Doctor Pleads Guilty to Health Care Fraud Conspiracy for Role in $19 Million Detroit Area Medicare Fraud Scheme

Tuesday, October 3, 2017

A physician pleaded guilty today to conspiracy to commit health care fraud for his role in an approximately $19 million Medicare fraud scheme involving three Detroit area providers.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Daniel L. Lemisch of the Eastern District of Michigan, Special Agent in Charge David P. Gelios of the FBI’s Detroit Division, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office and Special Agent in Charge Manny Muriel of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.

Abdul Haq, 72, of Ypsilanti, Michigan, pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Denise Page Hood of the Eastern District of Michigan.  Sentencing has been scheduled for May 29, 2018 before Judge Hood.

As part of his guilty plea, Haq admitted that he conspired with the owner of the Tri-County Network, Mashiyat Rashid, and his co-defendants and others to prescribe medically unnecessary controlled substances, including Oxycodone, Hydrocodone and Opana, to Medicare beneficiaries, many of whom were addicted to narcotics.  He further admitted that in furtherance of the conspiracy, Rashid and others also directed physicians, including Haq and others, to require Medicare beneficiaries to undergo medically unnecessary facet joint injections if the beneficiary wished to obtain prescriptions for controlled substances.

In furtherance of the conspiracy, Haq and others referred Medicare beneficiaries to specific third party home health agencies, laboratories and diagnostic providers even though those referrals were medically unnecessary, he admitted.  Haq also served as the straw owner of various pain clinics owned and/or controlled by Rashid, and submitted false and fraudulent enrollment materials to Medicare that failed to disclose the ownership interest of Rashid, as it was illegal for Rashid – a non-physician – to own medical clinics under Michigan law.  In total, Haq admitted that he submitted or caused the submission of approximately $19,322,846.60 in false and fraudulent claims to Medicare.

Haq was charged along with Mashiyat Rashid, 37, of West Bloomfield, Michigan; Yasser Mozeb, 35, of Madison Heights, Michigan; Spilios Pappas, 61, of Monclova, Ohio; Joseph Betro, 57, of Novi, Michigan; Tariq Omar, 61, of West Bloomfield, Michigan; and Mohammed Zahoor, 51 of Novi, Michigan, in an indictment unsealed on July 6.  Rashid, Mozeb, Pappas, Betro, Omar and Zahoor are awaiting trial.

An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

This case was investigated by the FBI, HHS-OIG and IRS-CI.  Trial Attorney Jacob Foster of the Criminal Division’s Fraud Section is prosecuting the case.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

Owner of Two New York Medical Clinics Sentenced to 84 Months for Her Role in $55 Million Health Care Fraud Scheme

Friday, September 15, 2017

The owner of two Brooklyn, New York, medical clinics was sentenced today to 84 months in prison for her role in a $55 million health care fraud scheme.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Special Agent in Charge Scott Lampert of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS OIG) Office of Investigations, Special Agent in Charge James D. Robnett of the IRS Criminal Investigation’s (IRS-CI) New York Field Office and Inspector General Dennis Rosen of the New York State Office of the Medicaid Inspector General (OMIG) made the announcement.

Valentina Kovalienko, 47, of Brooklyn, and the owner of Prime Care on the Bay LLC and Bensonhurst Mega Medical Care P.C., was sentenced by U.S. District Judge Roslynn R. Mauskopf of the Eastern District of New York, who also ordered Kovalienko to forfeit $29,336,497. Kovalienko pleaded guilty in October 2015 to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering.

As part of her guilty plea, Kovalienko acknowledged that her co-conspirators paid cash kickbacks to patients to induce them to attend her two clinics.  Kovalienko also admitted that she submitted false and fraudulent claims to Medicare and Medicaid for services that were induced by prohibited kickback payments to patients or that were unlawfully rendered by unlicensed staff.  Kovalienko also wrote checks from the clinics’ bank accounts to third-party companies, which purported to provide services to the clinics, but which in fact were not providing services, and the payments were instead used to generate the cash needed to pay the illegal kickbacks to patients, she admitted.

