Wrist Slaps & More Guilt Admissions Topics of Healthcare Fraud Conference

Conference on Fraud and Abuse in the Sales & Marketing of Prescription Drugs and Medical Devices

It is common knowledge that the Department of Justice has recovered several billion dollars from health care providers through whistleblower lawsuits. The amounts recovered tend to be significantly lower than the unlawful profits made by the companies under scrutiny, but this is not the DOJ’s biggest problem today.

Arguably, the main focus of a recent Conference on Fraud and Abuse in the Sales & Marketing of Prescription Drugs and Medical Devices was the problem of the admission of guilt by investigated companies in the healthcare and pharmaceutical sectors.

Few Guilt Admissions in DOJ Healthcare Fraud Settlements

The DOJ is recovering taxpayer money by settling lawsuits and allowing companies to move about their usual business, more often than not, without demanding any admission of guilt, even when there is stark evidence of fraudulent behavior.

A dozen of DOJ lawyers who spoke at the American Conference Institute’s event seemed to categorically agree on the necessity of requiring admission of guilt when settling lawsuits in connection with fraudulent sales and marketing of prescription drugs and medical devices; a sentiment that seems to be shared by a substantial portion of the whistleblower community.

Whistleblower Thomas Mason: Slaps on the Wrist Send Weak Message

Last year, Thomas Mason, a whistleblower in a lawsuit against Health Management Associates said, the ball is in the court of the Department of Justice and its agencies. If hospital administrators see continued “slap on the wrist” fines, no criminal charges, and no admission of guilt, then they will continue to cross the line for higher profits. It is now up to the government to send a clear message to the medical community that unnecessary care or care tainted by kickbacks can be harmful to patients, wastes taxpayers’ money, and will be dealt with severely when detected.”

The government attorneys, who were, strictly speaking, expressing their personal opinions and not those of the DOJ, agreed that drug and device makers will increasingly be required to admit to a certain degree of wrongdoing in order to reach settlements.

NY AG’s Marie Spencer & Asst. U.S. Attorney Cunha Say More Guilt Admissions in Settlements Soon

Marie Spencer, a fraud specialist at the New York attorney’s general office was one of the speakers who referred to the issue. “We’re looking at having more admissions in our settlement agreements. More and more, we’re requiring that,” Spencer said.

According to Zachary Cunha, an assistant U.S. attorney in Rhode Island, the trend is going to be seen on a federal level as well. One of the cases mentioned as an example of the shift in settlement negotiations was the Novartis kickbacks case, which recently  settled for $390 million. As part of the settlement, Novartis admitted to have stopped working with pharmacies that weren’t dispensing enough of its prescription drugs and to offering bonus payments and steering patients to pharmacies that generated a higher number of refills. In the words of US Attorney Preet Bharara, “Novartis turned pharmacies that should have been disinterested health care providers into a biased salesforce for the drug maker,” and this is precisely what Novartis admitted to doing.

While we can expect to see more admissions in this type of whistleblower lawsuits in the future, the DOJ lawyers at the conference did not predict admissions to the full scope of the accusations at hand. “At least so far, the admissions that have been sought and given have been to very specific conduct, as opposed to blanket liability,” Cunha explained.

It remains to be seen how the onset of the new negotiation criteria will affect the development and evolution of whistleblower lawsuits. Certainly, in terms of deterring criminal behavior by pharmaceutical companies and health care providers, it will take several examples like the settlement with Novartis to ensure that companies will think twice before embarking in those infamous kickback schemes and other types of fraudulent behavior.

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