Teva Pharmaceuticals Agrees To Pay $54 Million To Settle Shepherd, Finkelman, Miller & Shah, LLP False Claims Act Qui Tam Case

NEW YORK, Jan. 6, 2020 /PRNewswire/ -- James E. Miller of Shepherd, Finkelman, Miller & Shah, LLP ("SFMS")(www.sfmslaw.com), Lead Litigation Counsel for plaintiffs-relators, Charles Arnstein and Hossam Senousy (the "Relators" or "Whistleblowers"), announced today that Teva Pharmaceuticals ("Teva") has agreed to settle alleged violations of the False Claims Act based on a complaint filed by the Whistleblowers in 2013 asserting that Teva used "speaker programs" to pay physician speakers unlawful compensation in violation of the False Claims Act, 31 U.S.C. §§ 3729-3733, and the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b.

The Whistleblowers were represented by Shepherd, Finkelman, Miller & Shah, LLP ("SFMS"), and its co-counsel, Eric L. Young of McEldrew Young (https://www.mceldrewyoung.com), David J. Caputo and Joseph Trautwein of Youman & Caputo, LLC (https://youmancaputo.com), and Heidi A. Wendel (https://heidiwendellaw.com). 

"I would like to take this opportunity to express my sincere appreciation for the courageous actions of Mr. Arnstein and Mr. Senousy in stepping forward to challenge Teva's alleged use of 'speaker programs' to influence the prescription writing of neurologists with respect to Azilect (a Parkinson's Disease drug) and Copaxone (a Multiple Sclerosis drug)," said James E. Miller. 

Mr. Miller also stated: "In addition to thanking the entire SFMS team that worked on this case, including Natalie Finkelman Bennett, Jillian M. Boyce, Jonathan Dilger, Betsy Ferling Hitriz, Nicolas Lussier, Bruce Parke, Laurie Rubinow, James C. Shah and Nathan Zipperian, as well as our highly skilled co-counsel, Eric L. Young, and David J. Caputo, Joseph Trautwein and Heidi A. Wendel, I would like to take this opportunity to state that it was a pleasure and honor to work closely with the Office of Geoffrey S. Berman, the United States Attorney for the Southern District of New York, in resolving this important matter.  I would like to specifically thank Pierre G. Armand, the Co-Chief of Civil Frauds Unit for the U.S. Attorney's Office for the Southern District of New York, and Assistant U.S. Attorneys, Li Yu and Jessica Hu, for their diligence, hard work and guidance on behalf of the United States of America.  I also would like to thank Carrie L. Bashaw, Senior Counsel of the State of Washington Medicaid Fraud Control Unit and Kathryn M. Heim Harris, Special Assistant Attorney General of the New York Medicaid Fraud Control Unit, for their persistence and hard work on behalf of the various states participating in the settlement." 

According to the complaint, physicians who participated in alleged sham speaker programs wrote prescriptions for the two drugs – Copaxone and Azilect - that were filled at pharmacies across the country.  After filling and dispensing the prescriptions, the pharmacies then submitted claims for reimbursement to various government-funded health care programs.  The pharmacies' claims resulted in payments by the government for prescriptions that were allegedly induced through fraud, i.e., Teva's alleged illegal payments to physicians who wrote the prescriptions.  Since Teva's actions allegedly caused the submission of false claims to the government via the dispensing pharmacies, those actions were alleged to constitute violations of the False Claims Act and the Anti-Kickback Statute ("AKS" ), 42 U.S.C. § 1320a-7b, which criminalizes, among other things, "knowingly or willingly" offering or paying a person "remuneration," in the form of  kickbacks, bribes, or rebates, to "induce" that person to "recommend" the purchase of a drug covered by a "Federal health care program." 42 U.S.C. § 1320a-7b(b)(2).   

Background

SFMS and McEldrew Young filed the original qui tam complaint on behalf of Mr. Arnstein and Mr. Senousy in May 2013.  The complaint alleged that Teva provided bogus honoraria or speaking fees to physicians for participation in numerous sham speaker programs in connection with the drugs Azilect and Copaxone.  On March 12, 2015, the Court issued an Order unsealing the complaint and permitting Mr. Arnstein and Mr. Senousy to prosecute claims on behalf of the United States and various states.  Teva's attempt to dismiss the Whistleblowers' case was unsuccessful and counsel for the Whistleblowers engaged in substantial discovery, including the review of millions of pages of documents, scores of depositions of Teva employees and former employees and expert discovery, including the production by the Relators of expert reports by several world renowned experts that they retained to support their claims.  

Summary Judgment Motion

On February 27, 2019, the Honorable Colleen McMahon, the Chief Judge for the United States District Court for the Southern District of New York, issued a thoughtful and comprehensive Memorandum Decision and Order denying Teva's motion for summary judgment.  In a detailed, seventy-page opinion, Judge McMahon rejected numerous arguments asserted by Teva and ruled that the case would proceed to trial. 

