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6Jun/100

Medtronic Shelling out the Big Bucks

This post was written by Josh

Medical device manufacturer Medtronic has voluntarily disclosed that it paid almost $16 million in royalties and consulting fees in the first quarter of 2010. Of this amount, the vast majority--$14.2 million--went to orthopaedic specialists or surgeons, with $13.9 million of that in the form of royalties for surgical inventions. More than 200 doctors were the beneficiaries of Medtronic's largess, including 13 in Medtronic's squeaky-clean home state of Minnesota. One orthopaedic surgeon in Tenessee received almost $4 million in royalties!

Investigators with Senate Finance Committee under Senator Chuck Grassley have been investigating Medtronic's relationship with several orthopaedic surgeons for years. In 2006, Medtronic agreed to pay the government $40 million to settle allegations that the company paid kickbacks to surgeons to get them to buy Medtronic products. The DOJ described Medtronic's relationships with doctors as “sham consulting agreements, sham royalty agreements and lavish trips to desirable locations” which the company offered to doctors between 1998 to 2003.

Medtronic makes big money off of the products it allegedly pays doctors to endorse. For example, Medtronic made $815 million in 2007 alone off of Infuse, a spinal product, which was the subject of a whistleblower lawsuit. With such enormous profits at stake, it is not surprising that device manufacturers like Medtronic pay fees to doctors and sponsor junkets.

Once again, all of this goes back to the ever-increasing role drug and medical device companies play in our lives. Health care is such a big business (emphasis on business) that the major players like Medtronic will keep shelling out what seems like big bucks for serious ROI. As more Americans become insured under the new health care bill and a whole new market opens for drugs and devices, the pecuniary carrot will be all the more enticing to these companies.

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

Tagged as: corporate fraud, drugs, False Claims Act, FCA, fraud, government, hospital, medicaid, medicare, Pharmaceutical, qui tam, whistleblower No Comments

2Jun/100

Military Contractor Fraud Triumvirate

This post was written by Josh

Three prime examples of military contractor fraud deserve attention today. Two put service members at serious risk of bodily harm or death, and all of them bilked tax payers.

In the first case, a subcontractor of Sikorsky agreed to pay $1.2 million to settle a FCA claim. Ceradyne, Inc., of Costa Mesa, CA, allegedly failed to ballistically test armor plating it installed near the pilot and copilot in Black Hawk helicopters. The Black Hawk is used by the Army, Navy, Air Force, and Marines. Ceradyne allegedly failed to conduct the tests between 1992 and 2006, so there is potentially a whole generation of Black Hawks out there that is not providing adequate protection for its crew members.

The second case also involves helicopters. This time, Bell Helicopter Textron realized that it (oops) overcharged the government for helicopters and services. Bell already paid more than $12.8 million in 2006 to settle its billing mistakes. Now, Bell must pay an additional $3.7 million to settle any claims the U.S. may have against the subsidiary Bell Helicopter Textron Canada Limited as a result of intra-company charges that led to more overbilling. This case comes under the umbrella of the National Procurement Fraud initiative, which is designed to identify this type of fraud early on. Unfortunately, military contractors are good at staying one step ahead of the government.

In the third leg of the military contractor fraud triumvirate is a case involving M24o and M249 machine guns. A former employee of defense contractor Northside Machine Company accused his employer of ordering him to approve gun parts that didn't meet quality standards for troops and then (surprise!) firing him for blowing the whistle. Northside provides trigger assemblies and other parts for M240s and M249s, which are widely used by the military. A federally funded research group found that 30% of troops surveyed reported that the M249 had simply stopped firing during combat, which is probably not the best thing when some insurgent is trying to take you out!

UPDATE: Maybe this should actually be called a quadumvirate! The Army has announced that it is recalling 44,000 advanced combat helmets manufactured by Hebron, OH-based ArmorSource LLC. Apparently the helmets (already issued to soldiers worldwide) do not meet military specs. So now, it looks like tax dollars are being spent to send soldiers out in helicopters with inadequate armor to fight with guns that don't shoot while wearing helmets that may not offer enough protection!

This article is brought to you by The Qui Tam Team, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

Tagged as: corporate fraud, False Claims Act, FCA, fraud, government, military, qui tam, whistleblower No Comments

26May/100

A Fraud By Any Other Name Would Be As… Expensive

This post was written by Josh

The False Claims Act provides for treble damages and a penalty between $5,500 and $11,000 for anyone who submits a false claim to the United States. With treble damages and penalties, committing fraud against the government can become a very expensive proposition. It's hard to see how high-level executives at the companies being sued in qui tam suits could think that fraud is a good way to do business, but this seems to be the logic that was followed in several cases.

In looking at the top 27 FCA cases, 93% of them have to do with some type of healthcare fraud. In fact, among the top 5 FCA cases, each one is related in some way to the healthcare industry.

At the top of the list is drug-making mastodon Pfizer. In the fall of 2009, Pfizer agreed to pay $2.3 billion to settle claims, including claims brought under the FCA. $1.3 billion of the settlement constituted criminal penalties. This penalty sounds like it would be the final straw for Pfizer, but when you consider Pfizer's 3rd quarter 2009 profit alone was $2.88 billion, you have to wonder whether even an enormous fine like this is enough to deter a drug company from potentially engaging in fraud. Pfizer was sued for allegedly marketing certain popular drugs like Bextra and Lipitor for unapproved uses. The company made huge profits off of these drugs, and legal experts are not convinced that fines will prevent drug makers from going down the same road in the future.

The FCA keeps drug companies on their toes, but it remains to be seen whether fraud will be completely eliminated. Our society does love its drugs--prescription drugs are so ubiquitous that they are even showing up in trace amounts in public drinking water supplies--and as long as profits outweigh fines, the temptation to engage in fraud to increase those profits will probably endure.