government`s complaint

Transcription

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
UNITED STATES OF AMERICA, THE
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STATES OF CALIFORNIA, DELAWARE,
)
FLORIDA, GEORGIA, HAWAII, ILLINOIS, )
INDIANA, MASSACHUSETTS, MICHIGAN, )
MONTANA, NEVADA, NEW HAMPSHIRE, )
NEW JERSEY, NEW MEXICO, NEW YORK, )
NORTH CAROLINA, OKLAHOMA,
)
RI:IODE ISLAND, TENNESSEE, TEXAS
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VIRGINIA, WISCONSIN and THE DISTRICT)
OF COLUMBIA,
)
)
)
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Plaintiffs,
)
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)
)
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SANOFI-AVENTIS U.S., INC. and
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SANOFI-AVENTIS U.S., LLC,
)
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Defendants. )
)
ex rel. MARK GIDDARIE,
CIVIL ACTION.
COMPLAINT AND
DEMAND FOR JURY
TRIAL
FILED UNDER SEAL
PURSUANT TO
31 U.S.C. § 3730(b)(2).
INTRODUCTION
1.
Plaintiff-Relator Mark Giddarie ("Relator"), on his own behalf and on
behalf of the United States of America (the "federal government"), and on behalf of the
State of California, the State of Delaware, the State of Florida, the State of Georgia, the
State of Hawaii, the State of Illinois, the State of Indiana, the Commonwealth of
Massachusetts, the State of Michigan, the State of Montana, the State of Nevada, the
State of New Hampshire, the State of New Jersey, the State of New Mexico, the State of
New York, the State of North Carolina, the State of Oklahoma, the State of Rhode Island,
the State of Tennessee, the State of Texas, the Commonwealth of Virginia, the State of
Wisconsin and the District of Cotmnbia (the "relevant states"), brings this qui tam action
against the defendants, sanofi-aventis, U.S., Inc. and sanofi-aventis, U.S., LLC.
2.
Relator brings this action against the defendants pursuant to the federal
False Claims Act, 31 U.S.C. 8§ 3729, et seq. (the "FCA"), the Medicare and Medicaid
Anti-Kickback Statute, 42 U.S.C. 98 1320a-7a and 1320a-7b (the "Anti-Kickback
Statute"), and the Stark Law, 42 U.S.C. § 1395nn.
3.
Relator also brings this action against the defendants pursuant to the
California False Claims Act, Cal. Govt. Code 99 12650, et seq., the Delaware False
Claims and Reporting Act, 6 Del. Code 99 1201, et seq., the Florida False Claims Act,
Fla. Stat. 99 68.081, et. seq., the Georgia State False Medicaid Claims Act, Ga. Code 99
49-4-168, et. seq., the Hawaii False Claims Act, Haw. Stat. 99 661-21, et. seq., the
Illinois Whistleblower Reward and Protection Act, 740 Ill. Comp. Stat. 89 175/1, et seq.,
the Indiana False Claims and Whistleblower Protection Act, Ind. Code 98 5-11-5.5, et
seq., the Massachusetts False Claims Act, Mass. Gen. Laws c. 12, 99 5A, etseq., the
Michigan Medicaid False Claim Act, Mich. Stat. 99 400.601, et seq., the Montana False
Claims Act, Mont. Stat. § § 17-8-401, et seq., the Nevada False Claims Act, Nev. Stat. § §
357.0i0, et seq., the New Hampshire False Claims Act, N.H. Rev. Stat. 8§ 167:61-b, et
seq., the New Jersey False Claims Act, N.J. Stat. 99 2A:32C-1, et seq., the New Mexico
Fraud Against Taxpayers Act, N.M. Stat. 98 44-9-1, et seq., the New York False Claims
Act, N.Y. State Fin. Law 98 187, et seq., the North Carolina False Claims Act, N.C. Gen.
Stat. 89 1-605, etseq., the Oklahoma Medicaid False Claims Act, 63 Okla. Stat. 89 5053,
etseq., the Rhode Island State False Claims Act, R.I. Gen. Laws 99 9-1.1-1, etseq., the
Tennessee Medicaid False Claims Act, Tenn. Code § § 71-5-181, et seq., the Texas
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Medicaid Fraud Prevention Law, Tex. Hum. Res. Code §9 36.001, et seq., the Virginia
Fraud Against Taxpayers Act, Va. Code 99 8.01-216.1, et seq., the Wisconsin False
Claims for Medical Assistance Act, Wis. Stat. 99 20.931, et seq., and the District of
Columbia Procurement Reform Amendment Act, D.C. Code 99 2-308. t 3, et seq.
(collectively, the "State FCAs").
4.
Relator seeks civil penalties, damages, declaratory relief, injunctive relief
and such other relief as is available under the FCA and/or the State FCAs, and demands a
trial by jury for all claims for which the right to a jury trial is authorized.
5.
This case arises from the defendants’ unlawful participation in (a) the
presentment to the federal government and the relevant states of false or fraudulent
claims for payment under Federal health care programs relating to the prescription
medication Hyalgan, (b) the malting or use of false records or statements material to the
false or fraudulent claims relating to the prescription medication Hyalgan, and (c)
conspiracies to violate the FCA with respect to the prescription medication Hyalgan.
6.
As used in this complaint, the term "Federal health care programs" shall
have the same meaning as defined in 42 U.S.C. 9 1320a-7b(f), and it therefore includes
Medicare, Medicaid, TR~CARE (administered by the Department of Defense through its
component agency, Champus), CHAhdl:’VA (administered by the Department of Veterans
Affairs), the Federal Employee Health Benefits Program (administered by the United
States Office of Personnel Management), the Railroad Retirement Medicare program
(administered by the Railroad Retirement Board), and the Indian Health Service
(administered by the Department of Health and Human Services).
JURISDICTION AND VENUE
7.
This Court has jurisdiction under 28 U.S.C. § 1331, 28 U.S.C. § 1345, 31
U.S.C. § 3730 and31U.S.C. § 3732. Pursuant to 28 U.S.C. § 1367 and31 U.S.C. §
3732(b), this Com’t has supplemental jurisdiction over the claims brought under the State
FCAs.
8.
Venue is proper in this dista-ict pursuant to 31 U.S.C. § 3732(a) because
the defendants transact business in this district and have committed numerous acts
proscribed by 31 U,S.C. § 3729 in this district.
PARTIES
Plaintiff-Relator Mark Giddarie is an individual residing in Roswell,
Georgia.
10.
Defendant sanofi-aventis U.S., Inc. is a Delaware corporation with its
corporate headquarters located at 300 Somerset Corporate Boulevard,’ Bridgewater, New
Jersey.
11. Defendant sanofi-aventis U.S., LLC is a Delaware company with its
corporate headquarters located at 55 Corporate Drive, Bridgewater, New Jersey.
12. Defendants sanofi-aventis U.S., Inc. and sanofi-aventis U.S., LLC
(together, "Defendants") are wholly-owned subsidiaries of sanofi-aventis SA, a French
company. Defendants conduct business throughout the country, including Massachusetts.
FACTUAL ALLEGATIONS
A. Overview
13. Defendants are affiliated with one of the largest pharmaceutical companies
in the world, and they employ approximately 15,000 people in the United States.
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14. Since January 1, 2001, after terminating a co-promotion agreement that
had been entered into with OrthoLogic Corporation in 1997, Defendants have been
responsible for promoting, marketing and selling Hyalgan in the United States.
15. Defendants’ Orthopedic Specialty Group, which later became known as
the Injectable Sales Group (the "ISG"), specialized in the promotion of Hyalgan and
other so-called °°injectable" devices. In 2005, there were approximately 110 sales
representatives in the ISG.
16. In 2003, in response to concerns about improper practices of
pharmaceutical companies like those alleged in this complaint, the Office of Inspector
General of the Department of Health and Human Services (the "OIG") ~°identified three
major potential risk areas for pharmaceutical manufacturers: (1) integrity of data used by
state and federal governments to establish payment; (2) kickbacks and other illegal
remuneration; and (3) compliance with laws regulating drug samples." OIG Compliance
Program Guidance for Pharmaceutical Manufacturers, 68 Fed. Reg. 23731-01, at 23732
(May 5, 2003).
17. Beginning no later than 2005 and continuing until at least October 2009,
Defendants systematically provided physicians with large numbers of free samples of
Hyalgan on a regular basis specifically for the purpose of inducing physicians to buy
Hyalgan and bill Federal health care programs, including Medicare and Medicaid, for
such samples.
18. As a consequence of Defendants’ acts and practices, the federal
government and the relevant states have expended a considerable amount of money
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through Federal health care programs by reimbursing physicians for their purchases of
Hyalgan and for their services in administering Hyalgan.
19. During the relevant period that Defendants were providing physicians with
illegal kickbacks in the form of free samples of Hyalgan, Defendants negotiated
settlements in two, unrelated FCA cases and entered into, and were operating under, a
Corporate Integrity Agreement (the "CIA") with the OIG.
20. On or about September 10, 2007, Defendants entered into a settlement
with the U.S. Department of Justice to resolve a FCA case relating to the alleged failure
of one of Defendants’ predecessor companies to provide accurate Average Wholesale
Prices for the prescription drug Anzemet, which prices were used for reimbursement
purposes under Federal health care programS. Pursuant to this settlement, Defendants
paid over $190 million and agreed to enter into the CIA.
21. On or about May 28, 2009, Defendants entered into a settlement with Ne
U.S. Department of Justice and the U.S. Attorney’s Office for the District of
Massachusetts to resolve a FCA case involving allegations that one of Defendants’
predecessor companies knowingly misrepresented to Medicaid the best price paid by
commercial customers for the prescription drugs Azmacort, Nasacort and Nasacort AQ,
which prices were used to establish rebates that would be owed to the states under
Medicaid. Pursuant to this settlement, Defendants paid $95.5 million and entered into an
Addendum to the CIA
22. Pursuant to the CIA and the Addendum thereto, which remain in force
until August 30, 2012, Defendants are obligated, inter alia, to::
a.
report accurate average sales prices and average manufacturer
prices for its drugs covered by Medicare and other federal health care programs;
b.
report accurate best price information for drugs covered by
Medicaid and other health care programs;
c.
establish a "U.S. Code of Business Conduct" that set forth
Defendants’ "commitment to full compliance with all Federal health care program
requirements, including the commitment to comply with all requirements relating to
Government Pricing and Contracting Functions, and to promote, sell, and market
Government Reimbursed Products... in accordance with Federal health care program
requirements[,]"; and
d.
report to OIG "anything that involves.., a matter that a reasonable
person would consider a probable violation of criminal, civil, or administrative laws
applicable to any Federal health care program for which penalties or exclusion may be
authorized .... "
B. Osteoarthritis and the Elderl~r
23. Osteoarthritis ("OA"), also referred to as degenerative joint disease, is a
chronic condition characterized by the breakdown of the cartilage that cushions the joint.
As a consequence of the cartilage disintegration, the bones in the joint rub together,
which causes pain and stiffness. There is no lmown cure for OA.
24. OA is the most common type of arthritis suffered by Americans, and OA
of the knee is the most common form of lower extremity OA. A recent study concluded
that the risk of developing OA of the knee by age 85 "to be nearly 1 in 2 overall, more
than 1 in 2 among those with history of a knee injury, and nearly 2 in 3 for obese
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persons." Louise Murphy, et al., Lifetime Risk of Symptomatic Knee Osteoarthritis, 59
Arthritis & Rheumatism, No. 9, 1207-1213, at 1210 (2008).