Twenty other individuals have pleaded guilty in connection with this case, including the former medical directors of Prime Care on the Bay LLC and Bensonhurst Mega Medical Care P.C., six physical and occupational therapists, three ambulette drivers, the owner of several of the sham companies used to launder the money and a former patient who received illegal kickbacks.

HHS-OIG, IRS-CI and OMIG investigated the case, which was brought as part of the Medicare Fraud Strike Force, under the supervision by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.  Acting Assistant Chief A. Brendan Stewart of the Fraud Section and Assistant U.S. Attorney F. Turner Buford of the Eastern District of New York, formerly a Fraud Section trial attorney, are prosecuting the case.

The Criminal Division’s Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 3,500 defendants who have collectively billed the Medicare program for more than $12.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

New Orleans Woman Convicted of Conspiracy, Identity Theft and False Statement Charges for Role in $2.1 Million Medicare Kickback Scheme

Thursday, September 14, 2017

On Tuesday, a federal jury found a New Orleans woman guilty of conspiracy, identity theft and false statements charges for her role in an approximately $2.1 million Medicare kickback scheme.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Duane A. Evans of the Eastern District of Louisiana, Special Agent in Charge C.J. Porter of the Office of Inspector General – Health and Human Services Dallas Field Office and Special Agent in Charge Jeff Sallet of the FBI’s New Orleans Field Office made the announcement.

After a two-day trial, Kim Ricard, age 51, of New Orleans, was convicted of one count of conspiracy to pay and receive kickbacks in connection with Medicare beneficiaries.  In addition, Ricard was convicted of three counts of accepting kickbacks, along with three counts of identity theft and one count of making false statements to federal agents.  Sentencing has been scheduled for December 7, before U.S. District Judge Jane Milazzo of the Eastern District of Louisiana, who presided over the trial.

According to evidence presented at trial, from 2008 to 2013, Ricard and others engaged in a scheme to refer mentally ill Medicare patients to home health agencies in and around New Orleans, in exchange for kickbacks.  The evidence further established that Ricard unlawfully used the Medicare identification information of three Medicare beneficiaries in connection with the scheme. Ricard then lied to investigators, the evidence showed.

As a result of the scheme, Ricard’s co-conspirator caused Medicare to pay over $2.1 million based on those illegally-obtained referrals

One other defendant was charged in this matter. Milton Diaz, 65, of Harvey, Louisiana, pleaded guilty and is awaiting sentencing.

This case was investigated by the Office of Inspector General of the Department of Health and Human Services, and the FBI.  Trial Attorneys Claire Yan and Kate Payerle of the Criminal Division’s Fraud Section are prosecuting the case.

The Criminal Division’s Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 3,500 defendants who have collectively billed the Medicare program for more than $12.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

New York Hospital Operator Agrees to Pay $4 Million to Settle Alleged False Claims Act Violations Arising from Improper Payments to Physicians

Wednesday, September 13, 2017

MediSys Health Network Inc., which owns and operates Jamaica Hospital Medical Center and Flushing Hospital and Medical Center, two hospitals in Queens, New York, has agreed to pay $4 million to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department announced today.

The settlement resolves allegations that the defendants submitted false claims to the Medicare program for services rendered to patients referred by physicians with whom the defendants had improper financial relationships. These relationships took the form of compensation and office lease arrangements that did not comply with the requirements of the Stark Law, which restricts the financial relationships that hospitals may have with doctors who refer patients to them.

“This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

The lawsuit was filed by Dr. Satish Deshpande under the qui tam, or whistleblower, provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. Dr. Deshpande will receive $600,000 as his share of the recovery.

“Health care providers who enter into improper financial relations with referring physicians compromise the referral process and encourage over-utilization of services, to the potential detriment of both patients and taxpayers,” said Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York. “We will hold health care providers accountable for their violations of federal law.”

“When hospital operators provide financial incentives to doctors for patient referrals, individuals rightfully wonder whose best interests are being served,” said Special Agent in Charge Scott J. Lampert for U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will continue to investigate such entities who fraudulently bill government health programs.”

