Nolan & Auerbach Assists the State of New York Recover Share of $28 Million Settlements

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Last week, the State of New York announced that it will receive $2.5 million from two recent multi-state False Claims Act settlements.

Last week, the State of New York announced that it will receive $2.5 million from two recent multi-state False Claims Act settlements. In both cases the national healthcare qui tam law firm, Nolan & Auerbach, P.A. represented the healthcare fraud whistleblower. These settlements involved Dava Pharmaceuticals and KV Pharmaceutical Company, the parent company of now-defunct Ethex Corporation. The KV Pharmaceutical case total national recovery was $17 million, and it stemmed from a decade-old qui tam action, alleging that dozens of small and mid-sized pharmaceutical companies sidestepped the FDA drug approval process. The Dava Pharmaceuticals case national recovery was $11 million, quieting allegations that it submitted false information to the Medicaid Drug Rebate program.

The Ethex complaint alleged that Ethex continued to market and receive government health care dollars for two medications that were not FDA approved and not eligible for Medicaid coverage. The two medications, Nitroglycerin Extended Release Capsules and Hyoscyamine Sulfate Extended Release Capsules, were the subject of regulatory reviews in April of 1999 and March of 1997, respectively. According to the Complaint, the company is alleged to have intentionally failed to notify the Centers for Medicare & Medicaid Services (CMS) that these medications were not eligible for Medicaid coverage. This settlement was the latest in a multi-defendant lawsuit that has led to the recovery of hundreds of millions of dollars for 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 whistleblowers can receive between 15 and 30 percent of the governments’ recovery.

The federal share of the KV Pharmaceuticals settlement was $10,158,695, and the state Medicaid share of the settlement was $6,841,305. The federal share of the Dava settlement was $5,731,098, and the state Medicaid share of the settlement was $5,083,345. In each settlement, the whistleblower will receive a percentage of the recoveries.

These cases were United States ex rel. Conrad v. Ethex Corp., et al., No. 02-11738-RWZ (D. Mass.) and United States ex rel. Conrad v. Dava Pharmaceuticals, Inc., No. WDQ 10-408 (D. Md.).

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Marcella Auerbach

Ken Nolan
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