A $23.2 million settlement has been reached by the California Department of Insurance and whistleblowers with pharmaceutical company Warner Chilcott to resolve a lawsuit alleging drug marketing fraud in violation of state law. (In 2013, Actavis announced the acquisition of Warner Chilcott creating an $11 billion leading specialty pharmaceutical company with over $3 billion in pro forma sales.) The settlement resolves allegations filed by three former Warner Chilcott employees. The lawsuit alleged that Warner Chilcott executives violated the California Insurance Code False Claims Act, which prohibits anyone from defrauding private insurance companies by using kickbacks or other inducements to procure or steer clients or patients.
The former Warner Chilcott employees alleged the company knowingly used illegal inducements to influence physician decisions, including paying kickbacks and falsifying prior authorization forms to increase the number of prescriptions written for several Warner Chilcott medications. Whistleblowers alleged Warner Chilcott management funneled kickbacks and inducements to physicians under the guise of physician education, often hosting events with little or no education content at high-end hotels and spas-all in an effort to encourage physicians to increase the number of prescriptions written for Warner Chilcott medications.
Of the $23.2 million state settlement, California will receive $11.8 million, which is to be used for enhanced insurance fraud investigation and prevention efforts.
In addition to the allegations of violating California law, a separate lawsuit was filed in federal court in Massachusetts alleging Warner Chilcott violated the Federal False Claims Act. The U.S. Department of Justice announced a settlement of the federal allegations on October 29, in which Warner Chilcott pleaded guilty to healthcare fraud and agreed to pay $125 million to resolve both federal civil and criminal liability for alleged activities that violated the federal anti-kickback and HIPAA statutes, and for false claims submitted to Medicare and Medicaid.