Whistleblowers in Fowler v Caremark lose Qui Tam claim on Appeal
Yesterday, Whistleblowers in United States ex. rel.Fowler v. Caremark Rx.L.LC.., No. 06-4419 (7th Cir. July 27, 2007), lost their qui tam claim against Caremark Rx. LLC on Appeal. The Seventh Circuit Court affirmed the lower courts decision on the merits. I want to make note that I found out about this decision on the humorous and clever Blawgletter, by Barry Barnett. Thanks Barry for being one of the first to cover this recent decision on your blog.
There are few things about this qui tam claim that are important to point out. First let's look at the background of the United States ex. rel.Fowler v. Caremark Rx.L.LC case. The whistleblowers or relators in the case, Michael Fowler, Peppi Fowler, Victor Cortes and Danny Nevarez, were all former employees of Caremark at two of its prescription drug processing facilities. Caremark Rx LLC merged with CVS Corporation in March of this year, making it one of the largest pharmaceutical services companies and provider of comprehensive drug benefit services to health plan sponsors throughout the U.S.
The whistleblowers brought a False Claims Act suit on behalf of the United States alleging that Caremark engaged in six fraudulent schemes: (1) failing to provide a credit for returned prescription drugs; (2) changing prescriptions without proper approval; (3) misrepresenting the savings obtained from its recommendations; (4) failing to substitute a generic version of “Prilosec;” (5) failing to credit for prescriptions lost in the mail; and (6) manipulating the mandatory times for filing prescriptions. This seems to be quite a comprehensive claim and on face value, it appears that the whistleblowers had their bases covered in their complaint and would have uncovered something to support their false act claim. Unfortunately, the whistleblowes found no such luck.
The original false claims act complaint was filed in December of 2003, and since that time, the whistleblowers have filed three amended complaints. This is a perfect example of how long and arduous the process can be for a whistleblower. Despite the hard work, the loss of job, reputation, the whistleblower can lose a qui tam case. This is not to sound discouraging. It is to promote how important it is for whistleblowers to have concrete critical facts, proof, data and a means to corroborate the claims. If not, it will be a very hard life lesson that the whistleblower will never forget. Another important lost qui tam case for the whistblower was the highly publicized Supreme Court Case Rockwell Int'l Corp. v. United States, No. 05-1272 (U.S. Mar. 27, 2007). This case involved a different set of circumstances than United States ex. rel.Fowler v. Caremark Rx.L.LC, but the results were the same, the relators lost their case. In Rockwell Int'l Corp. v. United States, the whistleblower, former engineer, James Stone, died this year at the age of 82, a few weeks after he lost the case for his relator's claim of $1 million.
On a positive note, Whistleblower Statistics or Qui Tam Statistics showing money recovered by the government as a result of fraud or qui tam claims, show positive figures. In 2006, The government recovered $255,006,432, of which, $174,358,450 was qui tam related and $42,067,470 was the relator's or whistleblowers share. In an earlier post on the The Whistleblower Law Blog, we covered a post on whistleblower statistics and numbers of qui tam cases submitted. These numbers should give relators hope. The financial rewards for a successful qui tam claim can be very rewarding.
We can not emphasize enough, of how important it is for whistleblowers to take the proper steps in handling a whistleblower claim. This can make a difference in relator's portion of the government's recovery being zero and a nice thank you or a relator's share being 15% - 30% of the government's recovery. Last, but not least, talk to an experienced attorney to discuss your whistleblower claim and protect your rights.
The Whistleblower Law Blog is presented as a service of the Private Law Firm, LaBovick & LaBovick, P.A., Civil Justice Prosecutors.
Interesting article from 2005 on the United States ex. rel.Fowler v. Caremark Rx.L.LC case. The article is from Employee Benefit News. At this moment in time, the case seemed promising for the whistleblowers. Unfortunately, things do not always remain the same. I hope you enjoy reading:
Employee Benefit News
Suit claims Caremark bungled drug handling
By Leah Carlson | Nov 1, 2005 |
http://www.mywire.com/pubs/EmployeeBenefitNews/2005/11/01/1070053?extID=10037&oliID=229
The pharmacy benefit manager Caremark Rx is defending itself against a false-claims lawsuit in which four whistle-blowers, all former employees of Caremark, claim the company frequently resold expensive medicines that had been returned.
The medications involved included specialty drugs that needed refrigeration and other kinds of special handling in order to treat cancer, hemophilia and growth hormone disorders. The whistle-blowers allege that hot blow dryers were used to remove patient labels from drugs that had been returned. Some returned drugs allegedly sat for days, weeks or months before being eyeballed by unqualified workers for processing, restocking and resale.
