Warner Chilcott Unit to Plead Guilty to Health Care Fraud and Pay $125 Million

Warner Chilcott U.S. Sales LLC, a unit of pharmaceutical manufacturer Warner Chilcott will plead guilty to health care fraud and 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®, and various formulations of these drugs.


The civil settlement resolves a lawsuit filed under the whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.

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

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

Warner Chilcott President W. Carl Reichel, 57, of Chester, New Jersey, was also charged with one count of conspiring to pay kickbacks to physicians.  

Reichel was arrested in Boston.

The company’s marketing scheme involved paying kickbacks to health care professionals to prescribe its drugs as well as filling out and submitting fraudulent prior authorization requests to evade Medicare and Medicaid formulary restrictions, also a violation of patients’ privacy protections under HIPAA.

Under the terms of the plea agreement, Warner Chilcott will pay a criminal fine of $22.94 million.

Warner Chilcott entered into a civil settlement agreement under which it agreed to pay $102.06 million to the federal government and the states to resolve claims arising from its conduct, which allegedly caused false claims to be submitted to government health care programs.

The civil settlement resolved allegations that Warner Chilcott violated the federal Ant-Kickback Statute by paying illegal remuneration to prescribing physicians in connection with the so-called “Medical Education Events” and speaker programs and caused the submission of false prior authorization requests for Atelvia® and Actonel®.

The federal share of the civil settlement is approximately $91.5 million, and the state Medicaid share of the civil settlement is approximately $10.6 million.

Prior to today’s guilty plea by Warner Chilcott and civil settlement, several individuals were either criminally charged or pleaded guilty to various offenses related to the company’s alleged conduct.

Two former district managers, Jeffrey Podolsky, 49, of East Meadow, New York, and Timothy Garcia, 35, of Los Gatos, California, previously pled guilty to various charges, including conspiracy to commit health care fraud and violations of the Health Insurance Portability and Accountability Act (HIPAA).

A third former district manager, Landon Eckles, 30, of Huntersville, North Carolina, was criminally charged earlier this month for alleged HIPAA violations relating to the alleged prior authorization scheme.

Last week a Springfield, Massachusetts physician, Rita Luthra, M.D., 64, of Longmeadow, Massachusetts, was charged with, among other things, allegedly accepting free meals and speaker fees from Warner Chilcott in return for prescribing its osteoporosis drugs.

The civil settlement resolves a lawsuit filed under the whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.

As part of today’s resolution, the whistleblowers will receive approximately $22.9 million from the federal share of the civil recovery.

“This shows what private citizens can do to enforce the law and effect change,” said Steven Molo of MoloLamken.

“Our clients risked their careers to help DOJ with the investigation,” said Scott Simmer of the Simmer Law Group, the lead counsel for the two former Warner Chilcott drug sales representatives who brought the whistleblower lawsuit. “It’s deeply gratifying that their perseverance and dedication is finally coming to light.  They each actively cooperated with the government’s criminal investigation for many months, helping to confirm just how egregious this conduct was. We continued to litigate these claims while the government pursued its criminal investigation.”

“Bribing physicians to prescribe a particular medication compromises the doctor’s integrity and erodes patient trust,” said Steve Weiss of Seeger Weiss. “The Anti-Kickback Statute prohibits the exchange of anything of value in an effort to induce the referral of federal health care program business. Violators on either end of the transaction risk not only civil and criminal penalties, but also possible exclusion from government health insurance programs. It was particularly appalling that some doctors even allowed drug reps access to patient records to prepare the prior authorizations required to receive reimbursement for a drug that was not on federal health insurance formularies.”

Federal officials alleged that between 2009 and 2013, Warner Chilcott, through its employees acting at the direction of members of the company’s management team, knowingly and willfully paid remuneration to physicians in order to induce those physicians to prescribe Warner Chilcott drugs.

Under the law, it is illegal to offer or pay remuneration to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs for which payments are made in whole or in part under a federal health care program.

The information alleges that Warner Chilcott employees, at the direction of company management, provided payments, meals and other remuneration associated with so-called “Medical Education Events,” which included dinners, lunches and receptions.  These events, which were often held at expensive restaurants, often contained minimal or no educational component and were instead used to pay prescribing physicians in an attempt to gain a “competitive advantage” over other companies.

Warner Chilcott also enlisted high-prescribing physicians as “speakers” for the company.  In fact, the “speakers” often did not actually speak about any clinical or scientific topics, and, instead, the payments were primarily intended to induce prescriptions.

For instance, Warner Chilcott informed “speakers” who were not prescribing at a high volume that they would not be paid for subsequent events unless their prescribing habits increased.

The information alleges that from 2011 to 2013, Warner Chilcott employees knowingly and willfully submitted false, inaccurate, or misleading prior authorization requests and other coverage requests to federal health care programs for the osteoporosis medications Atelvia® and Actonel®.

The false, inaccurate and misleading information was provided to certain insurance companies in order to overcome formulary restrictions that favored less expensive osteoporosis drugs.

For instance, Warner Chilcott was aware that many insurers only paid for Atelvia® if a physician submitted an individualized request explaining why the patient could not be treated with less-expensive medications approved to treat the same conditions.

Warner Chilcott sales representatives filled out numerous prior authorizations for Atelvia®, using “canned” medical justifications which often were inconsistent with the patients’ medical conditions.  In some instances, according to the information, Warner Chilcott sales representatives submitted these prior authorizations directly to insurance companies, holding themselves out to be physicians.

In other cases, sales representatives coached physicians and staff about which medical justifications would result in an approved prior authorization, whether or not the justification was true for a particular patient.

The information alleges that Warner Chilcott employees were instructed by members of the company’s management team to make unsubstantiated superiority claims when marketing the drug Actonel®.

The management team instructed the sales representatives to tell physicians that Actonel® was superior to other bisphosphonates due to its supposedly unique “mechanism of action.”

According to the information, Warner Chilcott managers also encouraged sales representatives to use props to visually support this false claim, including pouring water and syrup onto two sponges while telling physicians that Actonel, like water, penetrated and exited the bone more quickly than its competitors, represented by the syrup.

Warner Chilcott management directed the sales representatives to make the superiority claim even though the claim was not supported by clinical evidence.

“This is a landmark case in False Claims Act law enforcement,” said Patrick Burns of Taxpayers Against Fraud, a national organization that supports whistleblower incentive programs designed to combat fraud against the public. “The U.S. Department of Justice is moving beyond accounting to true accountability.  Not only are taxpayers recovering their stolen money, but the former CEO of the fraudster company has been hauled away in handcuffs.  This is a red letter day for integrity.  This needs to happen more often. It’s very clear that there’s a new sheriff in town, and her name is Attorney General Loretta Lynch. On behalf of America’s taxpayers, full applause.”



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