The case, United States ex rel. Deshpande, et al. v. The Jamaica Hospital Medical Center, et al., Case No. 13-cv-4030 (E.D.N.Y.), was handled by Senior Trial Counsel David T. Cohen of the Civil Division’s Commercial Litigation Branch, Assistant U.S. Attorney Kenneth M. Abell of the U.S. Attorney’s Office for the Eastern District of New York and Associate Counsel David Fuchs from HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability.

Oklahoma Doctor Agrees to Pay $580,000 to Settle Allegations of Submitting False Claims to Medicare

Monday, August 28, 2017

Oklahoma City, Oklahoma – Dr. Gordon P. Laird has agreed to pay $580,000 to settle civil claims stemming from allegations that he violated the False Claims Act by submitting false claims to the Medicare program, announced Mark A. Yancey, United States Attorney for the Western District of Oklahoma.

Laird is a physician licensed in the State of Oklahoma. He is a former owner and employee of the companies Blackwell Feet Plus, LLC, and Feet Plus, LLC, which later did business as Prevention Plus.

The United States alleges Laird caused false claims to be submitted to the Medicare Program for services he did not provide or supervise. First, the United States alleges that in 2011, he allowed Prevention Plus to use his National Provider Identifier numbers (NPIs) to bill Medicare for evaluation and management physical therapy services that he did not provide or supervise. Second, the United States alleges that in December 2011, he separated from Prevention Plus, did not provide any additional services for Prevention Plus, and deactivated his NPIs associated with Prevention Plus. However, Laird reactivated his NPIs associated with Prevention Plus around March 2012 so Prevention Plus could use them to bill Medicare for services in January and February 2012 that he did not perform or supervise.

To resolve these allegations, Laird agreed to pay $580,000. In reaching this settlement, he did not admit liability, and the government did not make any concessions about the legitimacy of the claims. The agreement allows the parties to avoid the delay, expense, inconvenience, and uncertainty involved in litigating the case.

This case was investigated by the United States Department of Health and Human Services, Office of Inspector General, and the Federal Bureau of Investigation. Assistant United States Attorneys Scott Maule and Ronald R. Gallegos prosecuted the case.

Pain Management Doctor Pleads Guilty in Health Care Fraud Case

Thursday, August 31, 2017

Acting United States Attorney Steve Butler of the Southern District of Alabama announced today that Dr. Rassan M. Tarabein, 58, a neurologist residing in Fairhope, Alabama, pled guilty before Chief United States District Judge Kristi K. DuBose to one count of health care fraud and one count of unlawful distribution of a schedule II controlled substance.  As part of his plea agreement, Dr. Tarabein will no longer be able to practice medicine and prescribe controlled substances in the United States.  Chief Judge DuBose has scheduled sentencing for March 2, 2018.  Dr. Tarabein faces up to ten years in prison for health care fraud and up to twenty years in prison for unlawfully distributing a controlled substance.

On June 28, 2017, a federal grand jury for the Southern District of Alabama returned a 22–count superseding indictment against Dr. Tarabein, charging him with health care fraud, making false statements relating to health care matters, lying to a federal agent, unlawfully distributing schedule II controlled substances, and money laundering.   He was arrested two days later.

Dr. Tarabein previously operated the Eastern Shore Neurology and Pain Center, a private clinic in Daphne, Alabama where he offered services relating to neurology and pain management, such as spinal injections.  In his plea agreement, Dr. Tarabein admitted that from around 2004 to May 2017, he ran an insurance scam in which he induced patients to visit his clinic so that he could bill health care benefit programs for medically unnecessary tests and procedures.  The purpose of Dr. Tarabein’s admitted scheme was to maximize personal financial gain by fraudulently seeking payments from health care benefit programs such as Medicare, Medicaid, Blue Cross Blue Shield of Alabama, Humana, UnitedHealthcare, and other private insurers.  As part of his guilty plea, Dr. Tarabein admitted to violating the traditional standards of care in his medical practice by, for example, failing to provide informed consent to patients about procedures, discriminating against Alabama Medicaid patients in services rendered, fraudulently documenting patient records, submitting false claims to insurance companies, and issuing prescriptions for schedule II controlled substances without a legitimate medical purpose.

