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Whistleblower achieves record settlement in non-intervened False Claims Act case

Last week, a case filed by a whistleblower who reported alleged fraud by the biotechnology company Biogen netted the largest recovery to date—$900 million—in a False Claims Act lawsuit in which the government had elected not to join and which the whistleblower pursued on his own.

In U.S. ex rel. Bawduniak v. Biogen, filed in federal district court in Massachusetts, the whistleblower’s complaint alleged that Biogen paid kickbacks to doctors to induce the doctors to prescribe more of Biogen’s drugs and reward those high prescribing doctors for their business. Biogen did this by signing up doctors to speak as part of its speaker program and paying excessively high honoraria to its speakers. Biogen also treated its speakers to extravagant meals and paid for speakers’ travel to desirable locations for speaking engagements, training, and consulting. The lawsuit alleged that approximately half of the highest-prescribing doctors of the drugs at issue received speaking or consultation fees from Biogen.

The federal Anti-Kickback Statute (known as the “AKS”) prohibits anyone from offering, paying, soliciting, or receiving anything of value to induce or reward referrals of federal healthcare services. Paying kickbacks to doctors such as speaker fees or treating doctors to lavish dinners, travel, or other rewards to influence how they prescribe pharmaceuticals can run afoul of the AKS. Violations of the AKS, which is a criminal statute, can result in jail time for perpetrators, as well as fines. In addition, a violation of the AKS creates liability under the False Claims Act.

Whistleblowers with information about fraud, including the payment of kickbacks to doctors or other healthcare providers, can file a lawsuit under the False Claims Act (called a qui tam” lawsuit) and are eligible for a reward if the case results in a recovery through a trial or a settlement. When the government joins or “intervenes” in a whistleblower’s qui tam lawsuit, the whistleblower can receive 15% to 25% of the recovery.

But if the government declines to intervene in the whistleblower’s lawsuit, the whistleblower can choose to continue to prosecute the case on their own. In those cases, called “non-intervened” cases, if the action results in a settlement, the whistleblower stands to receive 25% to 30% of the recovery.

The False Claims Act provides for larger rewards to whistleblowers in non-intervened cases in recognition of the fact that it is often more challenging for a whistleblower to prosecute a case without the government. Doing so not only requires shouldering the costs, it also poses greater risks for a variety of reasons. The statute therefore provides a greater potential for rewards as an incentive for whistleblowers to forge ahead in non-intervened cases.

The Biogen case, for example, was filed in 2012 and has been litigated by the whistleblower since 2015, following the government’s decision not to intervene.  The whistleblower, a former Biogen employee, will receive between 25% to 30% of the $900 million settlement, which was reached shortly before trial was scheduled to begin.

Prior to the Biogen settlement, the largest recovery in a non-intervened False Claims Act case was a $450 million settlement with the dialysis company DaVita. That case, settled in 2015, was brought by two whistleblowers—a doctor and a nurse who alleged that DaVita maximized the amount of drugs wasted when it performed injections in patients, then charged the government for the wasted products.

As the Biogen and DaVita settlements demonstrate, the False Claims Act’s private-public partnership continues to be an effective tool to hold companies accountable for fraud. These settlements should also remind companies and their counsel that the government’s decision to decline intervention is not necessarily a reflection on the merits of the case and that these cases can and do lead to successful recoveries.

If you are aware of kickbacks or other fraud and would like to discuss your case with experienced whistleblower lawyers, please contact Phillips & Cohen for a free, confidential review of your matter. Pharmaceutical industry insiders, healthcare providers, and others with knowledge of kickbacks or other types of fraud can report the wrongdoing and work with the government to stop the wrongdoing by filing a qui tam lawsuit under the False Claims Act. The law also offers whistleblowers protection from employer retaliation.

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