Our Recent Notable Cases

When evaluating a law firm it is important to consider whether the cases they list are cases they did or they are merely parroting recoveries by others. The cases we discuss here are cases in which our firm, together with our heroic clients, has recently completed settlement.

Nolan Auerbach cases break each year and we have a long history of successfully completed healthcare fraud qui tam cases. The following are descriptions of some of Nolan Auerbach’s completed cases:

Nolan Auerbach announced, for an unprecedented third time in one month, a nine-figure whistleblower recovery by its clients. In this settlement, pharmaceutical manufacturer Novartis Pharmaceuticals Corporation paid $237.5 million to resolve civil allegations that it unlawfully promoted its drug Trileptal for unapproved uses and that it paid illegal remuneration to healthcare providers to induce them to prescribe the company’s products. In addition, the company paid a $185 million criminal fine and to plead guilty to a misdemeanor charge of introducing misbranded drugs into interstate commerce. Nolan Auerbach represented three of the key whistleblowers in these cases, which were brought under the qui tam, or whistleblower, provisions of the False Claims Act. This settlement also resolves two other qui tam actions raising similar allegations. Click here to read the U.S. Department of Justice press release. For the Nolan Auerbach press release, click here.

Pharmaceutical manufacturer Forest Laboratories, Inc., and its subsidiary Forest Pharmaceuticals, Inc., paid $42.5 million to resolve allegations that they illegally sold the drug Levothroid, even though the FDA had never proven the drug to be safe or effective at that time. Nolan Auerbach represented the key whistleblowers in this case, which was brought under the qui tam, or whistleblower, provisions of the False Claims Act. This is the country’s largest False Claims Act recovery for allegations involving pharmaceutical companies selling unapproved drugs. This settlement also resolved two other qui tam actions, which, in total, resulted in a $149 million civil recovery for federal and state governments. In addition, Forest paid a $150 million criminal fine, forewent $14 million in disputed payments, and peld guilty to a misdemeanor charge of introducing this misbranded drug into interstate commerce. Click here to read the U.S. Department of Justice press release. For the Nolan Auerbach press release, click here.

Pharmaceutical manufacturer Allergan, Inc. paid $225 million to resolve civil allegations that it unlawfully promoted its drug Botox® Therapeutic for unapproved uses and that it paid illegal remuneration to healthcare providers to induce them to prescribe Botox Therapeutic. In addition, the company paid a $375 million criminal fine and pled guilty to a misdemeanor charge of introducing this misbranded drug into interstate commerce. Nolan Auerbach represented two of the whistleblowers in this case, which was brought under the qui tam, or whistleblower, provisions of the False Claims Act. This settlement also resolved two other qui tam actions raising similar allegations. For the Department of Justice press release, click here. For the Nolan Auerbach press release, click here.

Our clients’ cases against Schwarz Pharma and a subsidiary, Kremers Urban, resulted in a $22 million dollar recovery, generated from allegations that the Defendants submitted false quarterly reports to the government related to a pair of drugs, Deponit and Hyoscyamine Sulfate Extended Release (Hyoscyamine Sulfate ER). The Complaints alleged that Schwarz and Kremers misrepresented the regulatory status of both drugs and failed to advise CMS that these unapproved drugs did not qualify for coverage under federal healthcare programs.

St. Jude Medical, Inc., a leading medical device manufacturer, paid $16 million to resolve our client’s allegations that it paid kickbacks to physicians to prescribe its products. The Complaint maintained that St. Jude Medical made payments to doctors ostensibly for the collection of data in connection with post-market clinical studies of the company’s products; however, these payments were designed and used as a means of increasing sales of its devices over competitors, not as bona fide scientific research. The Complaint also alleged that St. Jude Medical shelled out payments to doctors for entertainment, tickets to sporting events, and other gifts and benefits. These alleged practices caused government health care programs to pay millions of dollars for prescriptions that were tainted by illegal kickbacks. Click here to read the Department of Justice press release. For the Nolan Auerbach press release, click here.