Dr. Tarabein has pending state criminal charges in Montgomery County, Alabama.  On June 16, 2017, a state grand jury returned a 2–count indictment against Dr. Tarabein, charging him with Medicaid fraud and theft of property in the first degree, each a felony offense.  On September 20, 2017, Dr. Tarabein is expected to plead guilty in state court to Medicaid fraud.

Acting United States Attorney Butler stated, “Today’s guilty plea reinforces our office’s dedication to protecting the public from corrupt physicians.  Doctors who exploit patients through medically unnecessary services to line their own pockets have no place in our health care system.  I commend the investigators who unraveled Dr. Tarabein’s scam for their commitment to uproot health care fraud.”

Attorney General Steve Marshall stated, “I am pleased that my Medicaid Fraud Control Unit had the opportunity to team with our federal law enforcement colleagues to investigate and bring to justice this defendant who not only violated his oath to his patients, but stole taxpayer money set aside to provide care for our most vulnerable citizens.  I am grateful to the U.S. Attorney’s Office for the Southern District of Alabama for its speedy resolution of the federal charges, as this defendant is held to account for his actions.”

Federal Bureau of Investigation (FBI) Special Agent in Charge Robert E. Lasky stated, “The FBI stands ready to work alongside our state, local, and federal partners to eliminate prescription drug abuse.  When doctors place money before the well-being of their patients, this task becomes nearly impossible.  This guilty plea is a testament to all the hard work and cooperation between the agencies that conducted this investigation.”

“The abuse of prescription drugs is a serious problem in our communities.  All too often, this abuse leads to addiction, shattered lives, and even death.  For the health and safety of our citizens, DEA and our law enforcement partners will continue to target those who illegally distribute these potentially dangerous drugs.  We hope that the conviction of Dr. Tarabein serves as a reminder to anyone who might illegally divert pharmaceuticals that they will be held accountable for the harm they cause,” said Stephen G. Azzam, Special Agent in Charge of DEA’s New Orleans Field Division.

“Today’s plea should serve as a wake-up call to those who intend to bill the government for medically unnecessary services and thereby enriching their own bottom line,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services Office of Inspector General (OIG).  “The nation is facing a very serious prescription drug crisis and the OIG, along with our state and federal law enforcement partners, take allegations such as these very seriously.”

The FBI, DEA, OIG, and Alabama Medicaid Fraud Control Unit are investigating the federal case.  Assistant United States Attorneys Sinan Kalayoglu and Gregory A. Bordenkircher are prosecuting the federal case in coordination with the Office of the Alabama Attorney General, Medicaid Fraud Control Unit.  Assistant Attorney General Bruce M. Lieberman is prosecuting the state case.

CHRISTUS St. Vincent Regional Medical Center and CHRISTUS Health to Pay $12.24 Million to Settle Medicaid False Claims Act Allegations

Friday, September 1, 2017

CHRISTUS St. Vincent Regional Medical Center (St. Vincent) and its partner, CHRISTUS Health (CHRISTUS), have agreed to resolve allegations that they violated the False Claims Act by making illegal donations to county governments, which were used to fund the state share of Medicaid payments to the hospital, the Department of Justice announced today. Under the settlement agreement, St. Vincent and CHRISTUS have agreed to pay $12.24 million, plus interest. St. Vincent is located in Santa Fe, New Mexico. CHRISTUS is based in Irving, Texas.

“Congress expressly intended that states and counties use their own money when seeking federal matching funds,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Using local funds provides an incentive for the counties and states to, among other things, hold down costs rather than rely on non bona-fide donations by private providers.”

New Mexico’s Sole Community Provider (SCP) program, which was discontinued in 2014, provided supplemental Medicaid funds to hospitals in mostly rural communities. The federal government reimbursed the state of New Mexico for approximately 75 percent of its health care expenditures under the SCP program. Under federal law, New Mexico’s 25 percent “matching” share of SCP program payments had to consist of state or county funds, and not impermissible “donations” from private hospitals. This restriction on the use of private hospital funds to satisfy state Medicaid obligations was enacted by Congress to curb possible abuses and ensure that states have sufficient incentive to curb rising Medicaid costs.

Between 2001 and 2009, St. Vincent and CHRISTUS allegedly made non-bona fide donations and thus caused the presentment of false claims by the state of New Mexico to the federal government under the Medicaid program.

