Tag: 2017 News

Celgene Corp., a manufacturer of pharmaceuticals, has agreed to pay $280 million to settle fraud allegations related to the promotion of two cancer treatment drugs for uses not approved by the Food and Drug Administration The settlement with Celgene Corp. was announced by federal prosecutors in Los Angeles.

Celgene agreed to pay the settlement to resolve a “whistleblower” lawsuit that alleged it had violated the federal False Claims Act by submitting false claims to Medicare. The lawsuit also alleged that Celgene violated the laws of 28 states and the District of Columbia by submitting fraudulent claims to state health care programs, including California’s Medi-Cal program.

The lawsuit also said the company ran afoul of anti-kickback statutes by coordinating with charities. They claim that the company donated hundreds of millions of dollars to charities like the Patient Access Network (PAN) Foundation and the Chronic Disease Fund (CDF) “as part of a core business scheme to gain billions” from government health programs. The charities assist patients with accessing expensive blood cancer medications like Celgene’s Revlimid by helping them afford their drug co-pays. Companies aren’t supposed to know exactly how their donated money is being spent and are barred from giving money directly to patients covered by Medicare prescription drug plans.

A Celgene spokesperson told Fortune in an emailed statement. “[The government] has issued guidance related to donations by medical innovators to charitable patient assistance programs. Celgene complies with that guidance with respect to its donations to patient assistance programs.” The two charities mentioned in the case are not named as co-defendants.

And Celgene is not the first to be scrutinized over similar practices. Amid a maelstrom of criticism against biopharmaceutical companies for high drug costs and price hikes, major industry players have pointed to patient assistance programs, arguing that people who need the treatments would never have to pay the full list price. Valeant Pharmaceuticals is also being investigated for its drug pricing and patient assistance programs, and biotechs Gilead and Biogen have received similar federal subpoenas regarding patient assistance charities.

Pursuant to the settlement, which was finalized in July, Celgene will pay $259.3 million to the United States and $20.7 million to the 28 states and the District of Columbia. California will receive $4.7 million, more than any other state.

The whistleblower lawsuit was filed in United States District Court by Beverly Brown, who was employed as a sales manager by Celgene, under the qui tam provisions of the False Claims Act and similar laws of the District of Columbia and the 28 states included in the lawsuit. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action.

The case, United States ex rel. Brown v. Celgene Corp., CV10-3165, was monitored by the United States Attorney’s Office, the Civil Division’s Commercial Litigation Branch, and HHS-OIG.

The company denied wrongdoing and said it settled to avoid uncertainty, distraction and expensive litigation.

Citing a market capitalization of $67 billion, and stock appreciation of 107%, Celgene was Forbes Magazine’s number 2 ranked drug company of 2013. Based on these numbers one could argue that this settlement is a minor cost of doing business.

In a federal lawsuit initially brought by thirteen plaintiffs in May 2015, lead plaintiff Etopia Evans, widow of the late Minnesota Vikings and Baltimore Ravens player Charles “Chuck” Evans, filed a federal class action against 32 NFL teams. The case was transferred from Maryland to Northern California in March 2016.

The players claimed NFL teams conspired since at least 1964 to have trainers and team doctors dole out unprescribed pills and injections, sometimes mixing them in “dangerous cocktails,” to get players back into games without warning them of the long-term side effects.

U.S. District Judge William Alsup previously dismissed most claims, including conspiracy claims, against all 32 NFL teams, leaving only claims of intentional misconduct against the Green Bay Packers, Denver Broncos and Los Angeles Chargers, three of the original 32 teams named in the case.

The two remaining of the thirteen original plaintiffs, Alphonso Carreker and Reggie Walker, argued their claims fell within a narrow “intentional harm” exception to workers compensation exclusivity laws in California, Colorado and Wisconsin.

In a final blow to the case, the federal judge in the Northern District of California rejected their arguments and struck down what remained of the case.

In a summary judgment ruling Judge Alsup found retired football players could only seek relief through workers’ compensation, because their claims against three NFL teams did not fall within narrow exceptions to the well recognized exclusive remedy limits to employer civil liability and that the plaintiffs failed to present facts showing the NFL teams intended to harm players in an egregious manner.

With respect to the California team, the court found that the “fraudulent-concealment exception is an extremely limited one. E.g., Jensen v. Amgen, Inc., 105 Cal. App. 4th 1322, 1326-27 (2003). To recover under the exception, Walker must prove that (1) the Chargers knew of his work-related injury, (2) the Chargers concealed that knowledge from him, and (3) the injury was aggravated as a result of such concealment. The exception does not apply if Walker was aware of the injury at all times.”

