Last Friday (November 15), Florida-based pharmaceutical company QOL Medical and its CEO Frederick Cooper agreed to pay $47 million to resolve Department of Justice (DOJ) and whistleblower charges they violated the False Claims Act and Anti-Kickback Statute by providing patients free breath testing services to induce them to purchase QOL’s drug Sucraid.

Sucraid treats Congenital Sucrase-Isomaltase Deficiency (CSID), which causes problems digesting sucrose and leads to diarrhea, abdominal pain, bloating, gas, and other gastrointestinal symptoms.  QOL sells Carbon-13 breath tests to detect low or absent surcrase activity which can be a feature of CSID, although it may be associated with other conditions unrelated to CSID.  A “positive” Carbon-13 test result does not necessarily mean a patient has CSID.

As the DOJ Settlement Agreement details, QOL distributed free Carbon-13 breath test kits to health care providers for their patients suffering common gastrointestinal symptoms.  QOL also paid a laboratory to analyze the breath tests, and report the results to QOL.  QOL sales reps then used this information to push the health care providers to prescribe Sucraid to their Carbon-13 positive patients.  QOL tracked how well sales reps converted positive tests into Sucraid prescriptions.

The Anti-Kickback Statute prohibits providing or receiving compensation in exchange for medical referrals covered by Medicare/Medicaid or any of the other federal healthcare programs.  The most common type of kickbacks are to physicians from healthcare providers, pharmaceutical companies, and medical equipment suppliers to induce patient referrals.  Virtually any form of remuneration falls within the statute’s reach, including money, meals, gifts, entertainment, and free products or services.

With QOL, DOJ took issue with two forms of remuneration QOL provided.  First was QOL’s provision of free Carbon-13 tests to patients, which DOJ found improperly induced the patients to purchase QOL’s Sucraid.  Second was QOL’s payments to the Laboratory for the lab testing and test results, which DOJ found allowed QOL sales reps to pressure healthcare providers to prescribe Sucraid.  These are very different forms of kickbacks DOJ routinely goes after showing how aggressive the government is willing to be in enforcing the anti-kickback law.

The government may have found additional motivation for its extra enforcement rigor here from QOL’s alleged false promotion of what the Carbon-13 test supposedly measured.  According to the government, QOL sales reps told health care providers the Carbon-13 test definitively diagnosed CSID, which apparently has no scientific support.  DOJ specifically pointed to slides QOL used to train its sales reps to tell health care providers, “If you have a positive breath test, the patient will not improve unless you treat with Sucraid.”

Even without this added misbehavior, DOJ has taken a hard line against kickbacks in any form that might improperly influence medical decision making and treatment outcomes.  The QOL action is just the latest example—and the government went out of its way to use it as an example—to highlight this enforcement priority.  In announcing the settlement, DOJ Civil Chief Brian Boynton stressed DOJ’s commitment to “upholding the objectivity of treatment decisions by physicians and patients.”

Assistant Director Chad Yarbrough of the FBI Criminal Investigative Division was even more blunt, asserting “kickbacks have no place in our healthcare system,” and that the settlement “should send a message that the FBI is committed to finding fraudsters and investigating all those who try to exploit the healthcare system at the expense of patients.”

Acting U.S. Attorney Joshua Levy for the District of Massachusetts added how this case demonstrates the government’s willingness to broadly apply the Anti-Kickback Statute:

 

“Not all kickbacks come in the form of cash going into a doctor’s or a patient’s pocket.  Here, the defendants relied on free breath tests and misleading sales tactics to drive patients to their product.  This conduct unnecessarily drained money from the federal health care programs and improperly influenced treatment decisions by physicians and their patients.”

 

The allegations against QOL originated with several whistleblowers who filed a lawsuit against QOL under the qui tam provisions of the False Claims Act, which allow individuals to bring actions on behalf of the government against those defrauding the government.  In exchange, successful whistleblowers are entitled to up to 30% of the government’s recovery.  The whistleblowers here—Elizabeth Allen, Lauren Canlas, Donald Johnson and Stacey Adams—all former QOL employees, will collectively receive a whistleblower award of roughly $8 million from the federal portion of the settlement amount.

If you would like to learn more about the Anti-Kickback Statute and what it means to be a whistleblower under the False Claims Act, please don’t hesitate to contact us.  We will connect you with an experienced member of our whistleblower team.

Read QOL Medical to Pay $47 Million to Settle DOJ and Whistleblower Kickback Claims at constantinecannon.com