“Protecting the integrity of the Medicaid program is crucial because millions of Americans, including hundreds of thousands of New Mexicans, depend on the program for medical care and related services,” said Acting U.S. Attorney James D. Tierney for the District of New Mexico. “This case illustrates our commitment to ensuring that government funds are legally obtained and used for their intended purposes. We will use all available civil remedies to recover the ill-gotten gains obtained by those who defraud government health care programs.”

The settlement resolves allegations originally brought in a lawsuit filed by a former Los Alamos County, New Mexico Indigent Healthcare Administrator under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. The whistleblower will receive $2.249 million as her share of the recovery in this case.

The case was handled by the U.S. Attorney’s Office for the District of New Mexico with assistance from the Justice Department’s Civil Division and the U.S. Department of Health and Human Services Office of Inspector General.

The lawsuit is captioned U.S. ex rel. Stepan v. Christus St. Vincent Regional Medical Center Corp. et al., Civil Action No. 11-cv-572 (D.N.M.). The claims settled by this agreement are allegations only; there has been no determination of liability.

Former Janesville Pharmacy Owner Sentenced for Health Care Fraud

Friday, September 1, 2017

Madison, Wis. – Jeffrey M. Anderson, Acting United States Attorney for the Western District of Wisconsin, announced that Mark Johnson, 55, Janesville, Wis., was sentenced today by U.S. District Judge James Peterson to 24 months in federal prison for health care fraud.  Johnson will begin serving his sentence in October.

On August 4, 2016, Johnson’s arrest was announced in conjunction with the unsealing of a 46-count indictment returned by the grand jury, charging him with health care fraud, making false statements in a health care fraud audit, and identity theft.

On May 24, 2017, Johnson entered a guilty plea to Count 1 of the indictment. Pursuant to the Federal Sentencing Guidelines, all the charged conduct was considered by the court at sentencing. Johnson defrauded Medicare and Medicaid from approximately January 2008 to March 2014. During this time-period, he was a licensed pharmacist, and the owner and president of Kealey Pharmacy and Home Care, Inc., a pharmacy located in Janesville, Wisconsin. Kealey Pharmacy was a retail pharmacy providing, among other things, prescription drugs to customers. Kealey was reimbursed for these prescriptions in a number of ways, including reimbursement payments under Medicare and Medicaid.

Johnson submitted false and fraudulent claims to Medicare and Medicaid obtaining reimbursement for medication that was not, in fact, provided to beneficiaries. On occasion, also created false prescription orders using the identities of physicians and then submitted claims for reimbursement for medication pursuant to these false prescription orders. also lied in his responses to an audit being conducted by the State of Wisconsin Department of Health Services of paid Medicaid claims in 2013. obtained approximately $740,000 in fraudulent prescription reimbursements during his fraud scheme.

At sentencing, Judge Peterson noted that Johnson’s criminal conduct caused a considerable financial loss to the Medicare and Medicaid programs, which are designed to protect the sick and the vulnerable.

The charges against Johnson were the result of a lengthy investigation conducted by the U.S. Department of Health and Human Services, Office of Inspector General, and the U.S. Postal Inspection Service. Federal investigators began investigating Johnson after being alerted to the possible fraud by two employees who worked at the pharmacy.

Acting U.S. Attorney Anderson commended the outstanding work of the investigators in the case and praised the two former employees who came forward with concerns about possible fraud. Anderson said, “Johnson’s case is an example of this U.S. Attorney’s Office’s commitment to prosecuting those in the health care profession who abuse the public trust by defrauding the Medicare and Medicaid programs.”

The prosecution of this case is being handled by Assistant U.S. Attorney Meredith P. Duchemin.

National Dental Clinic Chain to Pay $1.3 Million to Resolve Allegations of Overbilling Medicaid

Tuesday, September 5, 2017

BOSTON – The U.S. Attorney’s Office and the Massachusetts Attorney General’s Office announced today that Dental Dreams, LLC, a national dental chain with locations in Massachusetts, has agreed to pay $1.375 million to resolve allegations that it improperly billed the Massachusetts Medicaid program (MassHealth) for unnecessary and unjustifiable dental procedures.