25. As Defendants have trained their ISG sales representatives, "the
prevalence [ofOA] is far from evenly distributed across age groups. The estimated
prevalence is 1% in individuals younger than 30 years old, nearly 10% in those over 40,
and more than 50% in persons over the age of 60."
26. "OA has a formidable effect on the burden of disability and dependence
among older Americans and .was second only to chronic heart disease as the primary
diagnosis leading to adults’ [sic] receiving Social Security Disability payments." Reva C.
Lawrence, et al., Estimates of the Prevalence of Arthritis and Selected Musculoskeletal
Disorders in the United States, 41 Arthritis & Rheumatism, No. 5, 778-799, at 780
(1998).
C. Hyal~an
27. Hyalgan (Sodium Hyaluronate Injection) is a viscous solution that is
extracted from rooster combs and injected directly into a patient’s knee to relieve pain
from OA.
28. The United States Food and Drug Administration ("FDA") approved the
sale and distribution of Hyalgan within the United States on May 28, 1997. However,
Hyalgan "has been in clinical use in Europe since 1987." Hyalgan Product Label.
29. FDA specifically approved Hyalgan as a Class III medical device that "is
indicated for the treatment of pain in osteoarthritis (OA) of the knee in patients who have
failed to respond adequately to conservative nonpharmacologic therapy, and to Simple
analgesics, e.g., acetaminophen." Hyalgan Product Label.
30. "A treatment cycle [ofHyalgan] consists of five injections given at weekly
intervals." Hy, algan Product Label.
D. Government Reimbursement for Hyal~an
31. As explained in one of Defendants’ training manuals for their ISG sales
representatives::
Hyaluronates and related products..., in their clinical usage, are generally
classified as devices by the... FDA .... Other U.S. health agencies,
however, classify HYALGAN as a drug. For example, the Health Care
Financing Administration (HCFA)[now named the Centers for Medicare
and Medicaid Services (°°CMS")] - the federal agency that administers the
Medicare, Medicaid, and Child Health Insurance Programs - classifies
HYALGAN as a drug and reimburses accordingly.
32. " Under Federal health care programs, such as Medicare and Medicaid,
physicians are reimbursed not only for the cost of Hyalgan, but also for their services in
administering Hyalgan. As Defendants have further advised physicians, °’[i]f another
professional service is provided during the same visit, the physician may be able to
charge for an office visit as well."
33. The reimbursement rates for Hyalgan under Federal health care programs,
such as Medicare and Medicaid,_aze_basedAmp_a~on pricing data that Defendants are
obliged to report.
34. As Defendants’ Hyalgan Reimbursement Guide explained, ’°[s]ince
January 1, 2005, the reimbursement methodology for most Medicare-covered drugs and
biologics [including Hyalgan] has been based on 106% of ASP [the Average Sales Price].
¯.. In some states, Medicaid reimburses physicians for HYALGAN® on the basis of the
drug’s AWP [Average Wholesale Price], or invoice price. Some states may also base
drug reimbursement on a percentage of the ASP."
35. Under Federal health care programs, such as Medicare and Medicaid, each
drug that qualifies for reimbursement is assigned a specific reimbursement code
established under the Healthcare Common Procedure Coding Systems.
36. Beginning in 2002, Hyalgan has shared the same Medicare reimbursement
code (commonly referred to as the "J-Code") with a competitor’s product, Supartz. In
2001, FDA approved Supartz for sale in the United States, and it has been marketed by
Smith & Nephew, Inc. since that time. Supartz is chemicallyidentical to Hyalgan and
has the same indicated use as Hyalgan.
37. From January through June 2002, the Hyalgan/Supartz reimbursement
code was J7316, and from June through December 2002, the relevant code was changed ~
to Q3030. Beginning in 2003 and continuing until 2008, the Hyalgan!Supartz
reimbursement code was J7317. From 2008 until at least 2009, the Hyalgan/Supartz
reimbursement code was J7321.
38. From 2002 through 2009, there has been only one Medicare
reimbursement amount for any given code. The amount reimbursed under the J-Code
shared by Hyalgan and Supartz was derived by taking the average sales price of both
products. As a consequence, physicians received the same reimbursement amount from
Medicare whether they used Hyalgan or Supartz, even though the price that physicians
actually paid for Hyalgan (not including the provision of free samples) was almost
always higher than the price they paid for Supartz.
39. Prior to 2002, Hyalgan had enjoyed its own J-Code (i.e., J7315), which
permitted Defendants to have control over the rate at which Medicare would reimburse
physicians for their purchases of Hyalgan.
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40. With the introduction of Supartz to the market and the accompanying loss
of control over the reimbursement rate given the shared J-Code, Defendants made
repeated attempts in 2004~ 2005 and 2006 to convince CMS to assign Hyalgan its own JCode. While making such attempts, Defendants pursued a strategy of maintaining the
price for Hyalgan at a relatively high level in order to prevent the Medicare
reimbursement rate for the Hyalgan/Supartz J-Code from spiraling downwards. During
sales meetings and conference calls throughout the period in question, Defendants’
marketing department informed the ISG sales representatives that the price for Hyalgan
would be tied to the then existing Medicare reimbursement rate.
41. As a result of the shared J-Code and Defendants’ reluctance to lower its
stated price for Hyalgan, the ISG sales representatives were placed at a distinct
competitive disadvantage in attempting to sell a virtually identical product for a higher
price.
42. However, unlike their competitors, such as the Supartz sales
representatives, Defendants’ ISG sales representatives were provided with hundreds of
thousands of Hyalgan samples to use in promoting Hyalgan between 2005 and 2009.
E. The Prescription Dru~ Marketing Act
43. The Prescription Drug Marketing Act 21 U.S.C. §§ 353, et seq., (the
"PDMA"), governs the distribution of drug samples.
44. The PDMA permits sales representatives to distribute drug samples to
licensed physicians, but only upon the signed written request from the licensed physician
for the drug samples. 21 U.S.C. § 353(d)(3)(A); 21 C.F.R. § 203.31. Such written
requests, which have to be received before the drug samples are delivered, must, inter
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alia, identify (a) the physician, (b) the quantity of the particular drug samples requested,
and (c) the date of the request. 21 U.S.C. § 353(d)(3)(A); 21 C.F.R. § 203.31(a)(1) and
(b).
45. "Manufacturers or authorized distributors of record shall not distribute
drug samples on the basis of open-ended or standing requests, but shall require separate
written requests for each drug sample or group of samples." 21 C.F.R. § 203.35.
46. Physicians are required to sign receipts for all drug samples received from
sales representatives. 21 C.F.R. § 203.31(a)(3) and (c). Such receipts must, inter alia,
identify (a) the physician or the physician’s designee who acknowledges the delivery of
the drug samples, (b) the quantity of the particular drug samples delivered, and (c) the
date of the delivery. 21 C.F.R. § 203.31(c)(1).
47. Pursuant to the PDMA, Defendants are required, inter alidz, to maintain
detailed records of (a) all inventories of drug samples, (b) all drug samples distributed to
physicians, (c) all sales representatives who distributed drug smnples to physicians, and
(d) all of the written requests for drug samples made by physicians. 21 U.S.C. §
353(d)(3)(C); 21 C.F.R. § 203.31(d) and (e).
48. The PDMA mandates that °’[n]o person may sell, purchase, or trad~ or
offer to sell, purchase, or trade any drug sample." 21 U.S.C. § 353(c)(1).
F. The Anti-Kickback Statute and The Stark Law
49.. The Medicare and Medicaid Anti-Kickback Statute (the "Anti-Kickback
Statute") makes it illegal to knowingly and willingly solicit or receive any remuneration
directly or indirectly, overtly or covertly in cash or in kind in return for, inter alia,
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purchasing or ordering, or recommending purchasing or ordering, a good covered in
whole or in part under a Federal health care program. 42 U.S.C. 8 1320a-7b(b)(1).
50. Under the Anti-Kickback Statute, it is illegal to knowingly and willingly
offer or pay any remuneration directly or indirectly, overtly or covertly, in cash or in kind
to any person to induce such person to, inter alia, purchase or order, or recommend for
purchasing or ordering, a good covered in whole or in part under a Federal health care
program. 42 U.S.C.. 8 1320a-Tb(b)(2).
51. Any person that commits an act described in 42 U.S.C. 8 1320a-Tb(b)(1)
or (2) is also liable for damages of not more than three times the total amount of
remuneration offered, paid, solicited, or received, without regard to whether a portion of
such remuneration was offered, paid, solicited, or received for a lawful purpose. 42
U.S.C. 8 1320a-7a(a)(7).
52. The Stark Law prohibits a physician from making a referral to an entity
for the furnishing of"designated health services" if the physician has a "financial
relationship" with that entity. 42 U.S.C. 8 1395im(a)(1). Moreover, "[n]o payment may
be made under [Medicare] for a designated health service which, is provided in violation
of subsection (a)(1) of this section." 42 U.S.C. § 1395nn(g)(1).
53. Pursuant to the Stark Law, the phrase "designated health services" is
defined to include "outpatient prescription drugs," 42 C.F.R. § 411.351(1)(ix), which
" 42
itself is defined to specifically include "all drugs covered by Medicare Part B ....
C.F.R. 8 411.351 (3). The phrase "financial relationship" includes a "compensation
arrangement," which is defined to include any arrangement involving any remuneration
between the entity and physician. 42 U.S.C. 88 1395rm(a)(2)(B) and (h)(1).
13
54. Under the Stark Law, a "referral" by a °°referring physician" includes ~°the
request by a physician for the item[,]" 42 U.S.C. § 1395nn(h)(5)(A), and "the request or
establishment of a plan of care by a physician which includes the provision of the
designated health service ...." 42 U.S.C. § 1395nn(h)(5)(B).
55. Compliance with the Anti-Kickback Statute and the Stark Law is a
precondition to participation as a health care provider under Federal health care
programs.
56. For example, under Medicare, providers are obliged to affirmatively
certify that they have complied with the Anti-Kickback Statute. With regard to
Medicaid, each physician must sign a provider agreement with his or her state. Although
there are variations of the agreements among the states, the agreement typically requires
the prospective Medicaid provider to agree that he or she will comply with all Medicaid
requirements, which include the anti-kickback provisions. For instance, when physicians
enter into provider agreements with Massachusetts, the physician thereby "agrees... to
comply with all laws, rules, and regulations governing MassHealth ....
" 130 CMR
450.223(C). This includes the mandate that °°providers must comply with all federal and
state laws and regulations prohibiting fraudulent acts and false reporting, specifically
including but not limited to 42 U.S.C. 1320a-7b [the Anti-Kickback Statute]." 130 CMR
450.261. In a number of states, the Medicaid claim form itself contains an express
certification by the provider that the provider has complied with all aspects of the
Medicaid program, including compliance with federal laws.
57. When physicians submit bills for purchases and services under Federal
health care programs, the physicians also implicitly certify that those purchases and
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services were not improperly influenced by illegal financial inducements. The financial
inducements paid by Defendants to physicians as described herein have caused those
physicians’ certifications to be false.
58. A false express and/or implied certification that claims for payment or
reimbursement for drugs under Federal health care programs are not tainted by such
illegal kickbacks constitutes a false or fraudulent claim under the FCA arid the State
FCAs.
59. Since no later than 2005, Defendants were aware that compliance with the
Anti-Kickback Statute and the Stark Law was a condition of payment by Federal health
care programs.
60. Since no later than 2005, Defendant knowingly caused various physicians
to enter into arrangements that violated the Anti-I~’dckback Statute and the Stark Law.
Defendants knew that these physicians were making claims for payment to Medicare and
other Federal health care programs in violation of the Anti-Kickback Statute and Stark
Law.
