Healthpoint Whistleblower Case Settles for $48 Million

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In the case of United States et al., ex rel. Conrad v. Healthpoint, Ltd., et al., No. 02-cv-11738-NG (D. Mass.), the United States Government announced yesterday that Healthpoint, Ltd., and DFB Pharmaceuticals, Inc., have agreed to pay $48 million to settle the Complaint allegations that they illegally sold an unapproved prescription drug product called Xenaderm paid for by Medicare and Medicaid.

In the case of United States et al., ex rel. Conrad v. Healthpoint, Ltd., et al., No. 02-cv-11738-NG (D. Mass.), the United States Government announced yesterday that Healthpoint, Ltd., and DFB Pharmaceuticals, Inc., have agreed to pay $48 million to settle the Complaint allegations that they illegally sold an unapproved prescription drug product called Xenaderm paid for by Medicare and Medicaid.

According to the complaint-in-intervention, Healthpoint launched Xenaderm as a prescription drug in 2002, without first subjecting the product to the Food and Drug Administration (FDA) drug approval process. Since then, Healthpoint has sold hundreds of millions of dollars’ worth of Xenaderm, a skin ointment primarily used to treat nursing home patients’ bed sores (also known as “decubitus ulcers”).

Under the federal Food, Drug & Cosmetic Act, 21 U.S.C. § 301 et seq., every prescription drug must be approved by the FDA for safety and effectiveness before it can be marketed to the public. This qui tam action, brought by a courageous whistleblower represented by Nolan Auerbach, alleged that Healthpoint repeatedly deceived the government by falsely certifying that Xenaderm met the statutory definition of a Covered Outpatient Drug. These alleged false certifications allowed Healthpoint to market its unapproved product to physicians of Medicaid, and Medicare and other Government Health Care Programs.

Federal and State False Claims Acts allow private citizens with detailed knowledge of fraud to bring an action on behalf of the governments and to assist in the recovery of the governments’ stolen dollars. These statutes allow the government to recover three times the amount it was defrauded, in addition to civil penalties of $5,500 to $11,000 per false claim. Successful healthcare fraud whistleblowers receive between 15 and 30 percent of the monies returned to the Government.

This case is United States et al., ex rel. Conrad v. Healthpoint, Ltd., et al., No. 02-cv-11738-NG (D. Mass.).

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Marcella Auerbach

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