Teva Agrees to $54 Million Settlement to Resolve FCA Whistleblower Suit

On January 6, 2020, Teva Pharmaceuticals agreed to a $54 million settlement to resolve a False Claims Act action brought against Teva Pharmaceuticals USA, Inc., Teva Neuroscience, Inc., and Teva Sales and Marketing, Inc. (collectively “Teva”). The settlement resolves allegations that Teva violated the False Claims Act and the Anti-Kickback Statute by using speaker events to bribe doctors to prescribe two of its drugs, Copaxone and Azilect.

The False Claims Act (“FCA”), 31 U.S.C. §§ 3729–3733, prohibits companies from overcharging or otherwise defrauding the federal Government. Individuals who discover fraud can file a qui tam or whistleblower claim on the Government’s behalf and collect up to 30% of the proceeds of a successful lawsuit. The Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a–7b(b), criminalizes, among other things, knowingly offering anyone a kickback (in the form bribes, rebate, or “anything of value”) induce that person to recommend the purchase of a drug covered by a federal healthcare program.

The lawsuit was brought by Plaintiff-Relators Charles Arnstein and Hossam Senousy, who were former sales representatives for Teva. The original complaint, first filed under seal on May 31, 2013, alleged that the Defendants held promotional speaker programs which served as a conduit through which doctors were bribed with speaker fees, expensive meals, and alcohol in exchange for prescribing Teva’s multiple sclerosis drug Copaxone and Parkinson’s disease treatment-drug Azilect. Physician participants of these sham speaker programs would write prescriptions for the two drugs which were then filled at pharmacies across the country. The pharmacies then submitted claims for reimbursement to various Government-funded healthcare programs. Defendants’ actions thus caused the submission of false claims to the Government via the dispensing pharmacies, making those actions violations of the FCA and AKS.

In March 2015, the court issued an order unsealing the complaint and permitting Plaintiff-Relators to prosecute claims on behalf of the United States and various states. On February 27, 2019, the Honorable Colleen McMahon, chief judge for the U.S. District Court for the Southern District of New York, denied Defendants’ motion for summary judgment. In a detailed, seventy-page opinion, Judge McMahon rejected Teva’s argument that its written compliance policies could be used to shield it from liability. “The question is whether these policies are worth the paper they are written on,” the opinion stated. Crucially, Judge McMahon found that Relators “introduced substantial evidence that Teva did, in fact, track speakers’ prescription writing,” and that “[s]ales representatives linked prescriber habits with their retention as paid speakers for Teva.”

The settlement came less than a year after Judge McMahon denied Teva’s summary judgment motion. James E. Miller, lead litigation counsel for Plaintiff-Relators, said of the settlement, “We believe that this settlement will help to ensure that when a physician chooses a prescription drug for his or her patient, that choice will be motivated solely by the best interests of the patient and not be tainted by any improper financial considerations.”

The settlement calls for Teva to pay most of the settlement amount to the federal Government, which in turn would be able to make “share payments” to Senousy and Arnstein, according to the deal. About $3.7 million will go to various other states and municipalities, according to the agreement.

The case caption for this lawsuit is U.S. ex rel. Arnstein et al. v. Teva Pharmaceuticals USA Inc. et al., case number 1:13-cv-03702, filed in the U.S. District Court for the Southern District of New York.

The legal team at Miller Shah LLP has extensive experience representing FCA and qui tam matters. If you have any questions regarding this subject or this post, please contact Bruce D. Parke (bdparke@millershah.com) or Alec Berin (ajberin@millershah.com). The Firm can also be reached toll-free at (866) 540-5505.