G. Defendants’ Kickbacks to Physicians for Purchasing Hyalgan and Relator’s
Employment With Defendants
61. From no later than 2005 and continuing until at least October 2009, and
notwithstanding the PDMA, the Anti-Kickback Statute and the Stark Law, it has been an
integral part of Defendants’ illegal marketing strategy for Hyalgan to induce physicians
to purchase Hyalgan by regularly providing them with large numbers of free samples of
Hyalgan in order to effectively lower the cost of the medication.
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62. During the period of Relator’s complaint, each free sample of Hyalgan
was generally worth anywhere between $70 and $100, depending on the applicable
reimbursement rate under Federal health care programs.
63. Since no later than 2005, Defendants were aware that their kickbacks
made to physicians were unlawful.
’
64. For pml~oses of carrying out their unlawful scheme (which caused false or
fraudulent claims for payment for purchases of Hyalgan and for medical care relating to
the administration of Hyalgan to be presented to the federal government and the relevant
states, and caused the maldng or use of false records or statements material to those false
or fraudulent claims), Defendants:
a.
provided their ISG sales representatives with hundreds of
thousands of free samples of Hyalgan;
b.
trained their ISG sales representatives to provide physicians with
free samples of Hyalgan in exchange for purchases of Hyalgan;
c.
trained their ISG sales representatives to demonstrate to physicians
that the free samples of Hyalgan effectively lowered the per unit price, which implied to
physicians that they should bill Federal health care programs for the free samples;
d.
incentivized their ISG sales representatives by providing bonuses,
merit pay increases and promotions for increased sales of Hyalgan;
e.
awarded physicians with paid speaking opportunities as a means of
gaining or maintaining business for Hyalgan;
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f.
actively assisted physicians in securing reimbursement under
Federal health care programs for purchases of Hyalgan and for the selwices attending to
the administration of Hyalgan;
g.
avoided the creation of documents and references in docmnents
otherwise created in Defendants’ ordinary course of business regarding the promotion of
Hyalgan that would constitute a violation of federal laws in order to deter detection of
Defendants’ unlawful scheme; and
h.
disciplined employees who documented Defendants’ violations of
federal laws.
65.
On or about May 3, 2004, Defendants hired Relator as a sales
representative. In 2005, Relator was promoted to the ISG and transferred to the Atlanta,
Georgia telritory.
66. From 2005 until approximately December 2006, Mr. Reginald
Washington ("Washington") was Relator’s supervisor. Mr. Jeffrey Knight ("Knight")
became Relator’s supervisor in or about January 2007, and held that position until April
1, 2008. Relator was then supervised by Mr. Richard Tolbert ("Tolbert") from April 1,
2008 to July 1,2009, and by Mr. Jeff Hopper ("Hopper") from July 1, 2009 until
Defendants’ terminated Relator’s employment on October 7, 2009.
67. On October 7, 2009, after Relator left a written document with a
physician’s office that documented the use of samples in or to gain business for Hyalgan,
his employment with Defendants was terminated.
68. During the course of his employment as a Hyalgan sales representative,
Relatoracquired direct, personal knowledge of Defendants’ unlawful practices.
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69. Upon his promotion to the ISG in 2005, Relator was made aware that
Defendants systematically provided free samples to physicians as a means of gaining and
maintaining business for Hyalgan. Defendants’ ISG sales representatives, with the
knowledge and approval of their supervisors, routinely made express agreements with
physicians whereby the physicians would receive a specified number of samples of
Hyalgan in return for ordering a particular number of units of Hyalgan, e.g., for every
100 units of Hyalgan ordered, the physician would receive 10 free smnples from
Defendants. In this way, Defendants effectively lowered the price paid by physicians for
Hyalgan, and the ISG sales representatives explained to the physician that there was a
distinct economic benefit to ordering Hyalgan.
70. Relator also was made aware that free smnples of Hyalgan were used by
ISG sales representatives as an inducement to physicians to switch from a competitor’s
product to Hyalgan.
71. In early 2005, Washington,. e-mailed a territory action plan to Relator for
the Atlanta, Georgia territory, which had been created by the ISG sales representative,
Ms. Kara Arnold ("Arnold"), who Realtor was replacing. The territory action plan
highlighted the top accounts, opportunities and risks of the territory.
72. In the territory action plan, Arnold documented: "[Dr. Raj] Pandya [of the
Atlanta Knee & Shoulder Clinic] is already using Hyalgan for the shoulder and gets 20 of
my samples per quarter for indigent patients etc. Supartz does this as well." Arnold also
warned that Dr. Thomas Cadier of Orthopedic Surgery in Lawrenceville, Georgia was:
"COMPLETELY driven by money and told me in front of Frank [Craft, the District
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Manager before Washington] and Rachel Couchenour[1] that he would bill for samples.
Not good."
73. On or about May 2, 2005, after receiving the territory action plan, Relator
flew from Florida to Atlanta, Georgia and spent two days with Arnold as she introduced
him to the physicians in the territory. During these field rides, Arnold further explained
to Relator that samples were provided to physicians specifically for the purpose of
malcing Hyalgan more competitive when it came to price. For instance, with respect to
the Dr. Pandya deal referenced in her territory action plan, Arnold elaborated that an
agreement had been reached whereby the physician’s office would place an order for 100
syringes of Hyalgan every quarter andwould receive 20 free samples of Hyalgan in
return. As the territory action plan noted, Dr. Pandya "split[] his business between
Hyalgan and Supartz[,]" mad Arnold explained to Relator that the provision of the free
samples made the price for Hyalgan competitive with the price for Supartz.
74. Arnold also discussed with Relator the existence of the other following
m-rangements made with physicians: Atlanta Orthopedic Specialists agreed to order 100
syringes of Hyalgan every quarter and receive 5 free samples in return; Dr. Jeffrey
Lieberman wonld receive 10 free samples for every order of 100 syringes of Hyalgan he
made; Resurgens Orthopedics (Kemaesaw) received 10 free samples per quarter; and
North Dekalb Orthopedics received 10-15 free samples per quarter.
75. From August 14-26, 2005, following a home study course ("Phase I"
training), Relator underwent initial sales training ("Phase II" training) at Defendants’
corporate headquarters in Bridgewater, New Jersey with other ISG sales representatives
1 Upon information and belief, Ms. Rachel Couchenour was a medical liaison and later Defendants’
Director of External Compliance..
19
in the ISG. The trah~ing was conducted by Mr. Michael Bellotto ("Bellotto"), who was
previously a Hyalgan sales representative.
76. As part of Phase II training, Bellotto gave a PowerPoint presentation
advising the ISG sales representatives of the government’s prosecution of TAP
Phm’maceuticals for its misuse of Lupron samples. Bellotto warned the ISG sales
representatives to be "careful" regarding the use of sm~ples, and instructed them that they
would be "protected" as long as they told the physicians that (a) the smnples were to be
used for patient trials and indigent patients, and (b) the physicians were not supposed to
bill for the samples.
77. Not long after Phase II training, Relator spent two days in the field with
the area trainer, Mr. Brian Motycka ("Motycka"), who was the ISG sales representative
from the Jacksonville, Florida territory. On the last day of the field visit, at a restaurant
in the Atlanta airport, Motycka explained the concept of using samples to effectively
lower the price of Hyalgan by writing down on a piece of paper something like the
following:
100 Hyalgan syringes at $ 100 per unit = $10,000 total cost to practice
If 10 syringes are included per order: Divide $10,000 total cost to
practice into 110 Units (100 Hyalgan ordered + 10 samples) = $90.90
price per unit.
*A reduction in price per unit of 9 dollars.
78. Implicit within the explanation to physicians that the free samples would
reduce the cost of Hyalgan was the notion that physicians would bill for the free samples.
Relator observed that physicians’ offices frequently commingled the free samples of
Hyalgan provided by the ISG sales representatives with the Hyalgan syringes that the
offices had purchased.
20
79. Although it was understood that the physicians would bill for the fi’ee
samples, Motycka (reiterating what Bellotto had taught) told Relator that they could
"protect themselves" by simply saying to the physicimas that the samples should be used
for indigent patientsand patient trials and that the physicians should not bill for the
samples.
Supelwision
80. From 2005 to 2009, Defendants’ managers, including Washington,
ICrfight, Tolbert and Hopper, expressly condoned and encouraged the practice of
providing physicians with samples of Hyalgan in order to gain and maintain business for
Hyalgan.
81.
From 2005 through 2009, Relator and the other sales representatives in the
ISG were expected to keep their managers apprised of all aspects oft heir respective
accounts, which included briefing the managers on the specific deals that were reached
with physicians concerning the exchange of samples for orders of Hyalgan.
82. On November 1-2, 2005, Washington conducted field rides with Relator
during which Washington directly supervised Relator’s details to physicians. During
these field rides, Relator and Washington discussed the particulars of each of the
accounts referenced in the territory action plan created by Arnold, specifically including
the m’angements concerning the exchange of samples for orders of Hyalgan that had
been reached and maintained with each account.
83. On November 2, 2005, the last day of the field ride with Washington,
Relator and Washington treated Dr. Pandya of the Atlanta IG-aee & Shoulder Clinic to
dinner at the Nava restaurant in Atlanta, Georgia. Relator had discussed with Washington
21
the sampling agreement that had been reached with the Atlanta ICnee & Shoulder Clinic
(i.e., 20 fi’ee samples in exchange for orders of 100 syringes of Hyalgan), and Relator
arranged the November 2nd dinner so that he could introduce Washington to Dr. Pandya.
84. From July 11-13, 2006, an East Region Meeting of ISG sales
’ representatives was held at the Hyatt Regency hotel in Miami, Florida. On the second
night of the meeting, Washington took Relator, Knight (the ISG sales representative for
the West Palm Beach, Florida territory at this time) and Motycka (the ISG sale
representative for the Jacksonville, Florida territory) to dinner at the Prime 112 restaurant
as a reward for being high-performing sales representatives. During dinner, I~tight and
Motycka, who were very competitive with one another, talked about how they needed
"more samples" in order to do "more business."
85. On or about August 10, 2006, Washington again supervised Relator in the
fieId. Once again, ReIator and Washington visited various offices and discussed the
particulars of each account, including the arrangelnents regarding providing sanaples to
gain and maintain business. Also on this date, Washington attended a dinner program at
Justin’s restaurant in Atlanta, Georgia that Relator had an-anged for Dr. William Craven
("Dr. Craven") of Alliance Orthopedics. As he had advised Washington earlier, Relator
was able to secure Dr. Craven’s business first by providing the physician with 5 samples
of Hyalgan every quarter beginning in or about the second quarter of 2006, and then by
recommending Dr. Craven as a speaker, which Washington approved in or about the third
quarter of 2006.
86. Sometime in late August 2006, Ms. Patsy Mansoori, the office manager
for Dr. Gary Myerson ("Dr. Myerson") at Georgia Arthritis & Rheumatology, provided
22
Relator with a letter from a competitor asking for Dr. Myerson’s business. In the letter,
the Smith & Nephew sales representative offered Dr. Myerson 1,500 syringes of Supartz
for $75 each, while the price for Hyalgan was approximately $95 per syringe at the tinge.
Relator forwarded the letter to Washington via facsimile, and, in a subsequent
conversation, Washington told Relator that he (Washington) sent the letter up the chain of
command to Mr. Mike Buck ("Buck"), the Regional Sales Director. Notwithstanding the
difference between the stated prices for Supartz and Hyalgan, respectively, Relator was
able to secure Dr. Myerson’s business by reaching a deal whereby Defendants would
provide 50 free sanaples for every order of 500 syringes. Relator then advised his
manager, Washington, of the deal that had been reached to secure the business.
