Drug company pays $280 million to resolve whistleblower’s fraud allegations

On July 25, 2017, the United States Department of Justice (DOJ) announced a $280 million settlement with drug maker Celgene Corp. to settle claims the company fraudulently promoted two drugs for uses not approved by the Food and Drug Administration (FDA).

The whistleblower, former Celgene sales representative Beverly Brown, alleged that Celgene sold Thalomid and Revlimid for “off-label” uses not approved by FDA or covered by publicly funded health insurance programs like Medicare and Medicaid. Brown also alleged the company paid kickbacks to induce physicians to prescribe the drugs and that all of this conduct violated the federal False Claims Act (FCA) and analogous state false claims acts.

Brown is represented by Dick Harpootlian and Chris Kenney of Richard A. Harpootlian, P.A. along with co-counsel Reuben Guttman, Traci Buschner, and Justin Brooks, Dan Guttman, Liz Shofner, Caroline Poplin, MD/JD, and Paul Zwier of Guttman, Buschner & Brooks PLLC in Washington, DC, and Tom Bienert, Mike Williams, Ariana Hawbecker, and Ali Matin of Bienert, Miller & Katzman in San Clemente, California. 

The FCA allows whistleblowers, also called a qui tam “relator”, with knowledge of fraud to bring a lawsuit to recover money on the government’s behalf. If the whistleblower is successful, she can share in a portion of the money recovered. FCA whistleblower actions are filed under seal to allow the government to investigate the claims and decide whether to “intervene” or take the case over. If the government declines to intervene, the whistleblower can go forward on the government’s behalf.

The case, captioned United States ex rel. Brown v. Celgene Corp., CV 10-03165 (RK) (C.D. Cal.), was filed in 2010. In 2014, the case was unsealed and the government declined to intervene. Brown and her lawyers litigated the case on behalf of the federal government, 28 states, the District of Columbia, and the City of Chicago, which entailed taking approximately 40 depositions, reviewing millions of pages of documents, and briefing and argument on numerous pre-trial motions.

The Celgene settlement is believed to be the second largest non-intervened recovery in the history of the FCA.

Last year, whistleblowers recovered $104 million in non-intervened cases–just 3.5 percent of the $2.9 billion recovered through qui tam cases, according to DOJ statistics. However, in 2015, nearly 40% of qui tam recoveries came from non-intervened cases.

In 2011, Richard A. Harpootlian, PA represented another relator in what is believed to be the largest FCA bounty paid in a whistleblower in a case filed in the District of South Carolina.

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