Investigations Newsletter: Drugmaker Settles New York Opioid Lawsuit for $50 Million

Arent Fox
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Arent Fox

The New York Attorney General’s office announced that drugmaker Endo Health Solutions has agreed to pay $50 million dollars to resolve a lawsuit brought by the state of New York as well as two New York counties alleging that Endo (and other major drug manufacturers) improperly marketed and sold prescription opioids.

Friday Enforcement Wrap

Drugmaker Settles New York Opioid Lawsuit for $50 Million

The New York Attorney General’s office announced that drugmaker Endo Health Solutions has agreed to pay $50 million dollars to resolve a lawsuit brought by the state of New York as well as two New York counties alleging that Endo (and other major drug manufacturers) improperly marketed and sold prescription opioids. The announcement was made in the midst of an ongoing trial in Suffolk County State Supreme Court that began in June. The settlement includes no admission of wrongdoing by Endo or its affiliates.

The settlement came after allegations arose that Endo and its lawyers, Arnold & Porter, concealed key evidence of improper marketing. As a result of the settlement, a pending motion requesting a default against Endo for the discovery violations is now moot. A motion for sanctions against Arnold & Porter remains pending.

Four defendants remain in the trial and face more than $1 billion in damages.

The New York Attorney General’s announcement is here.

Government Intervenes in FCA Lawsuit Alleging Submission of Unsupported Diagnoses to Medicare Advantage Plans

On September 14, 2021, DOJ announced that the government has intervened in a qui tam lawsuit filed in the US District Court for the Western District of New York against Independent Health Association, Independent Health Corporation, DxID LLC (DxID), and the former CEO of DxID. The complaint alleges that the defendants submitted or caused the submission of false information about patients enrolled in Medicare Advantage Plans in order to inflate reimbursements.

Medicare Advantage Plans provide benefits to Medicare patients and receive a fixed payment amount per enrollee. The plans also receive an upward payment adjustment based on the demographics and health status of beneficiaries. Generally, the more severe the diagnosis for a beneficiary, the higher the “risk score,” and the larger the risk-adjusted payment for that beneficiary.

The government alleges that DxID used diagnosis codes that were not supported by a patient’s medical records, and the improper coding inflated the risk scores of beneficiaries, resulting in increased payments to the Medicare Advantage Plans. The government also alleges that DxID had providers sign addenda forms as much as a year after a patient’s visit, and used those addenda to substantiate the unsupported diagnosis coding. DxID allegedly received a contingency fee of up to 20% of the excess portion of the reimbursements received by the Medicare Advantage Plans.

The DOJ’s announcement is here.

Florida Cardiologist Agrees to Pay $6.75 Million to Resolve FCA Lawsuit

An Orlando-based cardiologist has settled a False Claims Act lawsuit alleging that he performed medically unnecessary ablations and vein stent procedures for $6.75 million. The government alleged that the cardiologist knowingly submitted false claims to federal health care programs for ablations and stent procedures on veins that did not qualify for treatment under accepted standards of care. In order to justify the procedures, the cardiologist allegedly falsified patient medical records to overstate the degree of reflux and diameter of veins, and misrepresented patient symptoms. The government also alleged that the procedures were often performed exclusively or primarily by ultrasound technicians, outside the scope of their practice. As part of the settlement, the cardiologist and his practice will enter into a multi-year integrity agreement with HHS-OIG that requires regular training and reporting, and a quarterly claims review conducted by an Independent Review Organization.

The DOJ announcement is here.

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