Tag: 2013 News

Reuters Health reports that the U.S. government filed a civil fraud lawsuit against Novartis AG on Tuesday, accusing a unit of the Swiss drug maker of causing the Medicare and Medicaid programs to pay tens of millions of dollars in reimbursements based on fraudulent, kickback-tainted claims. U.S. Attorney Preet Bharara in Manhattan said Novartis Pharmaceuticals Corp had since 2005 induced at least 20 pharmacies to switch thousands of kidney transplant patients to its immunosuppressant drug Myfortic from competitors’ drugs, in exchange for kickbacks disguised as rebates and discounts. He said Novartis tried to conceal the scheme by omitting the agreements from rebate and discount contracts with pharmacies.

In one alleged case, Novartis offered a Los Angeles pharmacist a “bonus” rebate of 5 percent of that pharmacist’s annual Myfortic sales, or several hundred thousand dollars, to switch as many as 1,000 patients to Myfortic. “Novartis co-opted the independence of certain pharmacists and turned them into salespeople,” Bharara said in a statement.

The lawsuit was filed in U.S. District Court in Manhattan, and seeks civil penalties and triple damages from Novartis for violating the federal False Claims Act.

Novartis disputes the claims and will defend itself, spokeswoman Julie Masow said in an email. Novartis is “committed to high standards of ethical business conduct and regulatory compliance in the sale and marketing of our products,” Masow said.

Myfortic net sales totaled $579 million in 2012, up 12 percent from a year earlier, according to Novartis’ annual report. The Novartis Pharmaceuticals unit has offices in East Hanover, New Jersey.

In his announcement, Bharara called Novartis a “repeat offender,” referring to a settlement of health care fraud charges based on kickbacks less than three years ago. Novartis in September of 2010 agreed to pay $422.5 million to resolve criminal and civil liability over its marketing of several drugs, including the epilepsy drug Trileptal.

The company violated a federal anti-kickback statute, “choosing instead to put sales growth and profits before its duty to comply with federal law,” according to the new complaint. The federal anti-kickback statute prohibits paying people to buy drugs or services that Medicare, Medicaid or other federal healthcare programs cover, according to the complaint.

The scheme has been highly lucrative for Novartis, according to the complaint, resulting in “rapid, sometimes exponential growth in Myfortic sales.” A pharmacy in Arkansas, for example, increased its annual sales of the drug to more than $1 million from $100,000 over four years, according to the complaint.

The lawsuit also claims a Novartis account manager admitted the kickback scheme generates “an ongoing stream of revenue” for Novartis “as long as the patient is still living and using (Myfortic).” These types of cases “are one of the highest priorities of the FBI’s health care fraud program,” FBI Assistant Director Ronald Hosko said in a statement. The case is U.S. v. Novartis Pharmaceuticals Corp, U.S. District Court, Southern District of New York, No. 11-08196.

Michael Brooks started working as a supervising probation officer at the County of Sacramento’s juvenile hall in 2007, and was apprised of a pending lawsuit alleging use of excessive force by the officers there. He observed problems he believed bordered on violation of protocols and felt that the Security Emergency Response Team (SERT), which he supervised, resisted and undermined his authority and supervision.

In November 2007, Brooks counseled two of the SERT officers as a result of an incident with a ward. Brooks informed his supervisor that the SERT officers resisted his instructions concerning restraining and movement of wards. Later Assistant Chief Deputy John O’Brien met with Brooks and gave him a memo entitled “Admonition and Notice of Internal Affairs Investigation.” The memo advised Brooks of the allegations by Ron Parker, a SERT member, which formed the basis of the internal affairs investigation. The memo directed Brooks to refrain from any supervisory duties which involve Ron Parker, refrain from abusive and or indiscreet language toward Ron Parker, and refrain from any other actions that could reasonably be construed as an attempt to intimidate or threaten Ron Parker. Brooks believed that these directives were unreasonable when it was his job to supervise Ron Parker. Brooks believed that with these directives he would not be able to intervene in an emergency.

Brooks asked to be reassigned or placed on administrative leave pending completion of the investigation. His requests were denied. Brooks did not feel that the Chiefs listened to his concerns or provided a reasonable alternative. However, the employer allowed Brooks to change his shifts to reduce contact with Ron Parker. Brooks went to work on January 2, 2008 and saw that Ron Parker was scheduled to work. Brooks was too upset to work and filed a workers’ compensation psychiatric injury claim which the employer denied. The defense of the claim involved the “good faith personnel action” defense.

Psychiatrist Ann E. Allen, M.D., acted as the agreed medical evaluator. Dr. Allen reported that his disorder was caused by (1) Parker’s complaint, (2) the internal affairs investigation, and (3) Brooks’s feelings that his supervisors were not supporting him. Based upon her report, the WJC found an industrial injury. Ultimately the WCAB affirmed the WCJ’s decision, with one dissenting commissioner, The employer appealed, and the Court of Appeal reversed the finding of injury in the published decision of County of Sacramento v WCAB, Michael Brooks.

The Court of Appeal agreed that Dr. Allen’s reports and testimony did not constitute substantial evidence. Labor Code section 3208.3 was enacted as part of the Margolin-Greene Workers’ Compensation Reform Act of 1989. It is part of the Legislature’s response to increased public concern about the high cost of workers’ compensation coverage, limited benefits for injured workers, suspected fraud and widespread abuses in the system, and particularly the proliferation of workers’ compensation cases with claims for psychiatric injuries. The Legislature’s expressed intent in enacting Labor Code section 3208.3 was to establish a new and higher threshold for compensability for psychiatric injury. To further this more restrictive policy, subdivision (h) provides: “No compensation under this division shall be paid by an employer for a psychiatric injury if the injury was substantially caused by a lawful, nondiscriminatory, good faith personnel action.”

