Patients trust doctors to have their best interests at heart when making recommendations about medical treatment and the appropriate course of action. Unfortunately, this isn’t always the case, and doctors and medical professionals sometimes recommend medical treatment and procedures that are not needed. In fact, according to this article in USA Today, unnecessary surgeries might account for 10% to 20% of all operations in some specialties, including a wide range of cardiac procedures and many spinal surgeries. Knee replacements, hysterectomies, and cesarean sections are also among the other surgical procedures performed more often than necessary.
While many times the unnecessary medical treatment is the result of incompetence or inexperience, in some cases the unnecessary medical treatments are the result of an illegal scheme to boost the profits of the doctor, hospital, or health care provider. As we recently reported, several doctors and the owner of Chicago’s Sacred Heart Hospital were arrested for their alleged orchestration of a kickback scheme that involved unnecessary tracheotomies. Such schemes are frequently the subject of False Claims Act allegations.
The U.S. Department of Justice, on behalf of the Food and Drug Administration (FDA), recently filed suit against Sage Pharmaceuticals, Inc. (Sage), its president Dr. Jivn-Ren Chen, and its Director of Corporate Quality, Charles L. Thomas, alleging violations of the Federal Food, Drug, and Cosmetic Act (FDCA) by manufacturing and distributing unapproved and misbranded drug products. Under the FDCA, a company must submit and receive approval of a new drug application from the FDA before it can sell a new drug product to consumers, which the government alleges Sage failed to do.
In 2000, the government obtained an injunction against Sage, banning the company from manufacturing and distributing two unapproved new drugs. Since then, FDA inspections revealed Sage continued to manufacture and distribute other drug products—including prescription pain relievers, over-the-counter (OTC) cough and cold remedies, and OTC wound cleansers—without first obtaining the requisite FDA approvals. Consequently, these drugs are deemed unapproved, and not considered to be safe for use.
United Technologies Corporation (UTC) – a Connecticut company that provides a broad range of high-technology products and services to the global aerospace and building systems industries – was recently found liable for over $473 million in damages and penalties in a case brought under the False Claims Act. In the lawsuit, the government alleged that UTC’s proposed prices under a contract to provide the Air Force with fighter aircraft engines for F-15 and F-16 aircraft between 1985 and 1990 misrepresented how UTC calculated such prices. As a result of the price misrepresentations, which failed to account for historical discounts that it received from suppliers, the government paid hundreds of millions of dollars more than it otherwise would have paid for the engines.
The U.S. District Court for the Southern District of Ohio awarded the government False Claims Act damages and penalties of $364 million, and an additional $109 million in damages on the government’s common law claims.
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