McAllen Hospitals, L.P., d/b/a South Texas Health System, a wholly owned subsidiary of Universal Health Services, Inc. entered into a Settlement Agreement pursuant to which it paid $27.5 million to resolve claims (see Complaint) concerning violations of the Stark and Anti-kickback laws. McAllen Hospitals, L.P., d/b/a South Texas Health System owns and/or operates multiple health care facilities in McAllen, Texas, including McAllen Medical Center, McAllen Heart Hospital, Edinburg Regional Medical Center, and the South Texas Behavioral Health Center. The case was originally filed in 2005 by our client, Bruce Moilan Sr. He received a $5.5 million relator share, 20% percent of the $27.5 million qui tam settlement. To read the Department of Justice Press Release, click here.

Select Medical Corporation paid $7.5 million to settle allegations that it paid suspect “Medical Director” payments to a number of Ohio physicians. Select operates over 100 long-term, acute-care hospitals, known as “LTACHs,” nationwide. As part of the settlement, Select Specialty Hospital System entered into a Corporate Integrity Agreement that mandates strict reporting and monitoring requirements.

KV Pharmaceutical Company, the parent company of now-defunct Ethex Corporation, paid $17 million to resolve allegations that Ethex continued to manufacture and market Nitroglycerin Extended Release Capsules and Hyoscyamine Sulfate Extended Release Capsules without FDA approval. Our client’s Complaint maintained that Ethex intentionally failed to notify the Centers for Medicare & Medicaid Services (CMS) that these medications were not covered outpatient drugs. This is the latest settlement from a decade-old qui tam action, alleging that dozens of small and mid-sized pharmaceutical companies have been allowed (and some continue to be allowed) to sidestep the FDA pharmaceutical approval process and manufacture and distribute unapproved pharmaceutical products, ultimately prescribed to Medicaid patients, jeopardizing the safety of millions of Americans and thwarting federal law. This multi-defendant lawsuit has led to the recovery of over 100 million dollars for the Medicaid Program.

Schering Plough Corporation and a related company paid $435 million regarding accusations that it improperly marketed drugs for unapproved uses and lied to the government about drug prices. Under the settlement, Schering Sales, Corp. pled guilty to conspiracy and paid a criminal fine of $180 million. Its parent company, Schering-Plough Corp., paid another $255 million to resolve civil aspects of the case, including our clients’ qui tam lawsuit, which, inter alia, alleged that Schering-Plough marketed drugs off-label for uses that had not been approved by the Food & Drug Administration. One drug was Temodar, a drug the FDA approved only to treat a rare type of brain tumor called anaplastic astrocytoma. The company also promoted the unapproved use of Intron A for the treatment of cancer on the surface of the bladder. Two of the three whistleblowers in this case were clients of Nolan Auerbach. Their recovery relates to the off-label marketing of Temodar, Rebetron and Intron A. The final relator share recovery by our two clients was over $12 million.

Victory Memorial Hospital agreed to a settlement to resolve claims that the hospital defrauded the Medicare program stemming from a Medicare overpayment to the hospital. In the qui tam complaint, our client alleged that Victory Memorial submitted cost reports for 1996 and 1997 that understated certain revenues for patient care, known as “charges.” This resulted in Victory Memorial having a higher Cost-to-Charge ratio for those years, which in turn resulted in Victory Memorial obtaining higher reimbursements from Medicare.

Other notable cases completed by Nolan Auerbach attorneys:

