Teva Pharmaceuticals has agreed to pay $54 million to settle a whistleblower lawsuit filed back in 2013 by two former sales reps who alleged the company committed healthcare fraud.

According to Compliance Week, plaintiffs Charles A. and Hossam S. alleged the company created a program designed to hide payments to doctors who prescribed multiple sclerosis drug Copaxone and Parkinson’s drug Azilect. Both men had been sales representatives of Teva Neuroscience.

A February 2014 regulatory filing indicated Teva revealed the U.S. Attorney for the Southern District of New York sent Teva a subpoena for sales documents, marketing strategies and promotions of both Copaxone and Azilect.

U.S. authorities let the court know in November 2014 that they would not intervene in the whistleblower lawsuit.

Teva tried to have the case dismissed, but the lawsuit was allowed to proceed. A court order to unseal the suit and allow the former sales reps to prosecute on behalf of the U.S. and several states was issued in March 2015.

The False Claims Act allows individuals who uncover fraud to file a lawsuit on behalf of the government and to receive up to 30 percent of any successful lawsuit or settlement. Under the False Claims Act, a lawsuit filed by a person on behalf of the government is called a “qui tam” action, and the individual who brings forth the qui tam action is called a “relator.”

The whistleblowers alleged Teva paid doctors bogus speaking fees by participating in “sham” speaking engagements. The promotional speaker program allegedly had healthcare workers rotate as speakers at one engagement and as an audience member at another. According to court records, at least 1,500 healthcare workers attended three or more events to hear about the same medication within a six-month time frame.

The speaking events allegedly helped Teva commit healthcare fraud because the events were just covers for paying the doctors to prescribe Copaxone and Azilect. Because both of the medications were on the list of those covered by Medicare, the unnecessary prescribing of the drugs was a violation of the False Claims Act.

Administering bribes in the form of fake speaking fees to doctors was a violation of the Anti-Kickback Statute.

Teva showed as evidence that the company’s written compliance materials did not promote unethical or illegal behavior, but the court said the existence of such materials doesn’t necessarily mean staff adhered to such rules.

Honorable Colleen McMahon, chief judge for the U.S. District Court for the Southern District of New York, denied Teva’s motion for summary judgment last February. In her 70-page opinion, McMahon said substantial evidence was presented showing that Teva tracked the number of prescriptions that doctors wrote and that each physician’s prescribing habits appeared to be linked to their retention as paid speakers for the Teva events.

The prescriptions were then covered by state and federal healthcare programs, which means the alleged healthcare fraud was committed against the government.

McMahon also noted why she disagreed with Teva’s argument that there was no evidence that the speaking engagements were fake programs.

She said that “relators submit that Teva routinely carried out speaker program events in a sham manner, as evidenced by the location at which many programs were held, the amount of alcohol served, and the fact the audience was frequently made up of either Teva representatives, speakers themselves, repeat attendees, or physicians’ family members.”

This article is not legal advice. It is presented
for informational purposes only.