by Ben Vernia | January 10th, 2014
On January 9, the Department of Justice announced that California-based CareFusion, the manufacturer of a pharmaceutical used in surgical preparations, had agreed to settle claims originally brought by a whistleblower, that the company caused the submission of false claims by making payments to physicians to promote its products. The government alleged that the company paid over $11 million to one key physician. According to DOJ’s press release:
CareFusion Corp. has agreed to pay the government $40.1 million to settle allegations that it violated the False Claims Act by paying kickbacks and promoting its products for uses that were not approved by the Food and Drug Administration, the Justice Department announced today. CareFusion, a California-based medical technology company, develops, manufactures and sells pharmaceutical products, including products sold under the trade name ChloraPrep.
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The settlement resolves allegations that, under agreements entered into in 2008 by CareFusion’s predecessor, CareFusion paid $11.6 million in kickbacks to Dr. Charles Denham while Denham served as the co-chair of the Safe Practices Committee at the National Quality Forum, a non-profit organization that reviews, endorses and recommends standardized health care performance measures and practices. The government contends that the purpose of those payments was to induce Denham to recommend, promote and arrange for the purchase of ChloraPrep by health care providers. ChloraPrep has been approved by the Food and Drug Administration for the preparation of a patient’s skin prior to surgery or injection.
This settlement also resolves allegations that, during the period between September 2009 and August 2011, CareFusion knowingly promoted the sale of ChloraPrep for uses that were not approved by the Food and Drug Administration, some of which were not medically accepted indications, and made unsubstantiated representations about the appropriate uses of ChloraPrep.
The Department announced that the whistleblower, a former CareFusion executive, will receive $3.26 million (an 8% relator’s share; the government offered no explanation why the amount appears to be below the False Claims Act’s 15% floor).
Comment: This case appears to be on the cutting edge of a quite significant area of health care law. The National Quality Forum, whose committee Dr. Denham co-chaired, is a private organization that receives federal funding, and will undoubtedly play a role in CMS’s turn toward quality-based reimbursement under the Affordable Care Act. If health care companies co-opt decisionmakers at these non-public institutions, it will imperil the long-range goals of the ACA.
