December, 2004

With the help of Whistlebloweraction attorneys, Chicago became the first major city in the country to enact a false claims/whistleblower ordinance. Patterned after the federal and Illinois whistleblower laws, the Chicago ordinance enables private whistleblowers to work with the City of Chicago to expose fraud and abuse where City funds are involved. Private whistleblowers who help the City get back ill-gotten City funds from defendants can receive up to 30% of the recovery for their efforts. The Chicago Ordinance was co-sponsored by Alderman Joe Moore, who spearheaded the legislative effort, and Mayor Richard Daley.

Link to the Whistleblower Ordinance --- Press release

Link to Chicago False Claims Act

November, 2003

Federal and State Governments Recover $1.6 Billion from Whistleblower FCA Cases Against Drug Companies

Seven False Claims Act (FCA) cases against pharmaceutical manufacturers initiated by whistleblowers have resulted in government recoveries of $1.6 billion dollars since 2001, according to a recently released report by the Taxpayers Against Fraud (TAF). Each case was brought by private whistleblowers under the qui tam provisions of the FCA and later joined by federal and/or state governments. More pharmaceutical fraud recoveries are expected in 2004.

November, 2003

DOJ Announces Record FCA Recoveries in 2003 and Whistleblower Rewards Totalling $319 Million

The Department of Justice reports government recoveries from fraud and abuse prosecutions in 2003 totaled more than $2.1 billion dollars, a 75% increase over last year. According to the government report, more than two-thirds of this amount was the result of qui tam cases brought by private whistleblowers. These private whistleblowers received $319 million for their efforts.

October, 2003

Government Report Releases 2003 Medicare and Medicaid Statistics and Highlights Key Findings

The Center for Medicare and Medicaid Services (CMS), the government agency which oversees federally subsidized health care programs, reports that Americans spent more than $1.42 billion on health care in 2001, more than 14.1% of the gross national product (GNP). CMS also reports that government subsidized health care expenditures totaled more than $337 billion dollars in 2002, more than 18.6% of the total federal budget. The CMS report details the financial impact the spiraling costs of health care coverage is having on the Medicare and Medicaid programs.

June 13, 2003

Leading federal prosecutor James G. Sheehan outlines the next wave of FCA enforcement

At a conference of qui tam relators' counsel sponsored by Taxpayers Against Fraud, www.taf.org, leading federal prosecutor James G. Sheehan of the US Attorneys' Office in Philadelphia described "pharmaceutical quality of care" as the next new area of False Claims Act enforcement. These new cases will focus on the serious risk of patient harm associated with drug prescription and administration. Medical providers, health care facilities, pharmacists and drug manufacturers who fail to meet their responsibilities in ensuring patient safety risk exposure under the FCA. The following is just a sampling of the types of practices that may trigger prosecution in this new area:

• Using prescription drugs to improperly restrain patients in long-term or other medical care facilities;
• Failing to monitor patient responses to prescription medications;
• Failing to review patient drug profiles prior to dispensing prescription medication;
• Continuing the use of drugs with adverse side effects or in medically unnecessary situations;
• Failing to advise physicians of possible adverse side effects of drug;
• Improperly or unnecessarily switching or inducing the switch of a patient's prescription from one drug to another;
• Failing to notify FDA of adverse side effects associated with use of a particular drug.

April 28, 2003

Office of Inspector General (OIG) Issues Compliance Program Guidance for Pharmaceutical Manufacturers

The OIG issued its final, voluntary compliance guidelines for the pharmaceutical industry today, identifying potential risk areas and recommending how drug companies can guard against violating federal fraud and abuse laws, including the Anti-Kickback Act, Stark Act and Best Price regulations. Violation of these laws may give rise to a claim under the False Claims Act, 31 U.S.C. §3729 et seq.

The three major fraud and abuse risk areas identified by the OIG are: (1) inaccurate reporting of average wholesale price (AWP) (i.e., drug companies must account for discounts, rebates, or other "freebies" offered to some or all purchasers); (2) the payment of money or other remuneration to doctors and others for the purpose of influencing prescription writing; and (3) illegal drug sampling.

The OIG noted the following drug company marketing practices are particularly suspect:

• "Switching" programs where the drug company pays cash or other value each time a doctor switches a patient's prescription to its product from a competing product;
• Paying doctors a "consultant" fee to attend a meeting, read a journal article, listen to marketing information, or perform other de minimis tasks;
• Paying a doctor to "train" a drug company sales rep (including the so-called "shadowing" or preceptor-type programs where the sales rep follows the doctor around as he or she treats patients)
• Providing lavish meals, entertainment, trips and other gifts to doctors or other parties in a position to influence referrals; and
• Furnishing of unrestricted "educational" and "research" grants to doctors.

Read the OIG press release and full report.

March 10, 2003

U.S. Supreme Court Expands Scope of the FCA, Holds Local Governments Are Subject to Suit

The Supreme Court unanimously held in U.S. ex rel. Chandler v. Cook County, Illinois, that local governments (including municipalities and counties) are "persons" subject to liability under the FCA, including its civil penalties and treble damages provisions. The Court explained that in enacting the FCA, Congress intended "to reach all types of fraud, without qualification." The Court also acknowledged the important role relators play in the government's efforts to fight fraud.

Previously, in U.S. ex rel. Stevens v. Vermont Agency of Natural Resources, 529 U.S. 765 (2000), the Court held that relators could not bring qui tam lawsuits under the FCA against states or state entities. In excluding states from the FCA's qui tam provisions, the Court characterized the FCA's treble damage provisions as "essentially punitive in nature." The Chandler decision favorably answers the question left open by Stevens -- whether relators can sue local governments under the FCA.

Importantly, the Court also clarified its earlier suggestion in Stevens that the FCA's treble damages provision is strictly punitive in nature. Instead the Court stressed the remedial aspects of the Act and recognized that single damages alone fail to compensate for the cost, delays and inconveniences caused by the submission of fraudulent claims. Defendants had seized upon the earlier language in the Stevens decision as an indication that the Court might undercut treble damages awards. The Chandler decision puts that concern to rest.

February 5, 2003

Senator Chuck Grassley (author of 1986 Amendments to the False Claims Act) Speaks at 6th Annual National Congress on Health Care Compliance; False Claims Act Enforcement Policy is First Priority.

Read Senator Grassley's Comments.