Boston US Attorney’s Office has revealed that a unit of pharmaceutical company Warner Chilcott has agreed to plead guilty to healthcare fraud, and will be required to pay $125 million to resolve civil and criminal liability.
The legal case against the pharmaceutical company is in relation to the illegal promotion of seven drugs. Payments were made to physicians to prescribe pharmaceuticals to patients instead of other drugs. This is of course not the first time such claims have been made against drug firms, and it not the first time that pharmaceutical companies have been found to be liable. What makes this case unusual is the fact that charges have been filed against member staff of Warner Chilcott and Warner Chilcott U.S. Sales LLC under HIPAA Rules.
The case was possible under the False Claims Act, which allows private individuals to sue companies on behalf of the government under the Act’s whistleblower sections. Two whistleblowers took the case against the company and are being represented by law firms MoloLamken, Seeger Weiss, and the Simmer Law Group.
The criminal charges taken against employees are for claimed HIPAA privacy violations, for unlawfully accessing and disclosing patient health records. The company also breached HIPAA Rules by submitting fraudulent prior authorization requests, thus avoiding Medicare and Medicaid formulary restrictions.
Warner Chilcott is believed to have bribed physicians over a duration of four years between 2009 and 2013, and paid remuneration in exchange for them prescribing more patients with their drugs: Actonel®, Asacol®, Atelvia®, Doryx®, Enablex®, Estrace®, and Loestrin®.
The guilty plea will result in Warner Chilcott paying close to $125 million, with $22.94 million paid to settle the criminal charges. $91.5 million will be paid to the government and a figure of $10.6 million to Medicaid to settle the civil charges. The whistleblowers will receive $22.9 million from the government’s share of the civil settlement.
A number of employees of the drug firm have been charged with breaches of HIPAA Rules, along with conspiracy to commit healthcare fraud. District managers Jeffrey Podolsky, 49, of New York, and Timothy Garcia, 35, of California have already entered a guilty plea to the charges, and Landon Eckles, 30, of North Carolina was charged with HIPAA violations last month.
Paying physicians was a commonplace practice. A number of physicians were provided with meals and given financial reward at company “Medical Education Events.” The events are believed not to have involved an educational component, and were used by Warner Chilcott executives to encourage physicians to prescribe patients with the company’s pharmaceuticals, instead of those manufactured by rival companies. Speakers fees were also issued to prominent physicians even though they did not actually perform talks at the events.
Charges have also been taken against a physician, Rita Luthra, M.D., 64, of Longmeadow, Massachusetts for accepting financial payment for prescribing the company’s osteoporosis drugs. In her case she was given speaker fees and free meals.
Sales reps are believed to have completed prior authorization forms in doctor’s surgeries, and also to have done so at home; taking patient files out of the office for this purpose, which is a violation of the HIPAA Privacy Rule.
Warner Chilcott President W. Carl Reichel has been charged with a single count of conspiracy to pay kickbacks to doctors, and was recently arrested in Boston.