87. In January 2007, I~night became Relator’s manager on an interim basis,
and Knight officially was appointed as the manager in April 2007. I_n spring 2007,
I~ght supervised Relator on a field visit to offices in the greater Atlanta area. As he had
done with Washington, Relator informed his new manager, IG~ight, of the specific
arrangements that hadbeen reached with physicians regarding the provision of samples in
exchange for orders of Hyalgan.
88. During the spring 2007 field ride, Relator told IGaight that a deal had been
reached with Dr. Myerson’s office pursuant to which the physician would receive 50 free
samples for ordering 500 syringes of Hyalgan. Then, when Relator and Knight visited
Dr. Myerson, Relator gave Dr. Myerson 50 samples of Hyalgan and the physician placed
an order for 500 syringes. Upon receipt of the samples, which were worth approximately
$4,700, Dr. Myerson remarked to Relator and Knight that the samples were "helpful" in
23
lowering the price of Hyalgan. Upon returning to Relator’s vehicle, Knight "high-fived"
Relator for securing the order with the use of the samples.
89. On or about August 7, 2007, Knight again supervised Relator during field
visits to physicians, and Relator again discussed with Knight the specific deals with
samples that had been reached and maintained with physicians. As one example, Relator
told I~night that he (Relator) was continuing to provide Dr. Craven with 5 samples of
Hyalgan per quarter in order to maintain the physician’s business. After being informed
of this arrangement, Knight accompanied Relator, Dr. Craven and Dr. Craven’s wife to
dinner at the Bacchanalia restaurant in Atlanta, Georgia.
90. On April 1, 2008, Tolbert became Relator’s new manager. Also during
this time period, a new position, the Injectable Customer Account Manager ("ICAM"),
was created to call on high-volume and government (e.g., VA hospitals) accounts. Mr.
Tony Bryant (°~Bryant") became the new ICAM within Relator’s territory.
91. In May or June 2008, Tolbert organized a meeting at Defendants’ regional
office in Atlanta, Georgia with Relator, Bryant, and Mr. Todd Sperry (~°Sperry"), the ISG
sales representative for the Atlanta West territory. The primary purpose of the meeting
was to talk about Bryant’s new role with high-volume and federal accounts in the
territory. During this meeting, there were discussions about how to recapture business at
Resurgens Orthopaedics ("Resurgens"), mad it was decided that Bryant and Sperry would
meet with the Chief Financial Officer of Resurgens.. Resurgens was Georgia’s largest
orthopaedic practice with approximately twenty offices located throughout the state.
92. On August 19, 2008, Bryant organized a meeting with Relator and Sperry
at a Starbucks in Woodstock, Georgia to discuss the Resurgens account. During this
24
meeting, Bryant suggested that an effective strategy for recapturing business from
Resurgens would be to increase the number of samples distributed to Resurgens. Sperry
and Relator agreed that increasing samples would be helpful, and Bryant said that he
would ask Ms. Maria Bereschek, the Regional Sales Director, to increase the san~ple
quantities for Relator and Sperry so that they could target the Resurgens accounts. It was
further agreed that, in addition to providing samples, they would attempt to lower the
price to $69 (the ompetitor’s price was about $71 at that time). Subsequently, Relator’s
and Sperry’s sample quantities were increased so that they could provide more samples to
Resurgens in order to induce it to purchase Hyalgan, and the price for Hyalgan offered to
Resurgens was reduced to $69.
93. In or about the first quarter of 2009, Relator met with the office manager
for the Roswell office of Resurgens, Ms. Tracey Holcolmb (°°Holcomb"), who informed
Relator that the office did not collect co-payments from its Medicare patients for their
Hyalgan injections. Subsequently, Relator and Sperry met with Ms. Theresa Cruz
("Cruz"), the CFO, at Resurgens’ main office in Atlanta, Georgia. During this meeting,
Cruz said that all of the Resurgens offices routinely failed to collect co-payments from
their Medicare patients. ’
94. On August 6, 2008, Ms. Carolyn Blue, the office manager for Alliance
Orthopedics & Sports Medicine in Decatur, Georgia, sent an e-email to Relator with the
following message:
As you may be aware, we have been contacted by other companies
providing injections similar to Hyalgan. To assess the profibility [sic] of
each prodcut [sic], we obtained the fee schedules from our major payers.
Dr. Craven asked that I provide you with a comparative listing of the
profits that we would anticipate with each product. Note that Supartz is
25
most profitable for our practice. This analysis does not take into
Consideration the products that you provide directly to our office. In
addition, Supartz will also provide courtesy samples.
To discuss this matter further, please give us a cal!.
95. Relator forwarded this e-mail to his manager, Tolbert, and Bryant. While
the office manager’s financial analysis did not include the samples of Hyalgan that
Relator was providing for free, Relator was aware that his job was to explain to
physicians how the provision of samples could help reduce the overall cost of Hyalgan
and demonstrate to physicians that there was a distinct economic benefit to ordering
Hyalgan. As Tolbert discretely put it in Relator’s perfolanance review for 2008, "[t]ake a
business owners approach to providing economic solutions for their practice when they
order Hyalgan ....Continue to focus on providing solutions while selling the value
proposition of your product portfolio."
96. In January 2009, when Relator and another sales representative, Mr.
Richard (Chaucer) Godfrey ("Godfrey"), were preparing to take over the Macon, Georgia
territory, Tolbert e-mailed a tel~tory action plan to them that had been created by the ISG
sales representative in the Macon, Georgia territory, Ms. Amae Fulghom ("Fulghom").
97. This territory action plan, stated in part:
1. Dr. Arton Janldae’s office (whom you have met), with Augusta
Orthopaedic Specialists, had 5 samples given to them by a rep that
have now expired. They would like for a representative to stop by and
replace those which will be extremely important for the business. The
representative will need to speak with Molly regarding this matter.
***
3. Piedmont Sports in Macon is in need of samples..Ask Lyrm [a nurse in
the office] and Mellissa [an X-ray tech in the office] what the deal is
with samples there..I was leaving them on a regimented basis_and
please have the representative call me with any questions.
26
o
Dr. Collins and Dr. Duncan (Augusta Ortho and Sports Medicine)
have been left samples of Hyalgan. Tina in the front office would like
to still see a rep (she places all of the orders..and it all comes down to
price (This could also be promising).
8. Dr. Hajeck (Musculoskeletal Associates in Albany GA)-given him a
fair number of samples..he said he would order more do [sic] to this
support, and when I had left he still had not ordered any Hyalgan (to
the best of my knowledge). This is something the new representative
should remind him of.
98. In June 2009, Ms. Janet Gingl"ich (’°Gingrich"), a manager in Defendants’
US Litigation & Investigations department, contacted Relator to question him about
Fulghom’s territory action plan. When Relator later telephoned Tolbert to inform him
that he had been asked about Fulghom’s statement that Dr. Hajeck had been given "a fair
number of samples" and agreed to order more Hyalgan due to this "support,’.’ Tolbert
remarked that Fulghom was a "dumb ass" for mentioning samples in writing. Tolbert
said that he had not been contacted by Defendants’ US Litigation & Investigations
department concerning Fulghom’s territory action plan.
99. On January 14, 2009; Relator had lunch with Ms. Claudia Petrovksld
("Petrovksld") (the ISG sales representative who preceded Fulghom in the Macon,
Georgia territory) at the Shogun Japanese Bar & Grill in Macon, Georgia. Petrovkski
informed Relator that she had reached an agreement with Piedmont Sports in Macon,
Georgia, that called for the ISG sales representative to provide 10 free samples of
Hyalgan to the office for every order of 100 syringes.
100. On January 26, 2009, Relator arranged a lunch meeting with Piedmont
Sports in Macon, Georgia. During this meeting, Melissa, the X-ray technician referenced
27
in the telritory action plan created by Fulghom, told Relator something to the effect that:
"we haven’t seen a sales rep in a long time. You owe us about 70 samples for all the
orders that we have placed."
101. On or about February 19, 2009, Tolbert supervised Relator in the field.
During this field ride, Relator informed Tolbert of the arrangements concerning samples
that were in place with accounts in his territory, including the arrangement with Piedmont
Sports in Macon, Georgia.
102. On March 25, 2009, Relator e-mailed Tolbert and Bryant to inform them
that he "presented Piedmont Orthopedic Sports Complex in Macon Ga, with an MTC
price reduction to $78 in response to heavy competitive bidding fi’om Synvisc, and
Euflexxa." "MTC" meant "meet the competition," which referred to an accotmt that had
a sufficient volume of business to justify lowering the price of the product to more
closely align with a competitor’s price. During the period of Relator’s employment with
Defendants, an account could not qualify for MTC pricing unless it ordered at least 1,000
syringes per year and expressed a strong commitment to ordering Hyalgan. Such an
account would then have to be approved for MTC pricing by the District Manager and
the Region Manager.
103. As Relator further explained in his March 25, 2009, e-mail, hl had met
with the Chief Financial Officer, Dr. Mikell Peed ("Dr. Peed"), who "committed to
continue to use Hyalgan exclusively in the practice, and ha[d] also agreed to [Relator’s]
suggestion towards adding 3 additional patients, per their bi-weekly 100 unit order
cycle[.]"
28
104. Orally, Relator further informedTolbert that the deal with Piedmont
Sports also called for the continued provision of 10 sm~aples for every order of 100
syringes of Hyalgan. By entering into agreements to also provide samples of Hyalgan to
MTC accounts, the actual price of Hyalgan to the MTC account was even lower. In this
way, Relator and other ISG sales representatives could market Hyalgan to these practices
as having a price that was effectively lower than the competitor’s, and they could
proactively stymie the effect of a competitor’s future price reduction.
105. In July 2009, Hopper becanae Relator’s manager. About two months later,
on September 30, 2009, Hoppe~ accompanied Relator on a field ride to various accounts
located in the greater Atlanta area. During this field ride, Relator informed Hopper of the
arrangements concerning samples that were in place with certain top accounts, including
the deal that Petrovkski had struck with Piedmont Sports. As part of this supervised field
ride, Relator and Hopper visited Piedmont Sports and met in a boardroom with Dr. Peed
and Ms. Cathy Kendricks ("Kendricks"), the office manager, to discuss the particulars of
the account. During this meeting, Dr. Peed and Kendricks thanked Relator for continuing
to provide the office with the Hyalgan samples, and they stated to Relator and Hopper
that the office remained a loyal Hyalgan customer specifically because of the free
samples and the MTC pricing. Following the private meeting, Melissa, the X-ray
technician at Piedmont Sports referenced in Fulghom’s territory action plan, placed an
order for 100 syringes of Hyalgan and Relator, in the presence of Hopper, gave Melissa
10 free samples of Hyalgan in exchange.
29
106. While carefully avoiding any written reference to the illegal sampling
arrangement, Hopper documented the details of this visit in his Field Coaching Report as
follows:
Piedmont Sports: We met with Paul Peterson (PA), Dr. Myers, Melissa
(x-ray tech), Dr. Peed (CEO), and Cathy Kendricks, RN. The account is
pleased with the performance of Hyalgan in their patients and placed an
order for 100 syringes ....
107. In praise of Relator’s efforts, Hopper noted in his Field Coaching Report
that "[i]t’s quicldy apparent that you’ve developed some strong relationships with these
key MTC aecom~ts and are providing the customer service that’s expected in the role." In
Relator’s performance review for 2009, Hopper repeated the theme of focusing on the
economic benefit to the customer in promoting Hyalgan: "[c] oncentrate on customer
needs and what they value. Establish mutually beneficial relationships with customers
and take action to effectively meet customers’ needs."