A personnel action has been defined as conduct attributable to management in managing its business, including such things as reviewing, criticizing, demoting, transferring, or disciplining an employee. An employer’s disciplinary actions short of termination may be considered personnel actions even if they are harsh and if the actions were not so clearly out of proportion to the employee’s deficiencies so that no reasonable manager could have imposed such discipline.

The reports of Dr. Allen, when “taken as a whole, were so confusing and changing that Dr. Allen’s opinion cannot be deemed support for the Board’s conclusion that personnel actions were not a substantial cause of Brooks’s injury. Therefore, the Board’s award must be annulled.”

The Division of Workers’ Compensation April 19 Newsline issued the following warning to claims administrators.

The DWC has received complaints regarding claims administrators who do not accept electronic bills from medical providers. The DWC Audit Unit has begun investigating claims administrators to determine if they accept electronic transmissions of medical bills.

Provisions relating to electronic medical bills became effective Oct. 18, 2012. By statute, claims administrators are required to accept electronic bills and may develop their own capacity to accept e-bills or may contract with a vendor to perform the function. Participation in e-billing is optional for medical providers.

Claims administrators who do not comply with the e-billing regulations will be subject to assessment, including civil penalties. The electronic billing rules are available on the DWC website. Claims administrators seeking assistance in implementing electronic medical bill processing may wish to consult one or more of the service providers who have elected to be listed on the DWC website. Other companies not listed may be equally capable of providing electronic bill processing services or products.

City Controller Wendy Greuel issued her latest audit, raising serious concerns about the City’s Worker’s Compensation Salary Continuation Program for employees injured on the job. Her audit finds potential savings of up to $5.2 million annually by bringing the City’s non-sworn employee payment program in line with other jurisdictions in the State of California.

Greuel called on the responsible departments and City leaders to act immediately to protect taxpayer resources and reduce t he benefits to a level comparable with others throughout the State. The State Rate for temporary disability is two thirds of an employee’s take-home pay not to exceed $1 ,067 per week, while Los Angeles pays an employee’s full salary for the first 52 weeks. As all disability pay is tax-exempt by law, the City’s policy creates the potential for earning more than 100% of salary and, in some instances, employees earn more while on disability leave than while working.

“I am deeply concerned by the findings of this audit. While it is critical to support our injured employees, Los Angeles absolutely cannot afford to leave $5 million a year on the table that could go towards keeping our children safe and our roads paved,” said Greuel.

Greuel’s audit found that Injury on Duty (IOD) payments have increased dramatically each of the last four years, from $12.6 million in 2009 to over $19 million in 2012. According to the audit, this increase is most likely a result of employees receiving payments for a longer period of time, rather than an increase in the number of employees receiving payments.

The audit also evaluated system controls to prevent overpayments. A test sampling of payment data identified $127,000 in overpayments due primarily to departments’ failure to terminate salary continuation payments following the 52 week period and a failure to communicate between two independent systems.

“I am pleased that the Personnel Dept is working closely with my Office to enhance oversight and improve communications and controls for Workers Compensation” Greuel said.

Controller Greuel has conducted more than 80 audits and and claims she uncovered more than $160 million that the City has lost to wasteful spending, fraudulent activity, and abuse of city resources.

Amgen Inc., a California-based biotechnology company, has agreed to pay the United States $24.9 million to settle allegations that it violated the False Claims Act. Amgen develops, manufactures, and sells pharmaceutical products, including products sold under the trade name Aranesp.

The settlement resolves allegations that Amgen paid kickbacks to long-term care pharmacy providers Omnicare Inc., PharMerica Corporation and Kindred Healthcare Inc. in return for implementing “therapeutic interchange” programs that were designed to switch Medicare and Medicaid beneficiaries from a competitor drug to Aranesp. The government alleged that the kickbacks took the form of performance-based rebates that were tied to market-share or volume thresholds. The government further alleged that, as part of the therapeutic interchange program, Amgen distributed materials to consultant pharmacists and nursing home staff encouraging the use of Aranesp for patients who did not have anemia associated with chronic renal failure.

“We will continue to pursue pharmaceutical companies that pay kickbacks to long-term care pharmacy providers to influence drug prescribing decisions,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “Patients in skilled nursing facilities deserve care that is free of improper financial influences.”

“By this agreement we are making important strides in holding drug manufacturers accountable for fraudulent and abusive practices not only in South Carolina but nationwide,” said William Nettles, U.S. Attorney for the District of South Carolina. “I am proud of the tireless work of this office to investigate this case across the country.”

This civil settlement resolves a lawsuit filed under the qui tam, or whistleblower, provision of the False Claims Act, which allows private citizens with knowledge of false claims to bring civil actions on behalf of the United States and share in any recovery. The False Claims Act suit was filed in the U.S. District Court for the District of South Carolina, and is captioned United States ex rel. Kurnik v. Amgen Inc., et al.

Acting Assistant Attorney General Delery noted that the settlement with Amgen, Inc. was the result of a coordinated effort among the Civil Division, the U.S. Attorney’s Office for the District of South Carolina, and the U.S. Department of Health and Human Services, Office of Inspector General.

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $10.3 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14.2 billion.

The claims settled by this agreement are allegations only; there has been no determination of liability.