Drugmaker Aqua Pharmaceuticals recently agreed to pay $3.5 million in a whistleblower settlement with the U.S. government, resolving kickback claims.

Aqua was accused of using their sales reps and other employees to provide kickbacks to practicing dermatologists in the form of meals, gift cards, tickets and other speaking engagements. In exchange for this perks, dermatologists would reportedly prescribe products manufactured by Aqua and charge these prescriptions to programs such as Medicare and Tricare. Aqua’s kickback scheme allegedly lasted from 2012 to 2017.

According to the U.S. Department of Health and Human Service’s Office of Inspector General, physician kickbacks are illegal under federal law. Kickbacks can compromise a physician’s integrity because they may start prescribing medications or recommending treatments based on their own gain rather than the best outcomes for their patients.

As part of the whistleblower settlement, Aqua has promised to identify any pending claims with federal healthcare programs that were made in connection with the kickback scheme. If the government denies these payments, Aqua has reportedly agreed not to contest those denials.

Although Aqua has agreed to settle the case, they do not admit any wrongdoing. Even so, the company has agreed to comply with any investigation into other parties that may have been involved in the kickback scheme.

“Patients must be able to trust that decisions made by their doctors are based on unbiased professional judgment and not personal gain,” Maureen R. Dixon, special agent in charge of the Office of the Inspector General for the U.S. Department of Health and Human Services, said in a statement.

What Leads to a Whistleblower Settlement?

Under the federal False Claims Act, whistleblowers are able to bring claims against companies if they violate federal law and defraud the government. This is known as a qui tam lawsuit. Under this federal law, whistleblowers are protected from retaliation from their employers.

These whistleblower suits remain “sealed” until the government decides whether or not they will intervene. If the government intervenes and reaches an award, whistleblowers, also called “relators”, are able to receive between 15 and 25 percent of any compensation recovered by the federal government.

The U.S. Attorney’s Office reportedly only intervened recently for the purpose of reaching a settlement with the company rather than intervening to begin litigation in court.

The former sales representative who acted as relator in this case will reportedly recover $735,000 from the whistleblower settlement plus an additional $180,000 in attorneys’ fees. According to her legal team, the whistleblower is pleased with the outcome of the settlement.

“Our client is a person of tremendous honesty and integrity, and we believe it took great courage for her to bring the case after trying to report the fraud internally for more than a year,” one of the whistleblower’s attorneys told Law360. “She and our firm commend the federal government and the state of California for bringing the case forward and halting a significant amount of fraud.”

The Kickback Whistleblower Lawsuit is Case No. 2:15-cv005086 in the U.S. District Court for the Eastern District of Pennsylvania.

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