4th Circuit Affirms Dismissal of FCA Medicaid Suit Against Allergan 

4th Circuit Affirms Dismissal of FCA Medicaid Suit Against Allergan 

On January 25, 2022, a majority of the Fourth Circuit panel affirmed the dismissal of a relator’s False Claims Act complaint against Allergan Sales LLC, alleging Medicaid fraud.

In the underlying case, the plaintiffs alleged that Allergan engaged in a fraudulent price reporting scheme under the Medicaid Drug Rebate Statute by failing to aggregate discounts given to separate customers for purposes of reporting the “best price,” allegedly costing the government at least $680 million. Plaintiffs further alleged that Allergen failed to properly report certain discount information under Medicaid Drug Rebate Statute rules. 

US District Judge Ellen L. Hollander of the District of Maryland dismissed the plaintiffs’ complaint, holding that “the Rebate Statute’s ‘plain and natural reading’ did not require aggregating discounts.” The Fourth Circuit majority agreed, explaining that Allergan’s interpretation “was at the very least objectively reasonable,” and concluding that the company did not act “knowingly” under the FCA. 

Circuit Judge James A. Wynn, Jr., dissented, arguing that the majority decision “effectively neutered” the FCA by ignoring two out of the three standards for fraudulent intent. 

The opinion can be found here. 

Fifth Defendant Pleads Guilty To Multi-Million Dollar Fraud Conspiracy

On January 26, 2022, a New York man pleaded guilty in the Eastern District of New York to participating in a fraudulent prize notice scheme that allegedly deceived consumers into paying fees for cash prizes that they would not receive. The defendant pleaded guilty to conspiracy to commit mail fraud.

According to court documents, the defendant engaged in a direct-mail scheme from November 2013 to November 2018, allegedly mailing fraudulent prize notifications to thousands of consumers. The mailings allegedly induced consumers to pay a fee to later receive a large cash prize. 
However, none of the consumers who participated ever received any prize.   

The defendant was the fifth to plead guilty to the fraud conspiracy. The four other defendants allegedly involved in the conspiracy previously pleaded guilty to conspiracy to commit mail fraud for their participation in the scheme. The scheme allegedly entailed coordinating mailings, processing consumers’ responses to the mailings, managing the lists of recipients and respondents, and processing consumers’ payments of fees.

The defendant has not yet been sentenced, and each of the five defendants faces a maximum sentence of 20 years in prison.

The DOJ press release can be found here.     

Pharmacist Sentenced to Five Years for $180 Million Fraud Scheme

On January 26, 2022, a pharmacist from Mississippi was sentenced to five years in prison for his alleged participation in a multimillion-dollar fraud scheme. The government alleged that the scheme involved paying kickbacks to distributors for referring medically unnecessary prescriptions, which resulted in over $180 million in allegedly fraudulent billings. Over $50 million was ultimately paid by federal health care programs such as TRICARE, the health care program for active duty services members, retirees, and their families.  

According to court documents, the pharmacist schemed to defraud TRICARE and other health care programs by distributing medically unnecessary prescriptions, including by adjusting prescription formulas in order to receive the highest possible reimbursement without regard for the efficacy of the medications. The pharmacist also allegedly sought recruiters to obtain prescriptions for medications with high reimbursements, and then paid those recruiters’ commissions based on a percentage of the reimbursements paid by health care programs, including commissions on claims reimbursed by TRICARE.

The pharmacist pleaded guilty on July 20, 2021, to conspiracy to defraud the federal government and solicit, receive, offer and pay illegal kickbacks. In addition to his prison sentence, the pharmacist was also ordered to pay restitution and forfeit all assets traced to his fraudulent proceeds.  

The DOJ press release can be found here.