• Vencor, Inc. (now known as Kindred Healthcare), — one of the nation’s largest nursing home chains — and Ventas, Inc. — a related real estate investment trust — paid the United States $104.5 million to resolve civil claims that Vencor knowingly submitted false claims to Medicare, Medicaid, and TRICARE, the military’s health care program. Our courageous clients’ case recovery included more than $54 million for improper claims made on Vencor’s hospital Medicare cost reports. Our clients’ case was part of a global settlement which included the largest settlement under the civil False Claims Act based on failure to provide adequate health care at long term care facilities. According to the suit, Vencor inappropriately included on its Medicare costs report the revenue and the expenses of running a separate business. That business supplied its nursing homes with special contracted services such as respiratory therapy. Vencor was thus able to inflate both the revenue and expense lines at its hospitals which, under Medicare’s formulas, boosted its reimbursements from Medicare.
• Multiple DME companies and individuals have paid millions involving false claims for wheelchairs and other durable medical equipment. Recoveries and judgments exceeding $62 million have already been made in this case. While the Government intervention in this case was over 10 years ago, our client continues to receive Relator share payments.
• A New York City hospital paid $12 million to settle allegations that it knowingly received in error more than $14 million in two Medicare payments from Empire Blue Cross and Blue Shield relating to its GME program, and then failed to disclose them, as required by law. Our client received a multi-million dollar Relator share.
• A large medical equipment provider paid $1.75 million, to settle allegations that the company inappropriately violated TRICARE healthcare insurance requirements due to the “off-label” sales of one of its products. Our client received a sizeable Relator share in this case – one of the first off-label cases ever brought.
• Lifeline Health Care paid $3.1 million in settlement of a case concerning allegations of false claims made to federal health care programs for patients who did not qualify for home health care. Our client’s, the whistleblowers, were four concerned and courageous clinicians.
• Nova Southeastern University paid $4.1 million to settle our client’s lawsuit concerning false claims for psychologicial services. Our client had complained internally for years and no one listened. The settlement of the lawsuit vindicated our client and straightened out the university’s compliance issues.
• Long-term care pharmacy Remedi Seniorcare, Inc., paid $1.27 million to resolve the whistleblower lawsuit filed in Federal Court, in the District of Maryland, United States ex rel. Thompson v. Woodhaven Pharmacy Services, LLC d/b/a Remedi Seniorcare, Inc. This is a unique and important whistleblower case alleging that, instead of disposing unused medications, the pharmacy unlawfully recycled, repackaged, redistributed and re-billed thousands of drugs to Medicare and Medicaid beneficiaries. Click here to read the U.S. Department of Justice press release. For the Nolan Auerbach press release, click here.
• Eon Labs, Inc. became the first defendant to enter into a settlement agreement to resolve our client’s case against multiple defendants based upon the sale of unapproved drugs to Medicaid. Eon paid $3.48 million to resolve claims that it represented to CMS that is oral nitroglycerin products were Covered Outpatient Drugs, when the products were marketed without FDA approval and despite the FDA’s previous finding that there was a lack of evidence to support effectiveness.

Representative and ongoing, unsealed cases handled by Nolan Auerbach attorneys:

• On January 13, 2010, Nolan Auerbach announced the unsealing of a whistleblower case filed nearly a decade ago that exposed the illegal marketing of thousands of unapproved drugs in the U.S. market. The firm’s qui tam complaint alleges that numerous pharmaceutical companies repeatedly deceived the Government by falsely certifying that their unapproved drugs had passed the requisite FDA tests for safety and effectiveness, or otherwise met Medicaid drug approval standards. The Complaint maintains that these false certifications allowed the pharmaceutical companies to peddle their unapproved products to physicians of Medicaid patients and to wrongfully receive payments from Government Health Care Programs. As a result of this lawsuit, the federal government has already recovered nearly $100 million. The government has intervened in some of the allegations; the firm has decided to move forward with the civil prosecution of the remaining 23 pharmaceutical companies.

In February 2009, the Government intervened in our client’s case against Scios, Inc. and Johnson & Johnson regarding off-label marketing of the prescription drug Natrecor. The FDA approved Natrecor for “the intravenous treatment of patients with acutely decompensated congestive heart failure who have dyspnea [shortness of breath] at rest or with minimal activity.” Shortly after receiving this approval in 2001, the lawsuit maintains, Scios began an aggressive campaign to market Natrecor for scheduled, serial outpatient infusions for patients with less severe heart failure — a use not included in the FDA-approved label. These patients were prescribed Natrecor infusions for less than 6 hours on a scheduled basis over an extended period of time. Medicare does not cover drugs used for off-label uses unless such off-label use is established to be medically necessary. The federal healthcare programs — in particular, Medicare — paid substantial amounts for the serial outpatient off-label use of Natrecor. Damages are estimated in the hundreds of millions.