Three former employees of the Ireland-based drugmaker Warner Chilcott have reached a settlement with their former employer to resolve claims they brought under the California Insurance Fraud Prevention Act (IFPA).

The Simmer Law Group, Seeger Weiss and MoloLamken represented the three whistleblowers in the case.

The company was represented by Geoffrey Hobart and Matthew O’Connor of Covington & Burling in Washington.

The California action is related to the global settlement announced by the U.S. Justice Department on October 29 in which Warner Chilcott, now part of Allergan, pled guilty to health care fraud and agreed to pay $125 million to resolve civil and criminal liability arising from the illegal promotion of the drugs Actonel, Asacol, Atelvia, Doryx, Enablex, Estrace and Loestrin.

The company was represented by Geoffrey Hobart and Matthew O’Connor of Covington & Burling in Washington.

The federal civil action addressed alleged violations of the Anti-Kickback Statute and HIPAA privacy protections that caused false claims to be submitted to government health insurance programs such as Medicare and Medicaid.

The Justice Department also indicted several former Warner Chilcott executives, including the company’s former president, as well as for a Massachusetts physician who is accused of having accepted financial payments.

“The vast majority of doctors in America serve both patients in government health plans as well as those in private managed care plans, so a drug marketing scheme that influences a doctor’s prescribing decisions will impact the cost of medications for both government programs and private health insurance plans alike,” said Scott Simmer, the whistleblowers’ lead counsel who began investigating healthcare fraud two decades ago while heading litigation for a major health insurer.

“The federal False Claims Act allows whistleblowers to sue for fraud related to government health plans; but only two states – California and Illinois – have statutes that allow whistleblowers to bring claims alleging illegal kickbacks to health care providers for the purpose of defrauding private health insurance plans. It is a shame more states don’t follow the example set by these two.”

Similar to the qui tam provisions of federal and state false claims acts, California’s IFPA allows private citizens to sue those who commit insurance fraud and receive a share of the recovery.

The whistleblower’s share of a federal recovery in a non-intervened case is by statute 25 to 30%.

Under California’s IFPA, the relator’s share is between 40% and 50% when the state does not intervene.

“The California legislature explained right in the statute that health care fraud adversely affects everyone in the state by increasing healthcare costs unnecessarily,” said Simmer. “A whistleblower who sues under the IFPA is helping to control healthcare costs for all Californians.”

“This case really should get the attention of state insurance commissioners around the country. To put things in perspective, the federal False Claims settlement returned a net of around $2.3 million to California’s Medicaid program, but this settlement will bring in a net of $11.8 million to the state’s general fund. Most importantly, drug companies have received a clear message not to engage in drug marketing fraud in the state of California.”