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State Enforcement Actions

Each state enforces its laws and defends its interests, and states often work with the federal government in investigating and prosecuting corporate frauds.  Whistleblowers with knowledge of fraud or wrongful conduct that involves state or local funds or programs may be able to bring a claim under a state or local False Claims Act, and may be eligible to receive a monetary reward and protection against retaliation.

Below are summaries of recent settlements, successful prosecutions, and enforcement actions by states. If you believe you have information about fraud which could give rise to a claim under a State or Local False Claims Act or other whistleblower reward provision, please contact us to speak with one of our experienced whistleblower attorneys.

February 6, 2019

Abbott Labs has agreed to pay a total of $25 million to settle allegations of paying kickbacks to healthcare professionals in exchange for promotion of its drug, and inappropriately marketing its drug, TriCor, for cardiovascular events not approved by the FDA. The case was initiated by the State of North Carolina and joined by California, Illinois, Nevada, Maryland, Michigan, and Texas, as well as the federal government. NC AG

January 30, 2019

Sunoco Pipeline L.P. will pay the United States $5 million and pay Louisiana Department of Environmental Quality (LDEQ) $436,274 to resolve alleged violations of the Clean Water Act and state environmental laws by Sunoco and Mid-Valley Pipeline Company stemming from three crude oil spills in 2013, 2014, and 2015, in Texas, Louisiana, and Oklahoma. Additionally, Sunoco agreed to take actions to prevent future spills by identifying and remediating the types of problems that caused the prior spills. This includes performing pipeline inspections and repairing pipeline defects that could lead to future spills. Sunoco is also required to take steps to prevent and detect corrosion in pipeline segments that Sunoco is no longer using. Mid-Valley, the owner of the pipeline that spilled oil in Louisiana, is responsible, along with Sunoco, for payment of the civil penalties and state costs relating to the Louisiana spill. DOJ

January 29, 2019

Tennessee-based home dialysis provider WellBound of Memphis agreed to pay $3,246,000 to the State of Tennessee and the United States for allegedly submitting false claims to Medicare, TRICARE, and Tenncare from 2016 to 2018. According to a qui tam complaint filed by whistleblower Dr. Darryl Quarles, the claims resulted from illegal inducements for patient referrals, which violated the anti-kickback statute (AKS) and are not payable under state or federal laws. USAO WDTN

January 24, 2019

Mississippi recovered $26.6 million in settlements with private prison and correctional services contractors including for-profit correctional facilities operators Management and Training Corporation ($5.2 million) and Cornell Companies, Inc., now part of GEO Group ($4.6 million), correctional healthcare provider Wexford Health Sources, Inc. ($4 million); commissary management company Keefe Commissary Network, LLC ($3.1 million), and construction company C. N. W. Construction Company ($3.1 million).  The state's lawsuits against the companies alleged that they used "consultants" as conduits to pay bribes and kickbacks to a commissioner of the Mississippi Department of Corrections, Christopher Epps.  MS

January 22, 2019

Walgreens Boots Alliance, Inc. will pay $209.2 million to settle a False Claims Act case brought by two whistleblowers alleging that the retail pharmacy chain knowingly dispensed insulin pens to patients who did not need them, and billed Medicare, Medicaid, and other government insurance programs for those unnecessary items.  As part of the settlement, Walgreens admitted that it prevented pharmacists from dispensing fewer than five insulin pens at a time and altered records regarding dispensing information and days-of-supply so that patients received more insulin pens than they actually needed.  $168 million of the settlement will be paid to the U.S., and approximately $41.2 million to state governments. The whistleblowers, Adam Rahimi and S. Christopher Schulte, will receive a share of the total settlement, to be determined at a later date.  USAO SDNY.  See also, NY, OH

January 22, 2019

In an investigation lead by Texas and South Carolina, 46 states and the District of Columbia have entered in to a consent judgment with Johnson & Johnson and its DePuy Orthopaedics unit, resolving claims that the company made misleading claims about the lifespan of two of its metal-on-metal hip implant devices, deceptively marketing and unlawfully promoting the medical devices.  The company will pay $120 million and agreed to specific steps to reform how it markets and promotes its hip implants.  Texas; see also, e.g., NY

January 15, 2019

New York has reached a $9 million settlement with Diamond Braces, a chain of dental offices, and its principal Oleg Drut, DDS, for false claims Diamond made to NY's Medicaid program for orthodontic procedures that were performed by personnel who were not certified to perform the work they did as required by NY state law.  NY

January 14, 2019

FedEx will pay $35.3 million to the State of New York to resolve lawsuits alleging that FedEx knew it was illegally shipping hundreds of thousands of untaxed cigarettes directly to New York residents on behalf of cigarette traffickers. FedEx also agreed to implement specific internal compliance procedures and make ongoing reports to the State.  NY

January 11, 2019

 Teva Pharmaceuticals USA Inc. will pay $135 million to the state of Illinois to settle allegations that published fraudulently inflated Average Wholesale Prices (AWPs) for numerous prescription drugs.  Illinois's Medicaid program bases its drug reimbursements for Medicaid beneficiaries on AWPs, and the inflated AWPs caused Illinois to overpay. IL AG

January 10, 2019

Fiat Chrysler has agreed to pay over $500 million in fines and mitigation costs to settle civil claims by the U.S. and numerous states that it violated environmental and consumer protection laws by installing software and equipment in 100,000 diesel automobiles in order to circumvent emissions testing requirements.  The "defeat devices" caused Jeep Grand Cherokees and Ram 1500s to be within legal limits during emissions testing, but to exceed limits during ordinary operation.  The company will also implement a recall program to repair the non-compliant vehicles. DOJ; CA
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