicit explanations about their role in investigating allegations of fraud within a corporation. They often do not, for a variety of reasons. Bottom line – employees need to take steps to protect themselves when they report corporate misconduct internally.
For a free consult about whether you have a potential government fraud claim, call K&M today.
Tags: abuse, attorney general, corporate fraud, corruption, False claims, False Claims Act, FCA, FERA, fraud, fraud reward, government fraud, health care fraud, IRS whistleblower, IRS whistleblower program, medicare fraud, pharmaceutical fraud, Qui Tam, retaliate, retaliation, SEC whistleblower, Tax cheat, tax evasion, Tax Fraud, tax whistleblower, whistle blowing, whistleblower award, whistleblowing, wrongful termination
Posted in Corporate Tax Fraud, Employment Tax Fraud, False Claims Act, Money Laundering Tax Fraud, Offshore Accouts Fraud, retaliation, SEC Whistleblower Program, Tax Fraud, Uncategorized, Whistleblower Protection | Comments Off
Wednesday, March 16th, 2011
In the fight against Medicare fraud, whistleblowers remain a strong weapon in the government’s arsenal. Last year, the federal government recovered $4 billion stolen from U.S. taxpayers through Medicare fraud. Much of that money was recovered through qui tam cases initiated by whistleblowers under federal and state false claims acts.
In 2010, Medicare covered 47 million beneficiaries, and had estimated outlays of $509 billion, of which the federal government lost nearly $48 billion on improper payments for Medicare. The Center for Medicare and Medicaid (CMS)- the agency within the Department of Health and Human Services that administers Medicare- estimates that nearly 10% of all Medicare payments are fraudulent
To combat Medicare fraud, the federal government is now stressing prevention. According to Peter Budetti of CMS, the focus is now on stopping bad actors from enrolling in Medicare.
Yet, as fraudulent schemes become more sophisticated and more difficult to detect, the federal government likely has no choice but to continue its current “pay and chase” method of fighting healthcare fraud. Under the “pay and chase” method, the government reimburses Medicare claims and, then, chases down those claims which are fraudulent. As long as those defrauding the government remain one step ahead of those chasing them, whistleblowers remain a key tool in the fight against Medicare fraud.
In the coming years, the federal government is going to rely on the sharp eyes and inquisitive minds of Medicare beneficiaries. Currently, the government is asking Medicare recipients to look closely at their Medicare bills, explanation of benefits and credit reports to determine if service tests, medications, or medical equipment listed on the documents was never administered or delivered. The government is also requesting those recipients pay attention to names of unknown physicians, therapists, or other healthcare providers charging Medicare services for services allegedly performed.
Kenney & McCafferty would like to help you assess whether you have a viable whistleblower claim. If you have knowledge of Medicare fraud, call K&M for a free consultation.
Monday, March 7th, 2011
In a report that was prepared for the House Ways and Means Subcommittee on Oversight, one of the three congressional committees that held hearings last week to discuss healthcare fraud, it was reported that nearly 10% of all Medicare payments are fraudulent. These fraudulent claims and other improper payments caused the federal government to lose $48 billion in 2010. That estimate only includes Medicare fee-for-service and Medicare Advantage plans — not Medicare’s Part D drug benefit, or any other government health insurance program such as Medicaid.
During its hearing on Wednesday, the oversight committee heard a much higher estimate from Louis Saccoccio, executive director of the National Health Care Anti-Fraud Association, who estimated that monetary losses from healthcare fraud range from $75 billion to $250 billion annually. Saccoccio’s estimate included fraud in the private insurance market as well; he noted that those who take money from the government pull the same scams on private insurers.
Also at the hearing, a convicted felon told lawmakers that Medicare fraud is not only a crime that pays and pays, but is also a crime that is “incredibly easy” to implement and commit. According to Aghaegbune “Ike” Odelugo, who was convicted in April and is cooperating with authorities while he is awaiting sentencing, it took him less than a month to put his scheme into practice, eventually swindling Medicare out of nearly $10 million over a three year period.
Although some fraudulent schemes can be very complex, many schemes, such as Odelugo’s medical equipment scam, are very simple to put into action. Odelugo testified that “the primary skill required to do it successfully is knowledge of basic data entry on a computer.”
In his case, Odelugo dealt with fourteen different providers of durable medical equipment, or DME, which includes wheelchairs, power scooters, and knee braces. “Marketers” would provide names of patients who supposedly needed DME and physicians would write phony prescriptions for the medical equipment. Odelugo said DME providers often “maintain an appearance of legitimacy” by filing real claims, but he estimated that those legitimate claims constituted only about 40% of all billings.
Odelugo said that high reimbursement rates make this area a particularly attractive area for those seeking to scam the system. He also offered lawmakers various ideas on how to reduce the number of fraudulent claims in the Medicare system.