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The whistleblower attorneys at Goldberg Kohn are committed to fighting fraud against the government and protecting the rights of whistleblowers. Below are summaries of recent developments pertaining to whistleblower, qui tam, and False Claims Act actions throughout the United States.

Johnson & Johnson Agrees to Pay $2.2 Billion to Settlement Fraud Claims related to Risperdal

Earlier this week, healthcare giant Johnson & Johnson (J&J) and its subsidiaries agreed to pay more than $2.2 billion – one of the largest healthcare fraud settlements in U.S. history – to resolve criminal charges and civil claims based on the False Claims Act related to its prescription drugs Risperdal, Invega, and Natrecor. According to the government, J&J allegedly promoted these drugs for uses not approved as safe and effective by the Food and Drug Administration (FDA) and paid kickbacks to physicians and to the nation’s largest long-term care pharmacy provider.

In a press release, Attorney General Eric Holder blasted the company for conduct that “jeopardized the health and safety of patients and damaged the public trust,” and in a press conference on Monday, Nov. 4, Holder called Johnson & Johnson's conduct “shameful” and “acceptable.” Johnson & Johnson’s conduct “displayed a reckless indifference to the safety of the American people,” Attorney General Holder said. “And it constituted a clear abuse of the public trust, showing a blatant disregard for systems and laws designed to protect public health.”

In addition to substantial fines, the settlement will require Johnson & Johnson to comply with stringent requirements under a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General that is “designed to increase accountability and transparency and prevent future fraud and abuse.”

Sutter Health Agrees to Pay $46 Million to Settle Claims Related to its Billing Practices

California health system Sutter Health has agreed to pay $46 million to settle claims related to billing practices for the hospital chain’s anesthesia patients, insurers, and other payers. The settlement resolves a 2009 whistleblower lawsuit in which Sutter’s billing auditor, Rockville Recovery Associates, alleged that the health system “included a false and misleading charge in its surgery bills” and that “Sutter patients or their insurers received three separate charges relating to anesthesia including a charge by an outside anesthesiologist, a charge for the operating room, and a charge under an obscure code” – all of which were allegedly already captured in an operating room charge.

In addition to the substantial financial settlement, Sutter has also agreed to disclose via its website every component of its anesthesia billing, including cost to the health system. California Insurance Commissioner Dave Jones has said that the settlement “represents a groundbreaking step in opening up hospital billing to public scrutiny.”

Ohio Whistleblower Shows the Importance of Relators to False Claims Act Recoveries

A recent case coming out of Ohio demonstrates just how important whistleblowers are to False Claims Act cases and protecting taxpayers from fraud. In August 2013, an Ohio roofing company agreed to pay $60.9 million to settle claims that the company violated government contract rules and sold defective roofing materials – funds that likely would not have been recovered were it not for the diligence and valuable information provided by the whistleblower in the case – the company’s former vice president, Greg Rudolph.

Rudolph began working for Tremco in 1988 and, in 2007, he began noticing problems with the quality of roofing products, many of which were used to roof government buildings. In 2009, after resigning, Rudolph filed a federal lawsuit under the False Claims Act and, while the federal government seemed to be uninterested in his allegations of product defects, the government was especially concerned to learn that private customers routinely received discounts of 30 percent whereas government customers received discounts of 13.3 percent – a direct violation of federal contract rules mandating that the government always receive the best price. Rudolph also alleged that Tremco sold government customers its most expensive materials even though identical products were available at a lower cost.

In exchange for his help in the case, Rudolph will receive $10.9 million under the False Claims Act as part of the settlement.

Michigan Manufacturing Company Agrees to Pay More than $1.2 Million to Resolve False Claims Act Allegations

LG Chem Michigan, Inc. (“LGCMI”) has agreed to pay the United States more than $1.2 million to resolve allegations that the company improperly sought and obtained federal funds to pay employees who were engaged in recreational and volunteer activities. The settlement is in addition to the $842,189 that LGCMI refunded to the U.S. Department of Energy (“DOE”) in January 2013 due to claims based on the same allegations.

The government’s claim alleges that DOE awarded LGCMI over $150 million in funds under the American Recovery and Reinvestment Act of 2009 to construct and operate a lithium-ion battery manufacturing plant in Holland, Michigan, but during the first three quarters of 2012 – before LGCMI had yet transitioned battery production from foreign sources to the Michigan plant – LGCMI submitted claims to obtain the federal share of wages and benefits paid to domestic workers who were engaged in non-work activities such as watching movies, playing games, and performing volunteer work. The federal government also accused LGCMI of failing to adequately respond to governmental inquiries about such activities.

Please contact us at (312) 863-7222 if you would like to learn more about any of the aforementioned whistleblower news updates or would like to schedule a free, confidential appointment with one of our nationally recognized whistleblower attorneys.