“Dental Dreams enriched itself at taxpayer expense by improperly billing Medicaid,” said Acting U.S. Attorney William D. Weinreb. “We will continue to work with our law enforcement partners to ensure that federal and state health care dollars are spent properly.”

“This dental chain’s extensive improper billing violated state regulations and cost our state’s Medicaid program more than a million dollars,” said Massachusetts Attorney General Maura Healey. “As a result of this joint investigation, today’s settlement provides restitution to MassHealth and ensures that these funds are properly used to benefit its members.”

“Medicaid is designed to provide health care services to some of the most vulnerable members of our society and it’s our agency’s mission to ensure government health funds are spent properly,” said Special Agent in Charge Phillip M. Coyne of the U.S. Department of Health and Human Services Office of Inspector General. “Working with our Federal and State partners, we will continue to hold accountable any medical professional who, just to enrich themselves, bills Medicaid for more intensive and expensive services than those actually provided.”

“The company took advantage of a vulnerable patient population when it submitted claims to MassHealth for medically unnecessary and unreasonable dental procedures,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “Today’s settlement underscores the FBI’s commitment to investigate health care providers who overbill federal and private health insurance programs to maximize profits. We urge anyone with information regarding overbilling practices to contact us.”

The settlement resolves allegations that Dental Dreams overbilled the Massachusetts Medicaid program for surgical extractions of teeth and for a specific kind of oral examination.

The settlement resolves a lawsuit filed by a former employee under the whistleblower provisions of the False Claims Act, which permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery.

Acting U.S. Attorney Weinreb, Massachusetts Attorney General Healey, HHS-OIG SAC Coyne and FBI SAC Shaw made the announcement today. The case was handled by Assistant U.S. Attorneys Michelle Leung, Sonya Rao, and Kriss Basil of Weinreb’s Civil Division and Assistant Attorney General Stephany Collamore of Healey’s Medicaid Fraud Division.

Novo Nordisk Agrees to Pay $58 Million for Failure to Comply with FDA-Mandated Risk Program

Tuesday, September 5, 2017

Payments Resolve Allegations Highlighted in DOJ Civil Complaint and Recently Unsealed Whistleblower Actions

Pharmaceutical Manufacturer Novo Nordisk Inc. will pay $58.65 million to resolve allegations that the company failed to comply with the FDA-mandated Risk Evaluation and Mitigation Strategy (REMS) for its Type II diabetes medication Victoza, the Justice Department announced today. The resolution includes disgorgement of $12.15 million for alleged violations of the Federal Food, Drug, and Cosmetic Act (FDCA) from 2010 to 2012 and a payment of $46.5 million for alleged violations of the False Claims Act (FCA) from 2010 to 2014. Novo Nordisk is a subsidiary of Novo Nordisk U.S. Holdings Inc., which is a subsidiary of Novo Nordisk A/S of Denmark. Novo Nordisk’s U.S. headquarters is in Plainsboro, New Jersey.

“Today’s resolution demonstrates the Department of Justice’s continued commitment to ensuring that drug manufacturers comply with the law,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “When a drug manufacturer fails to share accurate risk information with doctors and patients, it deprives physicians of information vital to medical decision-making.”

In a civil complaint filed today in the U.S. District Court for the District of Columbia asserting claims under the FDCA, the government alleged that, at the time of Victoza’s approval in 2010, the Food and Drug Administration (FDA) required a REMS to mitigate the potential risk in humans of a rare form of cancer called Medullary Thyroid Carcinoma (MTC) associated with the drug. The REMS required Novo Nordisk to provide information regarding Victoza’s potential risk of MTC to physicians. A manufacturer that fails to comply with the requirements of the REMS, including requirements to communicate accurate risk information, renders the drug misbranded under the law.

As alleged in the complaint, some Novo Nordisk sales representatives gave information to physicians that created the false or misleading impression that the Victoza REMS-required message was erroneous, irrelevant, or unimportant. The complaint further alleges that Novo Nordisk failed to comply with the REMS by creating the false or misleading impression about the Victoza REMS-required risk message that violated provisions of the FDCA and led some physicians to be unaware of the potential risks when prescribing Victoza.

