A Boston pharmaceutical company has agreed to pay $900 million to settle allegations that it violated the False Claims Act. A former employee of the company brought the lawsuit under the qui tam provisions of the Act.
The former employee alleges that the pharmaceutical giant violated the Act by paying physicians to prescribe the company’s drugs, resulting in false claims to Medicare and Medicaid.
What is the False Claims Act?
The False Claims Act is a federal statute that makes any person or organization that intentionally submits false claims to the United States government liable for three times the government’s damages plus a penalty that varies according to inflation. The FCA allows the government to bring suit on its own or for private citizens to sue as whistleblowers. Qui tam actions are often brought by people who have an affiliation or former affiliation with the accused, such as an employee or former employee.
How did the accused violate the False Claims Act?
According to the lawsuit, the company paid physicians who prescribed the company’s multiple sclerosis drugs in violation of the Anti-Kickback Statute. This inducement to prescribe the drugs resulted in false Medicare and Medicaid claims. Because the government runs these insurance programs, this put the company in violation of the False Claims Act.
All companies need to take steps to avoid fraudulent behavior. The treble damages provision of the False Claims Act makes it particularly important for companies that deal with the government to avoid fraudulent acts due to the potential for large settlements such as the one in this case.