GlaxoSmithKline Settlement Puts Healthcare Industry on Notice

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[author: Gene Grabowski]

With the Justice Department’s announcement that GlaxoSmithKline will pay $3 billion in the largest healthcare fraud settlement in U.S. history, all drug companies – and any other businesses working in healthcare or health-related fields – should be on notice that the federal government is cracking down hard on any infractions it can find.

Republicans, Democrats, and a host of regulators representing numerous departments and agencies have every reason to be especially vigilant against healthcare fraud in the current economic and political environment. Healthcare costs (as well as those for private and government insurance) are on the rise and likely to keep climbing with or without total implementation of the Affordable Care Act. The Glaxo case stands as a perfect example of the ways in which the government can burnish its watchdog credentials, add to the federal Treasury, and help keep costs down by sending a stern message to potential fraudsters.

In announcing the Glaxo settlement, Deputy Attorney General James Cole twice said in one news conference that the administration “will not tolerate health care fraud.” Signals don’t come any clearer than that.

The Justice Department has likewise cracked down on hospitals where doctors are conducting expensive operations and charging the associated costs to Medicare and Medicaid. The most notable case involved St. Joseph’s Medical Center in Maryland, which was ordered to pay $22 million to resolve allegations that it violated the False Claims Act (the primary legal vehicle by which the government prosecutes qui tam cases).

At the same time, the U.S. Food and Drug Administration (FDA) has issued nearly 300 warning letters in 2012 alone – more than half of which were sent to companies within the pharmaceutical, medical device and dietary supplement industries.

This government crackdown is as much about politics as anything else. But that simply doesn’t matter. At the end of the day, anyone working in the healthcare industry today can expect to come under extreme scrutiny from regulators, prosecutors and consumers. Drug and healthcare companies would be wise to consider three steps to avoid having a target affixed to their backs.

  1. First, healthcare companies need to perform internal audits and police malfeasance before it gets out of hand. And they need to be certain that all related documents are written in a way that put the company in a positive and righteous light. Otherwise, future court cases and media coverage may have a damaging paper trail to follow if wrongdoing is found.
  2. Second, they need to craft practical crisis communications plans for alleged healthcare fraud in the event that wrongdoing is discovered and criminal or civil prosecutions arise.
  3. And third, they must avoid blaming the media or politics should fraud allegations arise. Healthcare is important to everyone and scrutiny will only increase. It’s far better to accept and prepare for it than it is to rely on messages that won’t help in the courtroom or the Court of Public Opinion.

Gene Grabowski is Executive Vice President at Levick Strategic Communications, the nation’s top crisis communications firm. He is also a contributing author to Bulletproof Blog. Connect with him @crisisguru.

 

Topics:  DOJ, Fraud, Healthcare, Pharmaceutical

Published In: Administrative Agency Updates, Business Torts Updates, General Business Updates, Health Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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