In denying summary judgment, Chief Judge McMahon rejected Teva's argument that Relators were required to produce evidence of a quid pro quo arrangement: "The statute also does not require evidence of negotiations with the party receiving the kickback. Rather, the payor must offer or pay 'with the intent to gain influence over the reason or judgment of a person making referral decisions.'" United States v. Teva Pharm. USA, Inc., No. 13 CIV. 3702 (CM), 2019 WL 1245656, at *10 (S.D.N.Y. Feb. 27, 2019)("Teva II").  Chief Judge McMahon also rejected the argument that Teva's written compliance policies could be used to shield it from liability: "The question is whether these policies are worth the paper they are written on."  Teva II at * 12 (emphasis added).  Importantly, Chief Judge McMahon found that "Relators … have introduced substantial evidence that Teva did, in fact, track speakers' prescription writing," and that "[s]ales representatives linked prescriber habits with their retention as paid speakers for Teva."  Teva II at * 13.  Chief Judge McMahon noted that "Teva has no real answer to this evidence," and that the evidence included "dozens of examples of sales representatives using speaker prescriptions to see whether the programs were producing tangible results and to suggest working more closely with high volume prescribing speakers."  Teva II at * 14.  In denying summary judgment, Chief Judge McMahon also cited to the substantial evidence developed by counsel for Relators in discovery:

"Relators have also submitted evidence showing that the same programs were repeatedly presented to the same attendees. For example, they have introduced evidence showing 1,500 examples of health care providers' attending three or more events related to the same drug within six months, (Rels. 56.1 ¶ 75 (citing PX177) ); paid speakers who attended speaker programs on the same topic for which they also serve as a speaker, (Rels. 56.1 ¶ 74 (citing PX166; PX172; PX185; and PX193) ); and health care providers' "rotating" by attending sequential Teva programs as the speaker at one and audience member at the other, (id. (citing PX169)).

Teva II at * 16.  Chief Judge McMahon likewise rejected Teva's argument that Relators' evidence of sham speaker programs was insufficient, noting that "Relators submit that Teva routinely carried out speaker program events in a sham manner, as evidenced by the location at which many programs were held, the amount of alcohol served, and the fact that the audience was frequently made up of either Teva representatives, speakers themselves, repeat attendees, or physicians' family members," that "Relators … offer considerable data showing that events not qualifying as useful … occurred regularly," that, "[f]or that data, Teva has no answers" and, as a result, "Relators have raised a genuine issue of material fact that Teva structured its speaker programs in a sham manner."  Teva II at * 20–21 (emphasis added).

Settlement

"We believe that this settlement will help to ensure that when a physician chooses a prescription drug for his or her patient, that choice will be motivated solely by the best interests of the patient and not tainted by any improper financial considerations," said James E. Miller.  Mr. Miller echoed the comments of co-counsel, Eric L. Young, who added, "We were inspired by the level of our clients' commitment to ensuring that Teva was held to account for its alleged misconduct.  Today's result is also a victory for the American taxpayers who are the ultimate victims when unscrupulous individuals and companies defraud the government, oftentimes with impunity."

As SFMS's Managing Partner, James E. Miller has a distinguished track record of success.  Mr. Miller has tried over thirty cases to successful verdict as lead counsel and has recovered more than $3 billion dollars for his clients.  SFMS represents whistleblowers throughout the United States and on a global basis.  Many whistleblower cases are brought under the False Claims Act, which allows a private individual, known as a relator, to file a lawsuit on behalf of the United States government against a company that has perpetrated a fraud against the government.  If a relator successfully recovers funds on behalf of the government, he or she may receive a reward of up to thirty percent (30%) depending on the circumstances of the case.  SFMS has taken the lead in prosecuting some of the most important and significant cases in the United States regarding "speaker programs" and efforts by pharmaceutical companies and medical device manufacturers to influence the behavior of physicians, prescribers and other providers through allegedly unlawful payments.

Case citation: United States ex rel. Arnstein and Senousy v. Teva Pharmaceuticals USA, Inc., No. 1:13-cv-03702-CM-OTW (S.D.N.Y.)

About SFMS

Shepherd, Finkelman, Miller & Shah, LLP (www.sfmslaw.com) has obtained billions of dollars in recoveries for its clients since its founding in 2002. Our attorneys have attended some of the best law schools in the country and have extensive experience in litigating cases against large and powerful companies. We maintain eight offices in the United States and two offices in Europe to serve our worldwide clients.  SFMS has handled some of the most significant whistleblower cases in the United States and is increasingly recognized as one of the "go to" law firms when a whistleblower case needs to be litigated to trial.

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