May 16, 2013 – Two recent major victories for the U.S. Government showcase the importance of the False Claims Act as a pivotal tool in combating healthcare fraud.

Tuomey Healthcare System

On May 8, 2013, a South Carolina jury concluded that Sumter- based Tuomey Healthcare System violated the False Claims Act by submitting tens of thousands of illegal bills to Medicare. The hospital now faces up to $357 million in potential False Claims Act liability.

The physician whistleblower who initiated the case alleged that the hospital was financially rewarding doctors for referring patients to the hospital. This conduct violates both the False Claims Act and the Stark Laws.

Interestingly, this was the second go-around for the Department of Justice and Tuomey. In 2010, a jury, considering essentially the same evidence, concluded that the Tuomey violated the Stark Law. The trial judge, in that case, imposed a $45 million penalty against the hospital. An appeal was taken and the 4th Circuit and the Court ordered that the case be retried, resulting in the May 8th verdict.

Tuomey is unique in that False Claims Act cases are rarely tried, let alone twice.

Ranbaxy

On May 12, 2013, generic drug maker Ranbaxy agreed to pay the U.S. Government $500 million to resolve allegations that it sold adulterated versions of several of its drugs which were manufactured in two of its Indian plants. The $500 million settlement includes $150 million paid to resolve criminal fines and the forfeiture and $350 million to resolve civil claims brought under the False Claims Act and related State laws.

The federal Food, Drug, and Cosmetic Act (FDCA) prohibit the introduction or delivery for introduction into interstate commerce of any adulterated drug. With regard to the Ranbaxy India-based plants in question, in violation of the FDCA, Ranbaxy admitted to having incomplete testing records and an inadequate program to assess the stability characteristics of certain drugs.

In its False Claims Act complaint, the U.S. Government alleged that Ranbaxy “manufactured, distributed, and sold [certain] drugs whose strength, purity, or quality differed from the drug’s specifications or that were not manufactured according to the FDA-approved formulation.” Further, as a result, “Ranbaxy knowingly caused false claims for those drugs to be submitted to Medicaid, Medicare, TRICARE, the Federal Employees Health Benefits Program, the Department of Veterans Affairs, and the U.S. Agency for International Development (USAID), which administers the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR).”

This case was brought by the Department of Justice as a result of a whistleblower complaint. A former Ranbaxy executive brought the case under the False Claims Act in 2007.

The press release from the Department of Justice describing Ranbaxy’s conduct and the settlement in greater detail can be found at: http://www.justice.gov/opa/pr/2013/May/13-civ-542.html

If you have information regarding pharmaceutical fraud, healthcare fraud, or government fraud occurring anywhere in the United States, contact a whistleblower attorney at Levy Konigsberg LLP at (800) 315-3806, or toll-free at 1-800-988-8005, for a free consultation.

IMPORTANT: If you believe you have evidence of fraud against the government, securities fraud, commodities fraud, or IRS or New York State tax fraud, contact us for a free, confidential consultation by calling our 24/7 toll-free hotline at 1-800-988-8005 or by submitting an email inquiry (see form above).

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