108. In order to meet the demands of the various arrangements to supply
samples on a continuing basis, it often became necessary for the ISG sales representatives
to borrow and lend Hyalgan samples from and to one another. Typically, the ISG sales
representatives would send Hyalgan samples to each other via Federal Express or deliver
them in person. On occasion, however, the managers would act as couriers. For
instance, on May 4, 2009, Ms. Mercia Piasecki, another ISG sales representative, sent a
text message to Relator indicating that Tolbert would deliver a Hyalgan sample from her
to Relator.
30
Speakers
109. As a further inducement to physicians, Defendants paid physicians
between $1,500 and $2,000 to give presentations about Hyalgan. Such presentations
typically lasted one hour.
110. During the period of Relator’s complaint, IS G sales representatives could
recommend physicians to become Hyalgan speakers, but the decision was ultimatdy
made by Defendants’ marketing department.
111. In 2005, Arnold informed Relator that Atlanta Knee & Shoulder Clinic
was considered an important account, and that Dr. Pandya had been granted a speaker
contract with Defendants to .give presentations to other physicians about Hyalgan.
112. In 2006, during the time period that Washington was Relator’s supervisor,
Relator arranged numerous speaker presentations with Dr. Pandya for which Defendants
paid the physician a total of about $5,000 to $10,000.
113. In late 2006, after Dr. Pandya’s accoun~ was temporarily lost reportedly
due to financial problems, Defendants did not renew Dr. Pandya’s speaker contract.
114. In late 2006 or early 2007, Relator arranged a lunch meeting with a
potential account, Piedmont Rheumatology in Atlanta, Georgia. During this meeting,
Relator promoted Hyalgan to Dr. Hayes Wilson ("Dr. Wilson"). Dr. Wilson told Relator
that Relator would have to "prime the pump" in order to gain Dr. Wilson’s business. A
deal was then reached whereby Relator would provide 5 samples of Hyalgan and Dr.
Wilson would order 50 syringes.
115. Sometime in late 2008, Relator agreed to recommend Dr. Wilson as a
Hyalgan speaker as a reward for his continued business, and Tolbert and Defendants’
31
marketing department granted their approval of Dr. Wilson. In the second quarter of
2009, Relator arranged for Dr. Wilson to give a presentation to Dr. Glenn Parris at the
Seasons 52 restam’ant in Bucld~ead, Georgia, for which Defendants paid Dr. Wilson
approximately $1,500.
S. ummatT of Specific Sampling At’rangements Of Which Relator Was Aware
116. Some oft he unlawful sampling agreements in effect during the period of
Relator’s employment with Defendants included the following:
a. Piedmont Sports Complex, 4660 Riverside Park, Macon, GA
31210: Beginning no later than 2005 and continuing through 2009, account received 10
free smnples of Hyalgan in exchange for every order of 100 syringes of Hyalgan;
b. Jeffrey Lieberman, MD, 2712 North Decatur Road, Decatur, GA
30033: Beginning no later than 2005 and continuing through 2009, account received 10
free samples of Hyalgan in exchange for every order of I00 syringes of Hyalgan;
c. Atlanta Orthopedic Specialists, 1163 Johnson Ferry Road, Suite
200, Marietta, GA 30068: Beginning no later than 2005 and continuing into 2007,
account received 5 free samples of Hyalgan in exchange for each order of 100 syringes of
Hyalgan placed every quarter;
d. Resurgens Kennesaw, 270 Chastain Road, Kermesaw, GA 30144:
Beginningin or. about 2005 and continuing until at least 2008, account received 10 free
samples of Hyalgan every quarter in exchange for ordering 100 syringes of Hyalgan;
e. Resurgens Roswell, 1285 Hembree Road, Roswell, GA 30076:
Beginning in or about 2006 and continuing through 2009, account received 5 free
samples of Hyalgan in exchange for ordering 50 syringes of Hyalgan;
32
f. Resurgens Woodstock, 2230 Towne Lake Parkway, Woodstock,
GA 30189: Beginning in or about 2006 and continuing until 2008, account received 5
free samples of Hyalgan in exchange for ordering 50 syringes of Hyalgan;
g. Atlanta Knee & Shoulder Clinic, 3200 Downwood Circle
Northwest, Atlanta, GA 30327: In or about 2005, account received 20 free samples of
Hyalgan in exchange for ordering 100 syringes of Hyalgan each quarter;
h. Georgia Arthritis & Rheumatology, 980 Johnson Ferry Road #220,
Atlanta, GA 30342: Beginning in or about late 2006 and continuing through 2007,
account received 50 free samples of Hyalgan in exchange for every order of 500 syringes
of Hyalgan;
i. Alliance Orthopedics & Sports Medicine, 5040 Snapfinger Woods
Drive, Decatur, GA, 30035: Beginning in or about 2006 and continuing through 2009,
account received 5 free samples per quarter in exchange for ordering 50 syringes of
Hyalgan;
j. Piedmont Rheumatology, 2001 Peachtree Road, #205, Atlanta, GA
30309: Beginning in or about late 2006 and continuing through 2009, account received 5
free samples of Hyalgan in exchange for ordering 50 syringes places per quarter;
k. Howm’d Ellison, MD, 1010 E. Freeway Drive SE, Conyers, GA
30094: Beginning in or about 2008 and continuing through 2009, account received 5 free
samples of Hyalgan in exchange for every order of 50 syringes of Hyalgan; and
1. Glenn Parris, MD, 989 Lawrenceville Highway, Lawrenceville,
GA 30045: In 2009, account provided with 6 free samples of Hyalgan to gain business
33
for Hyalgan. Account then received I or 2 free samples per quarter in exchange for
continued purchases of Hyalgan.
117. During the period of this complaint, Defendants’ internal computer
database, called Quest, contained a running inventory of each ISG sales representative’s
supply of sanaples. Among its other capabilities, the Quest database also identified the
physicians who signed for samples, the date the samples were received, and the number
of samples received.
H. Causin~ the Government to Pay for Hyal~an
118. Given the high incidence of OA among the elderly, and the large number
of elderly covered under Federal health care programs, it was reasonably foreseeable to
Defendants that Federal health care programs would expend considerable sums
reimbursing physicians for theia" purchases of Hyalgan and for their services in
administering Hyalgan. For example, from 2001 through November 2002, Medicare
spending for claims made under the Hyalgan/Supartz "J-Code" amounted to $34.4
million, or 0.5% of the total amount spent by Medicare on all covered drugs. See
Medicare Payments for Currently Covered Prescription Drugs, Hearing before the
Subcommittee on Health. of the Committee on Ways and Means, 10/3/02, pg. 15
119. In one training manual Defendants provided to their ISG sales
rep~esentati~g~ i~ ~f~d-that °’[t]h~-VA-presents an exceptional sales opportunity’ ....................
because OA °°is a condition that disproportionately affects the elderly population, a
profile similar to that of the VA patient population."
120. Further, Medicare is specifically dedicated to providing health insurance
for the elderly. Hyalgan is reimbursed under Medicare Part B, and as of July 1st of each
34
year fi’om 2005 to and including 2008, respectively, the number of persons aged 65 or
older who were covered under Medicare Part B were as follows: 33,808,239;
34,.183,855; 34,550,592; and 35,096,286.
121. Generally speaking, Medicare Part B, which is a voluntary insurance
program, provides reimbursement for certain prescription injections that are administered
by a physician in an office setting. Thus, the physician must purchase Hyalgan and
administer it to a patient and then submit a bill to Medicare.
122. Knowing that many physicians who purchased Hyalgan would ultimately
receive reimbursement through Medicare, Defendants tied the price of Hyalgan to the
Medicare reimbursement rate from at least 2005 until October 2009.
123. Hyalgan is also reimbursed under Medicaid. Medicaid provides health
care benefits for certain low-income persons, and coverage may depend upon whether the
person is aged or disabled. Funding for Medicaid is shared between the federal
govel~nent and the state governments. The federal government’s share for Medicaid
expenditures for a given state range from about 50-83%.
124. During. the relevant period of this complaint, Defendants knew that
physicians who received the illegal kickbacks described herein submitted claims to
Federal health care programs for reimbursement for their purchases of Hyalgan and for
their ~i?id~~g-iSfiidministeriii~- HyalganT-Further, Defendants actively assisted these
physicians in obtaining reimbursement from Federal health care programs.
125. Defendants required their ISG sales representatives to advise physicians
about securing reimbursement under Federal health care programs. Specifically with
respect to Medicare and Medicaid, Defendants required their ISG sales representatives to
35
inform physicians during sales calls about: the cmTent Medicare reimbursement rate for
Hyalgan; the current Medicare reimbursement rate for the procedure for administering
Hyalgan; and the applicable Medicare reimbursement code (J-Code) for Hyalgan.
126. Defendants created Hyalgan Reimbursement Guides for physicians "to
help [physicians] receive optimal reimbursement for HYALGAN® (sodium hyaluronate)
by providing [them] with key information on filing a claim for HYALGAN® therapy."
The Hyalgan Reimbursement Guide explicitly instructed physicians that, inter alia, they
could bill Medicare and Medicaid for (a) their purchases of Hyalgan, and (b) their
services in administering Hyalgan.
127. Defendants’ Hyalgan Reimbm’sement Guide further advised physicians
that: "If another professional service is provided during the same visit, the physician may
be able to charge for an office visit as well[,]" and suggested that "[o]ther professional
services (such as evaluation) will most likely be rendered on the date of the first
injection."
128. Defendants’ Hyalgan Reimbursement Guide also provided physicians with
the specific codes to use in order to obtain reimbursement from Federal health care
programs for Hyalgan, as well as the codes to use in order to obtain reimbursement from
Federal health care programs for the services of diagnosing OA and administering
Hyalgan.
129. Defendants also provided physicians with completed reimbursement claim
forms that could be used by physicians as a sample in submitting claims to Medicare and
Medicaid.
36
130. Defendants created a toll-free Hyalgan Reimbursement Hotline to fm-ther
assist physicians in submitting claims to Federal health care programs for reimbursement,
as well as offering advice and support in appealing claims that were denied or unpaid.
131. As Defendants advertized to physicians, °°The HYALGAN®
Reimbursement Hotline (1-866-TI~Ih~ALGAN) has information about local Medicare
policies and can assist providers with additional research, if necessary."
132. For accounts Nat ordered, or had the potential to order, a high volume of
Hyalgan, Defendants provided additional reimbursement support. In one case, Dr.
William Armstrong from Resurgens Kermesaw in Kennesaw, Georgia asked Relator if
Defendants would °°hh’e somebody" to assist with his office’s reimbursement issues
because his own employees were spending °°too much time" dealing with such issues.
After Relator repol~ed this to his manager, Washington, Relator contacted the Hyalgan
Hotline and arranged to have a particular person dedicated to handle all reimbursement
issues faced by this account.
133. Another resource provided by Defendants to physicians was
Injectableservices.com. On this Internet website, physicians could obtain
"[r]eimbursement services, including benefit verifications and prior authorizations," as
well as °~[r] eimbursement tools and online resources."
134. As an intended consequence of Defendants’ scheme to provide physicians
with illegal kickbacks in the form of free samples, physicians submitted claims to Federal
health care programs for reimbursement for Hyalgan. For example:
a. In or about the first quarter of 2007, Ms. Cammie Mzenchek
("Mzenchek"), the office manager at Resurgens Kermesaw in Kennesaw, Georgia,
37
informed Relator that ttie practice billed Medicare for Hyalgan, but was having some
difficulty getting reimbursed. In response, Relator provided Mzenchek with the
appropriate J-Code for Hyalgan so that the practice could obtain reimbursement from
Medicare;
b. In or about the first quarter of 2009, Ms. Tracey Holcolmb, the
office manager at Resurgens Roswell in Roswell, Georgia, informed Relator that the
practice billed Medicare for Hyalgan, although they did not collect the required
copayments from their Medicare patients; and
c. In or about the first quarter of 2009, Ms. Carolyn Blue, the office
manager for Alliance Orthopedics & Sports Medicine in Decatur, Georgia, informed
Relator that Dr. Craven had billed Medicaid for Hyalgan, but had been reimbursed for
only two of the Medicaid patient’s five procedures.