As alleged in the government’s complaint, after a survey in 2011 showed that half of primary care doctors polled were unaware of the potential risk of MTC associated with the drug, the FDA required a modification to the REMS to increase awareness of the potential risk. Rather than appropriately implementing the modification, the complaint alleges that Novo Nordisk instructed its sales force to provide statements to doctors that obscured the risk information and failed to comply with the REMS modification. Novo Nordisk has agreed to disgorge $12.15 million in profits derived from its unlawful conduct in violation of the FDCA.

“Novo Nordisk’s actions unnecessarily put vulnerable patients at risk,” said U.S. Attorney Channing D. Phillips for the District of Columbia. “We are committed to holding companies accountable for violating the integrity of the FDA’s efforts to ensure that doctors and patients have accurate information that allows them to make appropriate decisions about which drugs to use in their care. Working with the FDA and other law enforcement partners, we have sent a strong signal to the drug industry today.”

“Novo Nordisk Inc. sales representatives misled physicians by failing to accurately disclose a potential life threatening side effect of a prescription drug, and needlessly increased risks to patients being treated with this drug,” said Assistant Director in Charge Andrew W. Vale of the FBI’s Washington Field Office. “The FBI is committed to ensuring that the private industry provides honest and accurate risk information to the public and will continue to work closely with our law enforcement partners to investigate companies who do not comply with FDA-mandated policies.”

“We need to trust that pharmaceutical companies truthfully represent their products’ potential risks,” said Special Agent in Charge Nick DiGiulio for the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG). “We will continue to work with our partners to ensure federal health care dollars are spent only on drugs that are marketed honestly.”

Novo Nordisk will pay an additional $46.5 million to the federal government and the states to resolve claims under the FCA and state false claims acts. This portion of the settlement resolves allegations that Novo Nordisk caused the submission of false claims from 2010 to 2014 to federal health care programs for Victoza by arming its sales force with messages that could create a false or misleading impression with physicians that the Victoza REMS-required message about the potential risk of MTC associated with Victoza was erroneous, irrelevant, or unimportant and by encouraging the sale to and use of Victoza by adult patients who did not have Type II diabetes. The Food and Drug Administration (FDA) has not approved Victoza as safe and effective for use by adult patients who do not have Type II diabetes.

As a result of today’s FCA settlement, the federal government will receive $43,129,026 and state Medicaid programs will receive $3,320,963. The Medicaid program is funded jointly by the state and federal governments.

The FCA settlement resolves seven lawsuits filed under the whistleblower provision of the federal FCA, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The civil lawsuits are captioned as follows: United States, et al. ex rel. Kennedy, v. Novo A/S, et al., No. 13-cv-01529 (D.D.C.), United States, et al. ex rel. Dastous, et al. v. Novo Nordisk, No. 11-cv-01662 (D.D.C), United States, et al., ex rel. Ferrara and Kelling v Novo Nordisk, Inc., et al., No. 1:11-cv-00074 (D.D.C.), United States, et al., ex rel. Myers v. Novo Nordisk, Inc., No. 11-cv-1596 (D.D.C.), United States, et al. ex rel Stepe v. Novo Nordisk, Inc., No. 13-cv-221 (D.D.C.), United States et al. ex rel Doe, et al. v. Novo Nordisk, Inc., et al., No. 1:17-00791 (D.D.C.), and United States ex rel. Smith, et al. v. Novo Nordisk, Inc., Civ. Action No. 16-1605 (D.D.C.). The amount to be recovered by the private parties has not been determined.

The settlements were the result of a coordinated effort among the U.S. Attorney’s Office for the District of Columbia and the Civil Division’s Consumer Protection Branch and Commercial Litigation Branch, with assistance from the FDA’s Office of Chief Counsel. The investigation was conducted by the FDA’s Office of Criminal Investigations, the FBI, HHS-OIG, the Defense Criminal Investigative Service and the Office of Personnel Management, Office of the Inspector General.

For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information on the Commercial Litigation Branch’s Fraud Section, visit https://www.justice.gov/civil/fraud-section. For more information about the U.S. Attorney’s Office for the District of Columbia, visit https://www.justice.gov/usao-dc.