A doctor kickback lawsuit has resulted in a multi-million dollar settlement between the Justice Department and Forest Laboratories.

New York-based Forest Laboratories LLC and its subsidiary Forest Pharmaceuticals Inc. have agreed to pay $38 million to resolve claims that they offered to pay doctors kickbacks in exchange for promoting certain Forest pharmaceutical products.

The doctor kickback lawsuit accused Forest of violating the False Claims Act, a federal law that provides for penalties against businesses who submit fraudulent claims to the federal government.

Whistleblower Gets $7.8M Following Doctor Kickback Lawsuit

Under terms of the settlement, whistleblower Kurt K. will get an incentive award of $7.8 million. Kurt previously worked as a pharmaceutical sales representative for Forest Labs.

State Medicaid programs will get $2.5 million in settlement funds, and the remainder of the money will go directly to the federal government.

According to this doctor kickback lawsuit, Forest Labs allegedly offered meals and cash payments to some physicians in exchange for their promoting and prescribing Bystolic, Namenda and Savella, all Forest Labs products.

Bystolic is used to treat high blood pressure, Namenda is a treatment for dementia and Savella is an anti-fibromyalgia drug.

The alleged kickbacks took place between the beginning of 2008 and the end of 2011. Forest had styled the meals and payments as being connected to doctors’ participation in “speaker programs.”

However, DOJ investigators noted the payments and meals were distributed even when the speaker programs had been cancelled. Forest sometimes provided no bona fide reason for the cancellation.

Other speaker programs went completely unattended by any licensed physician. Some attendees were on the record for having attended a large number of programs in a short period of time.

Meals served in connection with these programs sometimes exceeded Forest Labs’ own internal expenditure limits, according to a DOJ press release.

“Kickback schemes undermine the integrity of medical decisions and increase the costs of health care for everyone,” according to Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division.

“Such schemes are particularly of concern when they are designed to influence drug prescriptions, and the Department of Justice will vigorously pursue companies that subvert the law at the public’s expense,” Mizer said.

Gregory J. Haanstad, U.S. Attorney for the Eastern District of Wisconsin, commented that illegal inducements under the Anti-Kickback Statute tend to persuade physicians to base their treatment decisions on their own financial interest instead of on their professional medical judgment.

Kurt initiated his doctor kickback lawsuit in 2012 in a federal court in Wisconsin. Under the False Claims Act, persons like Kurt who have evidence of fraudulent claims made against the government can file a civil claim on the government’s behalf.

The Justice Department then gets a chance to investigate, and it may intervene if it finds the claims have merit.

At first, the Justice Department declined to intervene in Kurt’s whistleblower lawsuit. But after several rounds of amendments, the department intervened, along with representatives from 27 states and the District of Columbia.