135. The payment of financial inducements to physicians by Defendants
resulted in higher costs to the federal government and the relevant states.
136. Moreover, the federal govern.ment and the relevant states did not obtain
the benefit of best pricing for Hyalgan because the hidden kickbacks also amounted to
monetary discounts for the prescribed product.
137. Switching patients from a competitor’s product to Hyalgan involved
additional and otherwise unnecessary medical visits and follow-up care, further
increasing the costs to the federal government and the relevant states.
138. The payment of kickbacks to physicians by Defendants compromised
physicians’ objectivity and the quality of patient care.
38
COUNT I - VIOLATIONS OF THE FALSE CLAIMS ACT
139.
Relator hereby incorporates paragraphs 1-13 8 above as if fully set forth
herein.
140. Relator’s qui tam action is not based upon the public disclosure of
allegations or transactions in any criminal, civil, or administrative heating, in any
congressional, administrative, or Government Accounting Office report, heating, audit, or
investigation, or from the news media.
141. Relator has direct and independent knowledge of the information on which
the allegations are based.
142. Prior to filing this action, Relator served the Attorney General of the
United States and the United States Attorney for the District of Massachusetts with a
written disclosure of substantially all material evidence and information then in Relator’s
possession.
143. Defendants’ actions as detailed above resulted in numerous violations of
the FCA occurring over a long period of time. Further evidence of Defendants’ specific
violations of the FCA resides within Defendants’ exclusive possession and/or control.
144. The Fraud Enforcement and Recovery Act of 2009, Pub. L. No. 11-21,
123 Stat. 1617 ("the FERA"), amended the FCA by, inter alia, restructuring the
subsections of 31 U.S.C. § 3729. Pursuant to Section 4(f) of the FERA, the amendments
to 31 U.S.C. §§ 3729(a)(1) and (a)(3) took effect and apply to conduct on or after May
20, 2009, while the amendment to 31 U.S.C. § 3729(a)(2) was made retroactive. As
Defendants’ tmlawfial conduct as described herein spans the date on which the FCA was
amended, both the 1986 and 2009 versions of the FCA are applicable here.
39
145. From no later than 2005 and continuing until May 20, 2009, in violation of
31 U.S.C. § 3729(a)(1)(as anaended in 1986), Defendants knowingly caused to be
presented to the federal government numerous false or fi-audulent claims for payment or
approval for Hyalgan and for medical care relating to the administration of Hyalgan.
145. From May 20, 2009 and continuing until at least October 2009, in
violation of 31 U.S.C. § 3729(a)(1)(A)(as amended in 2009), Defendants knowingly
caused to be presented to the federal government numerous false or fraudulent clahns for
payment or approval for Hyalgan and for medical care relating to the administration of
Hyalgan.
147. From 2005 and continuing until at least October 2009, in violation of 31
U.S.C. § 3729(a)(1)(B)(as mnended in 2009), Defendants knowingly made, used and/or
caused to be made or used numerous false records and/or statements material to the
numerous false or fraudulent claims for payment or approval for Hyalgan and for medical
care relating to the administration of Hyalgan.
148. From no later than 2005 and continuing until May 20, 2009, in violation of
31 U.S.C. § 3729(a)(3)(as amended in 1986), Defendants conspired to defraud the federal
government by getting numerous false or fraudulent claims for Hyalgan and for medical
care relating to the administration of Hyalgan allowed or paid.
149. From May 20, 2009 and continuing until at least October 2009, in
violation of 31 U.S.C. § 3729(a)(1)(C)(as amended in 2009), Defendants conspired to
commit violations of 31 U.S.C. § 3729(a)(1)(A) and/or 31 U.S.C. § 3729(a)(1)(B).
150. From no later than 2005 and continuing until at least October 2009, the
United States, unaware of the kickbacks made by Defendants, and thus unaware of the
4O
falsity of the records, statements and/or claims made and/or caused to be made by
Defendants, paid claims relating to Hyalgan that would not have been paid but for
Defendants’ unlawful practices as detailed above.
151. By reason of Defendants’ acts and practices, the United States has been
damaged and is entitled to recover treble damages plus a civil monetary penalty for each
false claim.
COUNT II - VIOLATIONS OF THE CALIFORNIA FALSE CLAIMS ACT
152.
Relator hereby incorporates paragraphs 1-151 above as if fully set forth
153.
Prior to filing this action, Relator served the Attorney General of
herein.
California with a written disclosure of substantially all material evidence and information
then in Relator’s possession.
154. Defendants’ acts and practices, as described more fully above, have
violated the California False Claims Act, Cal; Govt. Code §§ 12650, et seq.
155. Defendants have knowingly presented and/or caused to be presented to the
State of California false claims for payment or approval in violation of Cal. Govt. Code §
12651(a)(1).
156. Defendants have knowingly made, used and/or caused to be made or used
false records or statements to get false claims paid or approved by the State of California
in violation of Cal. Govt. Code § 12651(a)(2).
157. Defendants have conspired to defi:aud the State of California by getting
false claims allowed or paid in violation of Cal. Govt. Code § 12651(a)(3).
41
158. The State of California, unaware of the falsity of the records, statements
and/or claims made or caused to be made by Defendants, paid claims that would not have
been paid but for Defendants’ unlawfLfl practices as detailed above.
159. By reason of Defendants’ acts and practices, the State of California has
been damaged, and continues to be damaged, in a substantial amount.
COUNT III- VIOLATIONS OF THE DELAWARE FALSE CLAIMS AND
REPORTING ACT
160. Relator hereby incorporates paragraphs 1-151 above as if fully set forth
herein.
161. ’ Prior to filing this action, Relator served the Attorney General of Delaware
with a written disclosure of substantially ali material evidence and information then in
Relator’s possession.
violated the Delawm’e False Claims and Reporting Act, 6 Del. Code §§ 1201, et seq.
163. Defendants have knowingly presented and/or caused to be presented,
directly or indirectly, to the State of Delaware false or fraudulent claims for payment or
approval in violation of 6 Del. Code § 1201(a)(1).
164. Defendants have knowingly made, used and/or caused to be made or used,
directly or indirectly, false records or statements to get a false or fraudulent claims paid
or approved by the State of Delaware in violation of 6 Del. Code § 1201(a)(2).
165. Defendants have conspired to defraud the State of Delaware by getting
false or fraudulent claims allowed or paid in violation of 6 Del. Code § 1201 (a)(3).
42
166. The State of Delaware, unaware of the falsity of the records, statements
and/or cIaims made or caused to be made by Defendants, paid claims that would not have
been paid but for Defendants’ unlawful practices as detailed above.
167. By reason of Defendants’ acts and practices, the State of Delaware has
COUNT IV - VIOLATIONS OF THE FLORIDA FALSE CLAIMS ACT
168.
Relator hereby incorporates paragraphs 1-151 above as if fully set fo~lh
169.
Prior to filing this action, Relator served the Attorney General of Florida
herein.
with a written disclosure of substantially all material evidence and information then in
170. Prior to filing this action, Relator served the Chief Financial Officer of
Florida with a written disclosure of substantially all material evidence and information
violated the Florida False Claims Act, Fla. Stat. §§ 68.081, et. seq.
State of Florida false or fraudulent claims for payment or approval in violation of Fla.
Stat. § 68.082(2)(a).
false records or statements to get false or fraudulent claims paid or approved by the State
of Florida in violation of Fla. Stat. § 68.082(2)(b).
43
174. Defendants have conspired to submit false or fraudulent claims to the
State of Florida and/or to deceive the State of Florida for the purpose of getting false or
fraudulent claims allowed or paid in violation of Fla. Stat. 9 68.082(2)(c).
175. The State of Florida, unaware of the falsity of the records, statements
been paid but for Defendant’ s m~awful practices as detailed above.
176. By reason of Defendants’ acts and practices, the State of Florida has been
damaged, and continues to be damaged, in a substantial amount.
COUNT V - VIOLATIONS OF THE GEORGIA STATE FALSE MEDICAID
CLAIMS ACT
herein.
violated the Georgia State False Medicaid Claims Act, Ga. Code 99 49-4-168, et. seq.
179. Prior to filing this action, Relator served the Attorney General of Georgia
with a mitten disclosure of substantially all material evidence and information then in
Georgia Medicaid program false or fraudulent claims for payment or approval in
violation of Ga. Code 9 49-4-168.1 (a)(1).
false records or statements to get false or fraudulent claims paid or approved by the
Georgia Medicaid program in violation of Ga. Code 9 49-4-168.1 (a)(2).
44
182. Defendants have conspired to defraud the Georgia.Medicaid proga’am by
getting false or fraudulent claims allowed or paid in violation of Ga. Code § 49-4168.1(a)(3).
183. The State of Georgia, unaware of the falsity of the records, statements
and!or claims made or caused to be made by Defendants, paid claims that would not have
184. By reason of Defendants’ acts and practices, the State of Georgia has been
damaged, and continues to be dmnaged, in a substantial amount.
COUNT VI - VIOLATIONS OF THE HAWAII FALSE CLAIMS ACT
185. Relator hereby incorporates paragraphs 1-151 above as if fully set
herein.
186. Prior to filing this action, Relator selwed the Attorney General of Hawaii
violated the Hawaii False Claims Act, Haw. Stat. §§ 661-21, et. seq.
State of Hawaii false or fraudulent claims for payment or approval in violation of Haw.
Star. §§ 661-21(a)(1).
of Hawaii in violation of Haw. Stat. § 661-21(a)(2).
45
190. Defendants have conspired to defraud the State of Hawaii by getting false
or fraudulent claims allowed or paid in violation of Haw. Stat. § 661-21(a)(3).
191. The State of Hawaii, unaware of the falsity of the records, statements
192. By reason of Defendants’ acts and practices, the State of Hawaii has been
damaged, and continues to be dan~aged, in a substantial amount.
COUNT VII - VIOLATIONS OF THE ILLINOIS WHISTLEBLOWER REWARD
AND PROTECTION ACT
herein.
194. Prior to filing this action, Relator served the Attorney General of Illinois
violated the Illinois Whistleblower Reward and Protection Act, 740 Ill. Comp. Stat. § §
175/1, et seq.
State of Illinois false or fraudulent claims for pasnnent or approval in violation of 740 Ill.
Comp. Stat. § 175/3(a)(1).
of Illinois in violation of 740 Ill. Comp. Stat. § 175/3 (a)(2).
46
198. Defendants have conspired to defraud the State of Illinois by getting false
or fi:audulent claims allowed or paid in violation of 740 Ill. Comp. Stat. § 175/3(a)(3).
199. The State of Illinois, unaware of the falsity of the records, statements
200. By reason of Defendants’ acts mad practices, the State of Illinois has been
COUNT VIII - VIOLATIONS OF THE INDIANA FALSE CLAIMS AND
WHISTLEBLOWER PROTECTION ACT
herein.
202. Prior to filing this action, Relator served the Attorney General of Indiana ’
with a mitten disclosure of substantially all material evidence and information then in
203. Prior to filing this action, Relator served the Inspector General of Indiana
Relator’s possession, including an appendix containing supporting documents.
violated the Indiana False Claims and Whistleblower Protection Act, Ind. Code §§ 5-115.5, et seq.