“In short, it is not enough, as plaintiffs suggest, to insist that the Chargers engaged in some type of fraudulent concealment. Counsel’s muddling of plaintiffs’ own theories concerning the specific alleged misconduct at issue does not substitute for actually satisfying each and every element of the fraudulent-concealment exception to exclusivity. To lose the protection of workers’ compensation exclusivity, the Chargers must have concealed knowledge of Walker’s underlying work-related injury from him and aggravated said injury as a result. On this point, plaintiffs have not shown any genuine dispute of material fact in their favor.”

“This order recognizes, as have California courts, that workers’ compensation exclusivity may bar claims that reveal egregious employer misconduct,” Alsup wrote. “But the mere culpability of such misconduct, without more, is not a basis for keeping in court a claim properly subject to the exclusive remedy provisions of workers’ compensation laws.”

Similar findings were made with respect to the Colorado and Wisconsin exclusive remedy law that governs the Denver Broncos and Green Bay Packers.

The Los Angeles County District Attorney’s Office announced that a Redondo Beach woman accused of participating in a $150 million workers’ compensation insurance fraud scheme pleaded guilty,

Deputy District Attorney Kennes Ma said forty-year-old Marissa Nelson pleaded to one felony count of conspiracy to commit insurance fraud and admitted a special allegation of taking property of a value exceeding $3.2 million in case BA455469.

The sentencing hearing for Nelson is scheduled for July 27, 2018, one year from now. This will provide prosecutors one year to see how cooperative she might be with the continuing investigation before they recommend a sentence or argue what sentence might be appropriate.

Nelson is one of more than a dozen people associated with Frontline Medical Associates who were accused in 2015 of taking part in a $150-million scam that involved unnecessary surgeries by non-surgeons, doling out kickbacks for illegal patient referrals and fraudulently billing insurance companies.

But the Los Angeles Times reports that over the 18 months that followed, a judge dismissed most of the 132 counts laid out in two indictments. The most serious charges – for aggravated mayhem, carrying a potential life sentence – were dropped for a lack of evidence.

Recently prosecutors are taking a second stab at the case after acknowledging flaws in how they presented it to a grand jury. At their request, Los Angeles County Superior Court Judge Kathleen Kennedy threw out pending charges in the two indictments against 13 defendants, except for two suspects who are fugitives.

Prosecutors immediately brought new charges against a dozen people, filing three separate criminal complaints listing 194 counts, including aggravated mayhem, money laundering, insurance fraud and unlawful patient referrals. An 82-year-old physician who was accused of overbilling insurance companies was not charged in the new complaint; prosecutors noted that he is suffering serious health issues.

Prosecutors allege that Dr. Munir Uwaydah, the orthopedic surgeon patients believed would conduct procedures, instead let a physician’s assistant perform surgeries. The scheme left nearly two dozen patients with lasting scars.

Uwaydah, the accused ringleader who prosecutors initially said had been captured in Germany, remains at large. They believe he is living in Lebanon.

Nelson was a personal assistant to orthopedic surgeon Dr. Munir Uwaydah. She is also the wife of co-defendant Peter Nelson, a physician’s assistant who never attended medical school and allegedly performed invasive and sometimes unnecessary surgeries. Her guilty plea may be a sign that prosecutors are now having some successful results, and her possible cooperation as a witness may prove to be the break they need to go forward with the remaining defendants.

Deputy District Attorneys Dayan Mathai, Catherine Chon, Karen Nishita and Kennes Ma are prosecuting the case.

The case remains under investigation by the Los Angeles County District Attorney’s Bureau of Investigation and the Organized Crime Division.

In 2016, Dane Nielsen, representing himself in both the trial and appellate courts, filed a malpractice complaint against the Northern and Central California law firm Moorad, Clark & Stewart and attorneys Adam Stewart and Albert Clark.

Nielsen alleged that he retained the law firm to represent him in a workers’ compensation claim and a Labor Code section 132a discrimination claim against the Pine Mountain Lake Association (PMLA) in 2003. Stewart and Clark were partners in the law firm. Unbeknownst to Nielsen, Clark was a member of PMLA.