The plaintiffs -Victor Cortes, Michael Fowler, Peppi Fowler, and Danny Nevarez - claim Caremark defrauded the California Public Employees' Retirement System and other clients by falsifying prescription dates and records on returned drugs, eliminating customer complaints from files, canceling prescription refills and converting certain prescriptions to over-the-counter medications, using contacts with physician office staffers who weren't qualified to change prescriptions.
CalPERS, which has a $265 million contract with Caremark, is not a plaintiff in the lawsuit, which was unsealed in Los Angeles Superior Court in June. The suit was originally filed on Dec. 4, 2003, and amended on April 1, 2004, and April 18, 2005.
Caremark spokeswoman Kelly Carper Erickson states, "We believe we have meritorious defenses to the claims." She says it's against company policy to restock drugs that have been returned by a patient, noting that "it's our responsibility to our customers and plan participants to deliver safe products."
Caremark briefly refers to the lawsuit in its Aug. 8 filing with the Securities Exchange Commission, stating that California Attorney General Bill Lockyer has declined to intervene in the lawsuit.
CalPERS spokesman Clark McKinley says, "We're satisfied with the attorney general's decision not to intervene. The attorney general is monitoring the case. If any findings lead us to believe that we need to advise our members, we'll do that. In the meantime, we're conducting our own audit, but don't want to alarm them unnecessarily. We'll advise members if we find anything of concern."
Covering 1.4 million lives, CalPERS is the second largest buyer of health care benefits in the country, after the federal government.
PBMs widely used
Employers, health insurers and unions turn to pharmacy benefit managers to lower overall medical expenses and secure discounts from retail pharmacies and drug manufacturers. About 200 million Americans, or 68% of the U.S. population, are in private health plans that use PBMs, which typically reduce pharmaceutical costs by 25%, according to a 2004 report from the consultancy PricewaterhouseCoopers.
In a recent EBN QuickPoll, 32% of respondents said their company had a direct contract with a PBM, while 37% said their health plan contracts with a PBM, and 24% did not use a PBM.
Approximately 40 to 50 PBMs operate in the United States today, according to a recent report from the Federal Trade Commission. Most large PBMs run mail-order pharmacies, designed to promote the use of generic drugs and provide medicine at a lower cost than what retail pharmacies charge.
Caremark provides drug benefit services for more than 2,000 health plan sponsors.
The Nashville, Tenn.-based company reported net revenues of $8.2 billion in the second quarter of 2005, an increase of 13% over the second quarter of 2004. During the second quarter of 2005, mail pharmacy revenues reached $2.8 billion. Caremark's main competitors in the PBM market are Express Scripts and Medco Health Solutions.
AdvancePCS settlement
Caremark Rx's subsidiary, AdvancePCS, recently reached a settlement with the federal government over allegations of soliciting and receiving kickbacks from pharmaceutical manufacturers and paying kickbacks to potential customers to entice them to contract with AdvancePCS.
AdvancePCS agreed to pay the federal government $137.5 million and give health plans information about the payments it receives from pharmaceutical manufacturers beyond rebates. AdvancePCS also agreed to not enter into kickback arrangements or engage in drug switching that results in the health plan or patient paying more than the cost of the originally prescribed drug. Caremark will have oversight of AdvancePCS' compliance obligations.
The settlement, which resolves charges under the False Claims Act and the Public Contract Anti-Kickback Act, was approved on Sept. 8 in the U.S. District Court for the Eastern District of Pennsylvania. The lawsuit arose from an investigation that federal law officials began in November 1999. Patrick Meehan, U.S. Attorney for the Eastern District of Pennsylvania, comments, "This settlement addresses AdvancePCS' hidden financial relationships with drug manufacturers and health plans that influence what drugs we are prescribed and how much we pay for them. Ultimately, disclosing these relationships should result in lower costs to consumers, which is especially important now as the Medicare Part D benefit is about to start."
AdvancePCS has denied all allegations, saying that its business practices were not wrongful or inappropriate. Caremark CEO Mac Crawford says, "We are pleased with the settlement with the federal government, as it allows us to avoid the expense, uncertainty and distraction of potentially time-consuming litigation. As the government has stated, no allegations of misconduct of Caremark were at issue, and we strongly stand behind the company's business practices."
(c) 2005 Employee Benefit News and SourceMedia, Inc. All Rights Reserved.
