Beware of "Speaker Fees" and other Kickbacks

Speaker programs are a widely used marketing tool in the pharmaceutical business. Drug makers enlist doctors to give paid talks about the benefits of a product to other potential prescribers, at a clinic or over dinner in a private room at a restaurant. But Krane and some fellow rookie reps were already getting a clear message from Burlakoff, she said, that his idea of a speaker program was something else, and they were concerned: It sounded a lot like a bribery scheme.

One of the most common varieties of False Claims Act cases, resulting in some of the biggest judgments, are kickback cases. Doctors, pharmacies, hospitals, etc. are not allowed to take gifts, including cash, that may influence their medical judgment. Patients are entitled to unbiased advice. But, for example, if a doctor gets a cut every time he sends a patient to John Doe Hospital, he is probably going to direct his patients to that hospital.

The ostensible purpose of a pharma-speaker program, as Krane understood it, was to spread the word about the drug through peer-to-peer marketing. With “honorariums” changing hands, the potential for a subtle corruption is clear, but Burlakoff was not subtle. He told Krane, she said, that the real target was not the audience but the speaker himself, who would keep getting paid to do programs if and only if he showed loyalty to Subsys. It was a quid pro quo or, as the Department of Justice later called it, a kickback. “He boiled it right down,” Krane recalled: We pay doctors to write scripts. That’s what the speaker program is.

If a doctor is receiving benefits from a pharmaceutical company, he is more likely to prescribe drugs from that company, even if the patient doesn't need them. And if the doctor is seen as prescribing more drugs, then the pharmaceutical company may be inclined to give even more benefits. It is this type of kickback that has not only defrauded Medicare and Medicaid out of millions of dollars, but, as this investigative report from Evan Hughes of the New York Times delves into, it has helped to fuel pill mills and the national opioid crisis.

The speaker events themselves were often a sham, as top prescribers and reps have admitted in court. Frequently, they consisted of a nice dinner with the sales rep and perhaps the doctor’s support staff and friends, but no other licensed prescriber in attendance to learn about the drug. One doctor did cocaine in the bathroom of a New York City restaurant at his own event, according to a federal indictment. Some prescribers were paid four figures to “speak” to an audience of zero.

If you are in the medical field, be on the lookout for such arrangements that appear to pay a medical practitioner something for nothing, or that are out of whack with what you would expect for the service being provided, especially if the payments are based on volume (e.g., the more referrals/prescriptions, the bigger the payment). These agreements frequently violate federal Stark and Anti-Kickback laws and can be the basis of a False Claims Act case.

Lance Armstrong Settles False Claims Act Case for $5 Million

Lance Armstrong has settled allegations by the federal government that he defrauded the U.S. Postal Service when they cheated by taking performance enhancing drugs while riding under the U.S.P.S. banner.  Armstrong's former U.S. Postal Service teammate, Floyd Landis, sued Armstrong under the federal False Claims Act. Armstrong has previously admitted to doping and was stripped of his seven Tour de France titles, from 1999 to 2005. Landis himself has also admitted to doping, and has settled similar allegations, and was stripped of his 2006 Tour de France title.

According to court records, the contract paid the team, which was operated by Tailwind Sports Corp., about $32 million from 2000 to 2004. Armstrong got nearly $13.5 million. Armstrong claimed he didn’t owe the Postal Service anything because the agency made far more off the sponsorship than it paid; his lawyers estimate around $100 million. The government countered that Armstrong had been “unjustly enriched” through the sponsorship and that the negative fallout from the doping scandal tainted the agency’s reputation.

Armstrong reached a $5 million settlement with the federal government, which could have pursued "treble damages" of up to $100 million. As the person who filed the original lawsuit, Landis will receive $1.1 million. Armstrong will also pay $1.65 million to cover Landis’ legal fees. The case against Tailwind Sports Corp., however, continues.

In a statement to The Associated Press, Armstrong said he’s happy to have “made peace with the Postal Service.”

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Like a Rock

And I stood arrow straight
Unencumbered by the weight
Of all these hustlers and their schemes
— Bob Seger
lapis.jpeg

Today, out of the blue (pun intended), I received a large piece of lapis lazuli in the mail. There was no note, no indication why I was receiving this package. Generally when a rock lands in my office, I assume it came from opposing counsel, but those aren't usually delivered by the postal service, nor are they quite as beautiful. After some investigating, I found that the box came from Afghanistan, and I was able to start putting the pieces together.

In August 2016, I received a letter from a brave individual in Bagram who was being retaliated against for internally reporting behavior that he believed was risking the health of military and civilian personnel stationed there. He had reported the conduct to everyone he could think of in Bagram to no avail.

It was clear right away that this did not fall into my area of practice, but I spent some time researching what he could do, for himself and for those at risk. I scheduled a call with him from Afghanistan, had him walk me through his allegations, and talked with him about his options. Ultimately I referred him to another attorney with more experience than I had in this area (which was basically zero) and wished him luck.

I assumed from my gift that he had successfully reported the wrongdoing with his new lawyer and was reaping the rewards, but I was mistaken. They had taken the report as far as they could with the government, but the government chose not to open an investigation. Still, he had kept his job and those who were responsible for the wrongdoing were gone, and so the bad acts had stopped.

My job is to right wrongs and help people in need. Sometimes, after years of litigation, I get paid for it. But a not-insignificant amount of my time is spent talking to individuals with no expectation of ever receiving a dime or even hearing from them again. I spent probably just two hours trying to help this gentleman, and then his case had not turned out like he'd hoped. But he was still so grateful for my having taken the time to listen and help him that he thought to send me a gift from the other side of the world over a year-and-a-half later. I am incredibly blessed to be doing what I am doing and honored to work on behalf of the people that I do.

My hands were steady
My eyes were clear and bright
My walk had purpose
My steps were quick and light
And I held firmly
To what I felt was right
Like a rock

DoJ Publishes 2017 False Claims Act Statistics

Nearly $3.5 billion in proceeds that was brought in last year from False Claims Act cases filed by whistleblowers. Some of the interesting stats are below:

  • 675 Qui Tam Cases Filed in 2017
  • $3,443,153,343.00 in total qui tam recoveries for both intervened and non-intervened cases
  • $334,906,856 in Relator's Share awards for intervened cases
  • $59,581,593.00 in Relator's Share awards for non-intervened cases

The full report can be found here.