Weekly Update: Celgene Settles for $280 Million – False Claims Act Whistleblower Entitled to $84 Million

This week, our Los Angeles based False Claims Act (“FCA”) whistleblower focused attorneys reported one of the largest qui tam whistleblower settlements in recent years.  This was the $280 million dollar settlement Celgene paid to make the case go away without admitting fault.  Most companies end up settling to avoid protracted and costly litigation.  The crux of this case involved Celgene’s unlawful promotion of two cancer-fighting drugs – Thalomid and Revlimid.  The illegality behind the promotion or marketing of the drugs pertained to Celgene making misleading announcements and paying kickbacks to clinicians so that they prescribe its drugs.

The Department of Justice (“DOJ”) also reports that the Food and Drug Administration (“FDA”) notified Celgene to halt its false marketing and promotion efforts in addition to failing to warn patients about the potentially fatal risks and results from the drugs (some of which were banned since the 1960s due to their roles in birth defects).  Further, Celgene was accused of instructing its sales representatives to hide the drugs’ risks and its potential for lethal blood clots.

The settlement was reached with the DOJ, 28 states, DC, and the City of Chicago.  Celgene was accused for marketing the cancer drugs for unapproved uses while receiving federal government reimbursement.  This is unlawful and has been a trend in the bio pharmaceutical industry.

Under the FCA, the Judge is entitled to order the defendant to pay triple the actual damages that the jury finds.  In addition, the FCA also permits statutory penalties from $5,500 to $11,000 for each false claim submitted by the defendant.  As result, the whistleblower will receive approximately 15 to 25 percent of the total FCA recovery plus attorney’s fees.

As the main enforcement arm of the federal government, the Justice Department reviews all cases filed under the FCA.   Then, once the whistleblower case is assessed, the government decides whether it will prosecute or allow the whistleblower to bring the complaint on the government’s behalf.

The FCA is used to stem out fraud related to billing, staffing, and kickbacks. Examples of these are when financial companies are supposed to abide by state and federal laws and chose to ignore them.  They also bills for services that were not provided or the bill was submitted at an improperly higher rate of reimbursement for the services.  In addition, financial companies are often fount to illegally bill the government for substandard services by fraudulently certifying otherwise. Alternatively, these companies may realize that they have credit from their services that they have to repay to the government, but the companies do not reimburse the government within the 60 day time frame.  See these blogs for more examples of the FCA.

If you witness any potential false claims in California (i.e. requests for reimbursement to the government, not actually rendering work when reimbursement is received, or receiving and knowingly retaining an overpayment) by your company, or you are retaliated against for voicing your concern about potential wrongdoing, immediate action is vital.  Contact the experienced employment law attorneys at Stephen Danz & Associates for a free consultation to discuss your circumstances and legal options.