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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.

Halifax Health is in hot water – and not just for its alleged Medicare fraud. According to court documents, the company is accused of destroying thousands of records for short-stay admissions from 2002 to 2004, despite being aware that the documents were relevant to a federal investigation and whistleblower lawsuit. The lawsuit was filed in 2009 and accuses the hospital of admitting patients for inpatient care when they could have either been discharged or treated on an outpatient basis.

The hospital claims that hospital officials inadvertently destroyed the bulk of the records between April and October 2012, but federal subpoenas for the documents were issued in 2009, and Halifax Health policy requires patient records to be kept for at least seven years after discharge. As a result of the missing documents, the plaintiffs, who are supported by the U.S. Department of Justice, have asked the court to enter a default judgment ruling that the claims are false or instruct the jury to presume that the claims were false.

The Department of Justice is seeking damages and penalties between $725 million and $1.14 billion on its claims.

Boston Scientific Corp. and its subsidiaries — Guidant LLC, Guidant Sales LLC and Cardiac Pacemakers Inc. — have agreed to pay $30 million to settle allegations that, between 2002 and 2005, Guidant knowingly sold defective defibrillators to health care facilities that in turn implanted the devices into Medicare patients. In addition to False Claims Act charges, the lawsuit also accuses the company of violating the Controlled Substances Act by enabling nursing home staff to order narcotics, and pharmacists to dispense narcotics, before a doctor had determined whether the drugs were necessary for the patient.

According to the government’s lawsuit, two of Guidant’s implantable defibrillators contained a defect that resulted in “arcing,” which occurs when the device detects the irregular heartbeat and delivers a shock that “arcs” back to the device instead of traveling to the heart. As a result, the device short circuits, rendering it ineffective. The government alleged that Guidant learned of the defects as early as April 2002 and took corrective action to fix the defects, but continued to sell its remaining stock of the defective versions of the devices and took steps to hide the reasons for the defect from patients, doctors, and the FDA.

James Allen – the whistleblower in the False Claims Act action and a patient who had received one of the defective devices – will receive $2.25 million as part of the settlement.

A federal appeals court recently ruled that a former Bayer employee can proceed in her whistleblower lawsuit, in which she accuses the drug company of illegally and deceptively marketing its Baycol cholesterol drug. The lawsuit is limited to charges that Bayer defrauded the U.S. Department of Defense.  Claims of Medicare and Medicaid fraud were dismissed.

The lawsuit was filed seven years ago by a former market research manager who accused Bayer of exaggerating Baycol’s efficacy and safety, downplaying its risks, and concealing information about its dangers from doctors, the federal government, and consumers. The lawsuit also alleged that Bayer paid kickbacks to doctors and other providers to entice them to prescribe Baycol.

Although a federal court dismissed the case last year due to lack of specificity, the U.S. Court of Appeals for the Eighth Circuit reversed that part of the decision relating to the Department of Defense, which had contracted with Bayer in 1999 to provide Baycol to service members. Because the lawsuit alleged that Bayer made false statements in order to induce the Department of Defense to renew its contract and that, had those assurances not been given, the agency would not have done so, the appeals court found that there was sufficient evidence for the claim of fraud-in-the-inducement.

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.