California Settlement with Warner Chilcott Sets National Precedent for Combatting Fraud in Private Health Plans

Dec 18, 2015, 14:25 ET from The Simmer Law Group

WASHINGTON, Dec. 18, 2015 /PRNewswire-USNewswire/ -- The Simmer Law Group (SLG) announced today that its clients, three former employees of the Ireland-based drug maker Warner Chilcott, have reached a settlement with their former employer to resolve claims they brought under the California Insurance Fraud Prevention Act (IFPA). The California Department of Insurance announced the settlement in a press release today. The Simmer Law Group, Seeger Weiss and MoloLamken represented the three whistleblowers in the case.

The California action is related to the global settlement announced by the U.S. Justice Department (DOJ) on Oct. 29 in which Warner Chilcott, now part of Allergan, pleaded guilty to health care fraud and agreed to pay $125 million to resolve civil and criminal liability arising from the illegal promotion of the drugs Actonel®, Asacol®, Atelvia®, Doryx®, Enablex®, Estrace® and Loestrin®. The federal civil action addressed alleged violations of the Anti-Kickback Statute and HIPAA privacy protections that caused false claims to be submitted to government health insurance programs such as Medicare and Medicaid. DOJ also issued indictments for several former Warner Chilcott executives, including the company's former president, as well as for a Massachusetts physician who is accused of having accepted financial payments.

"The vast majority of doctors in America serve both patients in government health plans as well as those in private managed care plans, so a drug marketing scheme that influences a doctor's prescribing decisions will impact the cost of medications for both government programs and private health insurance plans alike," said Scott Simmer, the whistleblowers' lead counsel who began investigating health care fraud two decades ago while heading litigation for a major health insurer.

"The federal False Claims Act allows whistleblowers to sue for fraud related to government health plans; but only two states - California and Illinois – have statutes that allow whistleblowers to bring claims alleging illegal kickbacks to health care providers for the purpose of defrauding private health insurance plans. It is a shame more states don't follow the example set by these two," said Simmer.

Similar to the qui tam provisions of federal and state false claims acts, California's IFPA allows private citizens to sue those who commit insurance fraud and receive a share of the recovery. The whistleblower's share of a federal recovery in a non-intervened case is by statute 25 to 30%. Under California's IFPA, the relator's share is between 40% and 50% when the state does not intervene.

"The California legislature explained right in the statute that health care fraud adversely affects everyone in the state by increasing health care costs unnecessarily," said Simmer. "A whistleblower who sues under the IFPA is helping to control health care costs for all Californians."

"This case really should get the attention of state insurance commissioners around the country. To put things in perspective, the federal False Claims settlement returned a net of around $2.3 million to California's Medicaid program, but this settlement will bring in a net of $11.8 million to the state's general fund," Simmer said. "Most importantly, drug companies have received a clear message not to engage in drug marketing fraud in the state of California."

About the Simmer Law Group PLLC
Based in Washington, DC, the Simmer Law Group PLLC represents whistleblowers nationwide who have filed cases alleging fraud that financially impacted state and federal governments in the areas of health care, for-profit education and government contracting; as well as insurance plans in large scale recovery actions.


SOURCE The Simmer Law Group