205. Defendants have knowingly or intentionally presented to the State of
Indiana false claims for payment or approval in violation of Ind. Code § 5-11-5.5-2(b)(1).
47
206. Defendants have knowingly or intentionally made and/or used false
records or statements to obtain payment or approval of false claims from the State of
Indiana in violation of Ind. Code § 5-11-5.5-2(b)(2).
207. Defendants have conspired with another person to present to the State of
Indiana false claims for payment or approval in violation of Ind. Code § 5-11-5.5-2(b)(7).
208. Defendants have conspired with another person to make and/or use false
records or statements to obtain payment or approval of false claims from the State of
Indiana in violation of Ind. Code § 5-11-5.5-2(b)(7).
209. Defendants have caused or induced another person to present to the State
of Indiana false claims for payment or approval in violation of Ind. Code § 5-11-5.520,)(8).
210. Defendants have caused or induced another perk;on to make and/or use
false records or statements to obtain payment or approval of false clams from the State
of Indiana in violation of Ind. Code § 5-11-5.5-2(b)(8).
211. The State of Indiana, unaware of the falsity oft he records, statements
been paid but for Defendants’ unlawful practices as de*ailed above.
212. By reason of Defendants’ acts and practices, the State of Indiana has been
48
COUNT IX’- VIOLATIONS OF THE MASSACHUSETTS FALSE CLAIMS ACT
213.
214.
Prior to filing this action, Relator served the Attorney General of
herein.
Massachusetts with a written disclosure of substantially all material evidence and
information then in Relator’s possession.
violated the Massachusetts False Claims Act, Mass. Gem Laws c. !2, §§ 5A, etseq.
Commonwealth of Massachusetts false or fraudulent claims for payment or approval in
violation of Mass. Gen. Laws c. 12, § 5B(1).
false records or statements to obtain payment or approval of claimsby the
Commonwealth of Massachusetts in violation of Mass: Gem Laws c. 12, § 5B(2).
218. Defendants have conspired to defraud the Commonwealth of
Massachusetts through the allowance or payment of fraudulent claims in violation of
Mass. Gen. Laws c. 12, § 5B(3).
219. The Commonwealth of Massachusetts, unaware of the falsity of the
r-e~drds, Statement~-and/or claims made or caused to be made by Defendants, paid claims
that would not have been paid but for Defendants’ unlawful practices as detailed above.
220. By reason of Defendants’ acts and practices, the Commonwealth of
Massachusetts has been damaged, and continues to be damaged, in a substantial amount.
49
COU~T X - VIOLATIONS OF THE MICHIGAN MEDICAID FALSE CLAIMS
ACT
herein.
222. Prior to filing this action, Relator served the Attorney General of Michigan
223. Defendants’ acts and practices, as described more fuIIy above, have
violated the Michigan Medicaid False Claim Act, Mich. Stat. §§ 400.601, et seq.
22.4. Defendants have knowingly made and/or caused to .be made false
statements or false representations of a material fact for use in determining rights to
Medicaid benefits in violation of Mich. Stat. § 400.603(2).
225. Defendants have entered into an agreement, combination and/or
conspiracy to defraud the State of Michigan by aiding another to obtain the payment or
allowance of false claims in violation of Mich. Stat. § 400.606(1).
226. Defendants have made, presented and/or caused to be made or presented
to the State of Michigan claims under the social welfare act knowing the claims to be
false in violation of Mich. Stat. § 400.607(1).
227. The State of Michigan, unaware of the falsity of the records, statements
228. By reason of Defendants’ acts and practices, the State of Michigan has
50
COI~TXI - VIOLATIONS OF THE MONTANA FALSE CLAIMS ACT
229.
230.
Prior to filing this action, Relator served the Attorney General of Montana
herein.
with a written disclosure of substantially all material evidence and infon~aation then in
violated the Montana False Claims Act, Mont. Stat. § § 17-8-401, et seq.
State of Montana false or frandulent claims for payar~ent or approval in violation of Mont.
Stat. § 17-8-403(1)(a).
false records or statements to get false or fraudulent claims paid Or approved by the State
of Momana in violation of Mont. Stat. § 17-8-403(1)(b).
234. Defendants have conspired to defraud the State of Montana by getting
false or fraudulent claims allowed or paid by the State of Montana in violation of Mont.
Stat. § 17-8-403(1)(@
235. The State of Montana, unaware of the falsity of the records, statements
ano/or claims maoe or caused to be mai:le l:;y Det’~ni:lan~s; pmtl claims th-at’w-ould-not’have ....... "
236. By reason of Defendants’ acts and practices, the State of Montana has
51
COUNT XII - VIOLATIONS OF THE NEVADA FALSE CLAIMS ACT
237.
238.
Prior to filing this action, Relator served the Attorney General of Nevada
herein.
with a written disclosure of substantially all material evidence and infotTnation then in
violated the Nevada False Claims Act, Nev. Stat. §§ 357.010, et seq.
240. Defendants have Icnowingly presented and/or caused to be presented to the
State of Nevada false claims for payment or approval in violation ofNev. Stat. §
357.040(1)(a).
false records or statements to obtain payment or approval of false claims from the State
of Nevada in violation ofNev. Stat. § 357.040(1)(b).
242. Defendants have conspired to defraud the State of Nevada by obtaining
allowance or payment of false claims in violation of Nev. Stat. § 357.040(1)(c),
243. The State of Nevada, unaware of the falsity of the records, statements
244. By reason of Defendants’ acts and practices, the State of Nevada has been
52
COUNT XIII - VIOLATIONS OF T]~E NEW HAMPSHIRE FALSE CLAIM ACT
245.
246.
Prior to filing this action, Relator served the Attorney General of New
herein.
Hampshire with a written disclosure of substantially all material evidence and
information then in Relator’s possession.
violated the New Hampshire False Claims Act, N.H. Rev. Stat. §§ 167:61-b, et seq.
248. Defendants have knowingly presented and!or Caused to be presented to the
State of New Hampshire false claims for payment or approval in violation ofN.H. Rev.
Stat. § 167:61-b(I)(a).
of New Hampshire in violation ofN.H. Rev. Stat. § 167:61-b(I)(b).
250. Defendants have conspired to defraud the State of New Hampshire by
getting false or fraudulent clainas allowed or paid in violation ofN.H. Rev. Stat. §
167:61-b(I)(c).
251. The State of New Hampshire, unaware of the falsity of the records,
statements and/or claims made or caused to be made by Defendants, paid claims that
would not have been paid but for Defendants’ unlawfial practices as detailed above.
252. By reason of Defendants’ acts and practices, the State of New Hampshire
has been damaged, and continues to be damaged, in a substantia! amount.
53
COUNT XIV - NEW ,’JERSEY FALSE CLAIMS ACT
253.
Relator hereby incorpo :ates paragraphs 1-151 above as if fully set forth
herein.
254. Prior to filing this a ztion, Relator served the Attorney General of New
Jersey with a written disclosure, ,f substantially all material evidence and information
then ha Relator’s possession.
255. Defendants’ a~ ,ts and practices, as described more fully above, have
violated the New Jersey Fa] ;e Claims Act, N.J. Stat. §§ 2A:32C-1, et seq.
256. Defendant: have knowingly presented and/or caused to be presented to the
State of New Jersey fals ~ or fraudulent claims for payment or approval in violation of
N.J. Stat. § 2A:32C-3(t).
257. Defer Jants have knowingly made, used and/or caused to be made or used
false records or star ~ments to get false or fraudulent claims paid or approved by the State
of New Jersey in- iolation of N.J. Stat. § 2A:32C-3(b).
258. F efendants have conspired to defraud the State of New Jersey by getting
false or fraudu~.ent claims allowed or paid by the State of New Jersey in violation of N.J.
Stat. § 2A:322-3(c).
259. The State of New Jersey, unaware of the falsity of the records, statements
and/or cla’.ms made or caused to be made by Defendants, paid claims that would not have
been pai I but for Defendants’ unlawful practices as detailed above.
260. By reason of Defendants’ acts and practices, the State of New Jersey has
been gamaged, and continues to be damaged, .in a substantial amount.
54
COUNT XV - VIOLATIONS OF THE NEW MEXICO FRAUD AGAINST
TAXPAYERS ACT
herein.
262. Prior to filing this action, Relator served the Attorney General of New
Mexico with a written disclosure of substantially all material evidence and information
violated the New Mexico Fraud Against Taxpayers Act, N.M. Stat. §§ 44-9-1, et seq.
State of New Mexico false or fraudulent claims for payment or approval in violation of
N.M. Stat2 § 44-9-3(A)(1).
false, misleading or fraudulent records or statements to obtain or support the approval of
or the payment on false or fraudulent claims in violation.ofN.M. Stat. § 44-9-3(A)(2).
266. Defendants have conspired to defraud the State of New Mexico by
obtaining approval or payment on false or fraudulent claims in violation ofN.M. Stat. §
44-9-3(A)(3).
267. The State of New Mexico, unaware of the falsity of the records, statements
268. By reason of Defendants’ acts and practices, the State of New Mexico has
been dmnaged, and continues to be damaged, in a substantial amount.
55
COUNT XVI - VIOLATIONS OF THE NEW YORK FALSE CLAIMS ACT
269.
Relator hereby incolqporates paragraphs 1-151 above as if fulIy set forth
270.
Prior to filing this action, Relator served the Attorney General of New
herein.
York with a written disclosure of substantially all material evidence and information then
in Relator’s possession.
violated the New York False Claims Act, N.Y. State Fin. Law §§ 187, et seq.
State of New York false or fraudulent claims for payment or approval in violation of
N.Y. State Fin. Law § 189(1)(a).
of New York in violation of N.Y. State Fin. Law § 189(1)(b).
274. Defendants have conspired to defraud the State of New York by getting
false or fraudulent claims allowed or paid in violation of N.Y. State Fin. Law § 189(1)(@
275. The State of New York, unaware of the falsity of the records, statements
276. By reason of Defendants’ acts and practices, the State of New York has
56
COUNT XVII - VIOLATIONS OF THE NORTH CAROLINA FALSE CLAIMS
ACT
herein.
278. Prior to filing this action, Relator served the Attorney ~.eneral of North
Carolina with a written disclosure of substantially all material evidence and information
violated the North Carolina False Claims Act, N.C. Gen. Stat. §§ 1-605, et seq.
State of North Carolina false or fraudulent claims for payment or approval in violation of
N.C. Gen. Stat. § 1-607(a)(1).
false records or statements material to false or fraudulent claims in violation of N.C. Gem
Stat. § 1-607(a)(2).
282. Defendants have conspired to violate subdivisions (1) and (2) of N.C. Gem
Stat. § 1-607(a)in violation ofN.C. Gen. Stat. § 1-607(a)(3).
283. The State of North Carolina, unaware of the falsity of the records,
would not have been paid but for Defendants’ unlawful practices as detailed above.
284. By reason of Defendants’ acts and practices, the State of North Carolina
has been damaged, and continues to be damaged, in a substantial amount.
57
COUNT XVIII - OKLAHOMA MEDICAID FALSE CLAIMS ACT
herein.
286. Prior to filing this action, Relator served the Attomey General of
Oklahoma with a written disclosure of substantially all material evidence and information
violated the Oklahoma Medicaid False Claims Act, 63 Okla. Stat. §§ 5053, et seq.
State Of Oldahoma false or fraudulent claims for payment or approval in violation of 63
Okla. Stat. § 5053.1~)(1).
of Oklahoma in violation of 63 Okla. Stat. § 5053.1 (B)(2).
