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medication-1329267According to the Wall Street Journal, once again the Department of Justice is investigation drug companies for lying about the price of their drugs to the Medicaid program, a federal and state funded health care program for the poor.  The United States Attorney’s Office for the Eastern District of Pennsylvania and the United States Department of Justice are now requesting information from Eli Lilly and Company, and Valeant Pharmaceuticals International, Inc.  Valeant has also been in the news recently after it was questioned over its drug pricing and accounting practices concerning its relationship with a specialty pharmacy Warner Chilchot that distributed its drugs.  (See blog post US Charges Pharma President.)

Pharmaceutical companies pay a rebate to the Medicaid program based on the average wholesale price of the drug known as AWP.  The average wholesale price is supposed to be the average price that a wholesaler pays for the drug from the manufacturer.  However this has been an area that has seen extensive litigation under the False Claims Act with many suits resulting in substantial payments to the government.  Pharmaceutical companies are required to pay rebates between 17.1 % and 23.1% of the average price on most drugs, or they are required to rebate the between the difference between the average price and the best price that the drug is sold to private, non-government, customers.

The Department of Justice is conducting an investigation into the pricing of the Protonix, a heartburn medication sold by Pfizer, the pricing of Humalog, a type of insulin, and Cialis, sold by Lilly.  Valeant also received a letter from the DOJ that it is being investigated for violations of the False Claims Act, concerning conduct of Biovail Pharmaceutical’s, the company that acquired Valeant in 2010.  The False Claims Act creates liability for submitting false claims to the government.  Fraudulent manipulation of the AWP creates liability under a fraudulent claim theory or based upon a violation of the Anti-Kickback statute.  If found liable a company can be subject to treble damages and $5,500 to $11,000 for each false claim submitted.

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The Department of Justice wasted no time in showing that its new policy of going after individuals, not just companies, engaged in fraudulent conduct was for real.  (See, Blog post DOJ to Focus on Individual Accountability for Corporate Fraud.) Late last week, October 29, 2015, the government charged the former president of a subsidiary of Warner Chilcott PLC, a pharmaceutical division, with conspiracy to violate the Anti-Kickback Statute.  This is an important step in holding individuals accountable for the conduct of business units for which they are responsible.

For too long, companies could engage in fraudulent conduct only to pay a hefty fine, with the individuals responsible for the fraud suffering little or no consequences and often reaping the benefits of their unlawful conduct with increased pay and bonuses.  If a company faced a significant fine, or debarment from a government program, which impacted the company’s earnings, the only people likely to suffer were its shareholders.  Investor Bill Ackman said that drug companies get sanctioned all the time, but that does not mean that they are bad investments.  According to Ackman, the $390 million Novartis settlement was just the cost of doing business.   (See, Bloomberg.)

Engaging in fraud should never be a conscious business decision.  Holding individuals responsible will hopefully, deter this type of conduct.

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DOJ to Focus on Individual Accountability for Corporate Fraud

The U.S. Department of Justice announces that holding individuals accountable for corporate fraud is a top priority. In a seven-page memorandum, released September 9, 2015, Deputy Attorney General Sally Quillian Yates, announced new guidelines focusing on individual accountability for corporate misdeeds.

The Memorandum states that focusing on individuals is one of the most effective ways to deter corporate wrongdoing. Holding individuals accountable will deter further wrongdoing and encourage a corporation to change its culture and behavior, it will also further promote the public’s confidence in the justice system. Continue reading

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Chicago – As most of us know by now, eyewitness identifications are notoriously bad. Mistaken identifications by eyewitnesses account for the vast majority, roughly 85%, of wrongful convictions, according to some reports. Eyewitness misidentification is considered the single greatest cause of wrongful convictions. The State of Illinois alone has in fact released 21 individuals erroneously convicted and sentenced to death since 1993.

As the United States Supreme Court has long recognized, “[T]he vagaries of eyewitness identification are well known; the annals of criminal law are rife with instances of mistaken identification. Mr. Justice Frankfurter once said: ‘What is the worth of identification testimony even when uncontradicted? The identification of strangers is proverbially untrustworthy. The hazards of such testimony are established by a formidable number of instances in the records of English and American trials.” United States v. Wade.

Well Illinois is moving in the right direction to improve eyewitness identifications. Illinois’ new lineup procedure statute, 725 ILCS 5/107A-2, encourages many practices, unless not practical, thereby giving the police a way out if not followed. Continue reading

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man-with-a-megaphone-1-1378633-sChicago – The False Claims Act places several restrictions on a person’s ability to pursue a qui tam case on behalf of the government. One of these restrictions is known as the “public disclosure bar”. The definition of public disclosure was recently addressed in the case of United States, et al. v. Whipple, et al.