The gist of his claim was that the attorneys “failed to exercise reasonable care and skill” in performing legal services for Nielsen and “failed to properly draft the appropriate pleadings concerning the Labor Code section 132a action resulting in dismissal of that action.” The complaint further alleged that the WCJ stated defendants had failed to exercise care in drafting the pleadings and had a conflict of interest in violation of rule 3-300 of the California Rules of Professional Conduct.. Thus Nielsen alleged he had lost a meritorious claim for compensation.

Defendants demurred on the bases that the complaint failed to state a cause of action and that it was barred by the statute of limitations of C.C.P.section 340.6, subdivision (a). In support of the demurrer, defendants requested judicial notice of various documents filed in the workers’ compensation case. These documents included the petition for the Labor Code section 132a claim, filed by Clark on September 23, 2003, and two substitutions of attorney for plaintiff. In the first, filed June 30, 2006, Nielsen substituted himself in place of the law firm. A month and a half later he substituted in Stephen Mackey as counsel.

Nielsen did not file an opposition to the demurrer. The trial court sustained the demurrer without leave to amend. Nielsen appealed, and the Court of Appeal sustained the dismissal in the unpublished case of Nielsen v Adam Steward et.al.

The Court of Appeal found that all of Nielsen’s claims are barred by the four-year statute of limitations of Code of Civil Procedure section 340.6, subdivision (a) because none fall within the fraud exception and no tolling provisions apply.

Here, the alleged wrongful acts or omissions were defendants’ lack of care in performing legal services, specifically in drafting the pleadings for the Labor Code section 132a claim, and failing to disclose Clark’s membership in PMLA “at the time of representation.” All of these acts or omissions involve violation of a professional obligation and thus are subject to the limitations period of section 340.6, subdivision (a). Defendants ceased representing Nielsen by June of 2006, so all the alleged wrongful acts or omissions occurred more than four years before the complaint was filed in 2016.

Section 340.6, subdivision (a) provides for tolling of the statute of limitations in four instances: “(1) The plaintiff has not sustained actual injury. [¶] (2) The attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred. [¶] (3) The attorney willfully conceals the facts constituting the wrongful act or omission when such facts are known to the attorney, except that this subdivision shall toll only the four-year limitation. [¶] (4) The plaintiff is under a legal or physical disability which restricts the plaintiff’s ability to commence legal action.”

“None of these tolling provisions apply here.”

According to a Staff Report presented at the City Council meeting on July 25, 2017, the City of Santa Monica’s workers’ compensation costs continue to grow at an accelerated pace.

In FY 2017-18 alone, the City’s contributions to the Workers’ Compensation Self-Insurance Fund increased by 50%. Further, contributions are projected to rise by 10% annually thereafter if current claims trends continue.

In response to this, the Finance Director convened a Workers’ Compensation Working Group composed of the Assistant City Manager, City Attorney, Human Resources Director, and Risk Manager for the purpose of promoting initiatives to curb the City’s growing workers’ compensation costs.

Under the guidance of the Working Group, a variety of pilot cost control projects have been put in place across the City. Examples include the “Wow, That’s Fast” Program, which provides comprehensive case management services to injured sworn personnel and post-job-offer functional capacity testing to ensure prospective employees are capable of safely carrying out essential job functions prior to placement.

The most recent idea to emerge from the Working Group involves a BBB/Risk Management Division proposal to contract with a TPA to manage the BBB’s workers’ compensation claims. The idea was intriguing to the Working Group due to the many advantages a reputable and established TPA could have over an in-house program, and it resulted in the development of a three-year pilot program proposal to determine which model is more cost-effective.

The Finance Department and Big Blue Bus (BBB) asked the Council for authorization to engage in a three-year pilot program to determine the most cost-effective model for managing workers’ compensation claims. BBB will serve as the test group for the pilot program.

As proposed, administration of BBB’s workers’ compensation claims will transfer from in-house staff in the Risk Management Division of the Finance Department to a private claims administrator. Pilot program performance will be evaluated and monitored by BBB and Finance throughout the pilot period.

In order to pursue the pilot program, staff from the Finance, BBB and Human Resources Departments solicited formal proposals from TPAs for workers’ compensation claims administration services.

Based on this process, staff recommends that the City enter into an agreement with Intercare Holdings Insurance Services, Inc. for an amount not to exceed $1,699,509 over a five-year period. In addition, staff recommends that the City amend its existing contract with TCS Risk Management Services, the City’s workers’ compensation consultant, for assistance with transitioning claims administration services to the TPA and tracking and monitoring the pilot program’s performance. The amendment will cost $113,800 and result in a new agreement amount not to exceed $326,300.