290. Defendants have conspired to defraud the State of Oklahoma by getting
false or fraudulent claims allowed or paid in violation of 63 Okla. Stat. § 5053.1(B)(3).
291. The State of Oklahoma, unaware of the falsity of the records, statements
292. By reason of Defendants’ acts and practices, the State of Oklahoma has
58
COUNT XIX - VIOLATIONS OF THE RHODE ISLAND STATE FALSE
CLAIMS ACT.
herein.
294. Prior to filing this action, Relator served the Attorney General of Rhode
Island with a written disclosure of substantially all material evidence and information
violated the Rhode Island State False Claims Act, R.L Gen. Laws §§ 9-1.1-1, etseq.
296. Defendants have knowingly presented and!or caused to be presented to the
State of Rhode Island false or fraudulent claims for payment or approval in violation of
R.I. Oen. Laws § 9-1.1-3(a)(1).
297. Defendants have knowingly made, .used and/or caused to be made or used
of Rhode Island in violation of R.I. Gem Laws § 9-1.1-3(a)(2).
298. Defendants have conspired to defraud the State of Rhode Island by getting
false or fraudulent claims allowed or paid in violation of R.I. Gem Laws § 9-1.1-3(a)(3).
299. The State of Rhode Island, unaware of the falsity of the records,
would not have been paid but for Defendants’ unlawful practices as detailed above.
300. By reason of Defendants’ acts and practices, the State of Rhode Island has
59
COUNT XX - VIOLATIONS OF TIcIE TENNESSEE MEDICAID FALSE
CLAIMS ACT
301. Relator hereby incorporates pm’agraphs 1-151 above as if fully set forth
herein.
302. Prior to filing this action, Relator served the Attorney General of
Tennessee with a written disclosure of substantially all material evidence and information
violated the Tennessee MedJcaid False Claims Act, Tenn. Code §§ 71-5-181, etseq.
304. Defendants have presented and/or caused to be presented to the State of
Tennessee claims for payment under the Medicaid progran~ knowing such claims were
false or fraudulent in violation of Telm. Code § 71-5-182(a)(1)(A).
305. Defendants have made, used and/or caused to be made or used records or
statements to get false or fraudulent claims under the Medicaid proga’am paid for or
approved by the State of Tennessee loaowing such records or statements were false in
violation of Tenn. Code § 71-5-182(a)(1)(B).
306. Defendants have conspired to defraud the State of Tennessee by getting
claims allowed or paid under the Medicaid program knowing such claims were false or
fraudulent in violation of Tenn. Code § 71-5-182(a)(1)(C).
307. The State of Tennessee, unaware of the falsity of the records, statements
and/or clahns made or caused to be made by Defendants, paid claims that would not have
308. By reason of Defendants’ acts mad practices, the State of Termessee has
been damaged, and continues to be damaged, in a substantial mnount.
60
COUNT XXI - VIOLATIONS OF THE TEXAS MEDICAID FRAUD
PREVENTION LAW
309.
Relator hereby incorporates paragn:aphs 1-151 above as if fully set forth
herein.
310. Prior to filing this action, Relator served the Attorney General of Texas
violated the Texas Medicaid Fraud Prevention Law, Tex. Hum. Res. Code §§ 36.001, et
seq.
312. Defendants have knowingly made and/or caused to be made false
statements or misrepresentations of a material fact to permit persons to receive benefits or
payments under the Texas Medicaid program that were not authorized or that were
greater than the benefits or payments that were authorized in violation of Tex. Hum. Res.
Code § 36.002(1).
313. Defendants have knowingly entered into an agreement, combination or
conspiracy to defraud the State of Texas by aiding other persons in obtaining
unauthorized payments or benefits from the Texas Medicaid program in violation of Tex.
Hum. Res. Code § 36.002(9).
314. Defendants have violated Tex. Hum. Res. Code § 36.002(13) by
knowingly engaging in conduct that constitutes a violation under Tex. Hum. Res. Code §
32.039(b)(1-e); to wit, Defendant offered or paid, directly or indirectly, overtly or
covertly remuneration in cash or in kind to induce health care practitioners to purchase or
61
order and/or to arrange for or recommend the purchase or order of Hyalgan, which
payment was made, in whole or in part, under the Texas medical assistance program.
315. The State of Texas, unaware of the falsity of the records, statements and/or
claims made or caused to be made by Defendants, paid claims that would not have been
paid but for Defendants’ unlawful practices as detailed above.
316: By reason of Defendants’ acts and practices, the State of Texas has been
COUNT XXII - VIOLATIONS OF THE VIRGINIA FRAUD AGAINST
TAXPAYERS ACT
herein.
318. Prior to filing this action, Relator served the Attorney General of Virginia
violated the Virginia Fraud Against Taxpayers Act, Va. Code §§ 8.01-216.1, et seq.
Commonwealth of Virginia false or fraudulent claims for payment or approval in
violation of Va. Code § 8.01-216.3(A)(1).
32t. Defendants have knowingly made, used and/or caused to be made or used
false, misleading or fraudulent records or statements to get false or fraudnlent claims paid
or approved by the Commonwealth of Virginia in violation of Va. Code § 8.01¯ 216.3(A)(2).
62
322. Defendants have conspired to defi’aud the Commonwealth of Virginia by
getting false or fraudulent claims allowed or paid in violation of Va. Code 8 8.01216.3(A)(3).
323. The Commonwealth of Vh’ginia, unaware of the falsity of the records,
statements and/or claims made or caused to be made by Defendants, paid clahns that
would not hd;~ been paid but for Defendants’ m~awful practices as detailed above.
324. By reason of Defendants’ acts and practices, the Commonwealth of
Virginia has been damaged, and continues to be damaged, in a substantial amount.
COUNT XXIII - VIOLATIONS OF TIlE WISCONSIN FALSE CLAIMS FOR
MEDICAL ASSISTANCE ACT
herein.
326. Prior to filing this action, Relator served the Attorney General of
Wisconsin with a written disclosure of substantially all material evidence and information
violated the Wisconsin False Claims for Medical Assistance Act, Wis. Stat. 88 20.931, et
seq.
State of Wisconsin false claims for medical assistance in violation of Wis. Star. 8
20.93 l(2)(a).
329. Defendants have knowingly made, used and/or c~used to be made or used
false records or statements to obtain approval or payment bythe State of Wisconsin of
false claims for medical assistance in violation of Wis. Stat. 8 20.931 (2)(b).
63
330. Defendants have conspired to defi’aud the State of Wisconsin by obtaining.
allowance or payment of false claims in violation ofWis. Stat. § 20.931 (2)(c).
331. The State of Wisconsin, unaware of the falsity of the records, statements
been paid but for Defendants’ m~awful practices as detailed above.
332. By reason of Defendants’ acts and practices, the State of Wisconsin has
COUNT XXIV - VIOLATIONS OF THE DISTRICT OF COLUMBIA
PROCUREMENT REFORM AMENDMENT ACT
3 3 3. Relator hereby incorporates paragraphs 1-151 above as if fully set forth
herein.
334. Prior to filing this action, Relator served the Attorney General of the
District of Columbia with a written disclosure of substantially all material evidence and
infonr~ation then in Relator’s possession.
violated the District of Columbia Procurement Reform Amendment Act, D.C. Code § § 2308.13, et seq.
District of Columbia false claims for payment or approval in violation of D.C. Code § 2308.14(a)(1).
false records or statements to get false claims paid or approved by the District of
Columbia in violation of D.C. Code § 2-308.14(a)(2).
64
338. Defendants have conspired to defraud the District of Columbia by getting
false claims allowed or paid by the District of Columbia in violation of D.C. Code § 2308.14(a)(3).
339. The District of Colunabia, unaware of the falsity of the records, statements
340. By reason of Defendants’ acts and practices, the District of Columbia has
been dan~aged, and continues to be dan~aged, in a substantial amount.
COUNT XXV - INJUNCTIVE AND DECLARATORY RELIEF
herein.
342. There exists an actual controversy between the federal government and the
relevant states and Defendants.
343. Relator, on behalf of the federal government and the relevant states,
requests the following equitable relief:
a. that a judicial determination and declaration be made of the rights
of the federal government, the relevant states, and the
corresponding responsibilities of Defendants;
b. that Defendants be ordered to cease their unlawful practice of
providing payments or payments in kind to physicians to induce
them to prescribe Hyalgan; and
c. that any further equitable relief that this Court deems just be
afforded the federal government and the relevant states.
65
COUNT XXVI -ANTI-KICKBACK VIOLATIONS
344.
herein.
345. From no later than 2005 and continuing until at least October 2009,
Defendants knowingly and willingly offered or paid remtmeration directly or indirectly,
overtly or covertly in cash or in kind to physicians to induce such persons to, inter alia,
purchase or order, or recommend for purchasing or ordering, a good covered in whole or
in part under a federal health care program in violation of 42 U.S.C. § 1320a-Tb(b)(2).
346. Defendants’ actions as detailed above, including payments to physicians in
the form of free sanaples of Hyalgan, constituted illegal kickbacks under 42 U.S.C. §
1320a-7b(b)(2).
347. Defendants’ actions as detailed above, including payments to physicians in
the form of free samples of Hyalgan, constituted violations of 42 U.S.C. § 1320a7a(a)(7).
348.
As a result thereof, the federal government has sustained damages.
COUNT XXVII-STARK LAW VIOLATIONS
349.
350.
From no later than 2005 and continuing until at least October 2009,
herein.
Defendants knowingly and willingly offered or paid remuneration directly or indirectly,
overtly or covertly in cash or in kind to physicians to induce such persons to, inter alia,
purchase Hyalgan in violation of 42 U.S.C. § 1395nn(a).
66
351. Defendants’ payments to physicians constituted a "compensation
arrangement" between Defendants and the physicians under 42 U.S.C. § § 1395nn(a) and
(h)(1).
352. Defendants lmowingly caused the physicians with whom it had a
°°compensation an-angement" to purchase Hyalgan for which payment otherwise may be
made under Medicare in violation of 42 U.S.C. §§ 1.395nn(a)(1)(A) and (g)(1).
Defendants are liable therefore pursuant to 42 U.S.C. § 1395rm(g)(3).
353. Defendants’ actions as detailed above, hMuding its payments to
physicians constituted illegal arrangements or schemes in violation of 42 U.S.C.. § §
1395nn(g)(4).
354. As a result thereof, the federal government has sustained damages.
PRAYER FOR RELIEF
WHEREFORE, Relator prays for judgment against Defendants and for relief as
follows:
1. for damages and civil penalties as allowed under the FCA and the
State FCAs;
2. for treble damages as allowed under the FCA and the State FCAs;
3. for the maximum Relator award allowed under the FCA and the State
FCAs;
4. for expenses, attorneys’ fees and costs pursuant to 31 U.S.C. § 3730,
and the State FCAs;
7. for interest;
8. for declaratory and injunctive relief; and
67
9. for such other and fm-ther relief as this Court deems just.
JVRY DEMAND
RELATOR DEMANDS A JURY TRIAL ON ALL ISSUES SO TRIABLE.
Respectfully submitted,
For the Relator,
Fred~’c 0 Ellis, Mass. BBO # 542qq~
Ed/Car, d D. Rapacld, BBO # 4119}~ \
Joseph M. Makalusky, BBO # 6312x~,pJ
ELLIS & RAPACKI LLP
85 Merrimac Sta’eet, Suite 500
Boston, MA 02114
(617) 523-4800
(617) 523-6901 (facsimile)
[email protected]
Dated: January 19, 2010
68

government`s complaint

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