In Whipple, the plaintiff alleged that the defendant hospital violated the False Claims Act by knowingly submitting false of fraudulent claims to Medicare and other federally funded health care programs. The relator alleged that the hospital submitted fraudulent claims for inpatient care which should have been billed as outpatient, observation services for same day surgery claims, inpatient admissions for renal-dialysis claims, and for carotid artery stenting without authorization. The relators asserted that he discovered these frauds while working for defendant in 2006.

The relator also claimed that he was unaware of a government audit and investigation against defendant for improper billing of Medicare by defendant. In fact, the government opened an administrative investigation in February 2008 which was resolved in September 2009 after defendant refunded $477,140.42 to the government. Continue reading

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Cgun-and-bullets-1146529-shicago – The Illinois Supreme Court finally issued its opinion addressing a number of aspects of the Illinois Aggravated Unlawful Use of a Weapon Statute, 720 ILCS 5/24-1.6.  The Court found most importantly the mandatory prison sentencing provision unconstitutional under section (d)(2).

Accepting an argument that I advanced in my representation of clients charged with AUUW, the Court agreed that since subsection (a)(3)(A) was held unconstitutional, the sentencing provision  that requires mandatory prison based on section (A) was also unconstitutional.

Simply put, the Court found that the section of the AUUW statute which was previously found to be unconstitutional could not be used as a basis for mandatory imprisonment.

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Chicago – In a case that has been before the Court of Appeals for the third time and before the United States Supreme Court twice, the relator appealed the district court’s dismissal of her qui tam case based on the False Claims Act’s public disclosure bar.  Fortunately, for the relator, the Court of Appeals reversed.  United States ex rel. Wilson v. Graham County Soil & Water Conservation District, (4th Cir. Feb. 3, 2015)

The facts of the case begin in February 1995, when a storm caused flooding and erosion in North Carolina.  The United States Department of Agriculture agreed to help through a program known as the Emergency Watershed Protection Program.  The Graham County Soil & Water Conservation District, the Defendant, was responsible for to managing the Emergency Watershed Protection Program.

Karen Wilson, a part-time secretary at Graham County SWCD, and the relator reported her suspected misconduct to the USDA.  The USDA report created in response to Ms. Wilson’s allegations was distributed to several state and federal law enforcement agencies with a warning not to distribute the report outside of your agency without the approval of the USDA.

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What is Army Sexual Harassment?  With all of the recent news concerning sexual harassment this article will help you understand what the Army Sexual Harassment Policy prohibits.

Army Regulation 600-20, Chapter 7-4, Prevention of Sexual Harassment defines sexual harassment is defined as:

Sexual harassment is a form of gender discrimination that involves unwelcomed sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature between the same or opposite genders when—

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prison-979960-sChicago, Illinois

A fifteen year old was charged and convicted of aggravated criminal sexual assault, rape.  The defendant was tried as an adult and sentenced to 36 years in prison, of which he will have to serve 85%.  The Illinois Court of Appeals reversed, finding that the defendant’s confession was wrongly admitted, and that the victim’s sexual history should have been admitted under an exception to the Illinois Rape Shield statute.  The Illinois Supreme Court reversed and remanded to the appellate court to consider only the defendant’s excessive sentence claim.

The State alleged that Defendant raped his counselor when she was taking him back to the residential treatment  facility in which he lived.

The State raised two issues on appeal to the Illinois Supreme Court.   First, whether the statement should have been suppressed and second, whether the trial court properly applied the rape shield statute.

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gun-and-bullets-1146529-sChicago – On a Sunday night in Chicago around Armitage and Kildare and Wabansia and Karlov the Chicago Police received numerous 911 calls reporting gunshots in the area. The callers reported to 911 hearing between 5 and 9 shots and based on additional 911 calls that the shots were fired from a black car traveling south on Karlov nears Wabansia.

The traffic was light, and two Chicago Police officers on patrol drove to Kostner and proceeded south. Kostner is a few blocks west of Karlov. The officers drove past a black car heading north and officers turned around and followed the black car. The Chicago Police officers stopped the car a short distance later. The officers approached the car and found a revolver on the passenger seat of the defendant, which had 5 of the six round fired.

The Defendant, a convicted felon, was charged with possessing a firearm as a convicted felon.  18 U.S.C. § 922(g)(1).

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