Last July, Novartis agreed to pay over $729 million in separate settlements resolving claims that it violated the False Claims Act. The first settlement pertains to the company’s alleged illegal use of three foundations as conduits to pay the copayments of Medicare patients.. The second settlement resolves claims arising from the company’s alleged payments of kickbacks to doctors. The settlement was entered into in the US District Court for the Southern District of New York.
The total fine and penalty paid for illegal conduct inside the US was over double that paid by Novartis for its conduct outside the US. Novartis settled FCPA violations for foreign bribery for $337 million.
The California Attorney General just announced the trickle down effects, with its $11.8 million settlement against Novartis.
Novartis was accused of violating the federal Anti-Kickback Statute and False Claims Act, as well as the California False Claims Act, by offering payment in the form of cash, meals, and honoraria to healthcare practitioners who spoke at or attended Novartis speaker events, roundtables, speaker training meetings or lunch-n-learns to encourage them to prescribe certain Novartis drug products to recipients of Medicare and Medicaid.
Novartis sales representatives conducted speaker programs and roundtables at some of the most expensive restaurants in the United States, including Masa, Daniel, Gramercy Tavern, II Mulino, Babbo, Peter Luger, Le Bernardin, and Eleven Madison Park in New York City; Charlie Palmer’s in Washington, D.C.; Morton’s Steakhouse and the Four Seasons in Chicago, Illinois; Joe’s Stone Crab in Miami; Abacus, Nobu and the Four Seasons in Dallas; Gary Danko in San Francisco; Patina and Matsuhisa in Los Angeles; Grill 225 in South Carolina; and Commander’s Palace in New Orleans.
Some Novartis sales representatives conducted speaker programs and roundtables at venues where the focus was on entertainment, including fishing trips, sporting events, wine tastings, and hibachi tables. Novartis conducted hundreds of events at wineries and golf clubs. Sales representatives also conducted roundtables at Hooters.
The California settlement is a result of a whistleblower case filed in the United States District Court for the Southern District of New York in 2011. As part of the agreement, Novartis is required to pay California $11.8 million, which will be split between the General Fund and Medi-Cal.
This settlement agreement is a part of the work of the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse (BMFEA). The BMFEA receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $42,322,848 for Federal fiscal year 2019-20. The remaining 25 percent, totaling $14,107,616 for fiscal year 2019-20, is funded by the State of California.