The following is an update on recent developments relating to the Medicaid fraud lawsuit filed by the State of Alabama against 72 drug manufacturers. There have been a number of significant happenings including trials that were held against three of the companies.
State Wins Its Case Against GSK And Novartis
The State of Alabama has won its second Medicaid fraud lawsuit against two major drug manufacturers. The jury, after hearing two weeks of testimony, returned verdicts of $80,989,559 against GlaxoSmithKline and $83,257,694 against Novartis. This case was tried in the Circuit Court of Montgomery County. Each defendant was found by the jury to have committed fraud. The damages returned were all compensatory. The amount of damages awarded was exactly what the state had lost as a result of the fraudulent price reporting. Ed Sauls, a Montgomery-based CPA, was the state’s damages expert. Many had stated that this trial would be a test case for the drug manufacturers.
State Medicaid Fraud Lawsuits Get Support
In a most significant development, the AARP and Alabama Arise have thrown their full support behind the State of Alabama’s Medicaid fraud lawsuit. Dr. Joan Carter, AARP’s state director for Alabama, and J. Ray Warren, the group’s state president, told the media last month at a news conference that national AARP was in full support of the state’s efforts to recover damages from the 72 companies that have been sued. Jim Carnes, who is with Alabama Arise and deals with healthcare issues, said that his organization also backs the state and is throwing its full support behind the litigation.
These endorsements are extremely important for a number of reasons: first, the two groups are knowledgeable about Medicaid; and second, they have a tremendous number of members in Alabama. For example, AARP has over 500,000 members in the state. In addition, AARP has offered the services of its legal staff to assist in brief writing when the cases go to the Alabama Supreme Court. These endorsements are huge for our cause and we appreciate the support very much.
Judge Issues Strong Post-Verdict Order In AstraZeneca Case
Judge Charles Price, the judge assigned to the state’s Medicaid fraud cases and who presided over the trial of the AstraZeneca case, has issued a very strong order on the post-verdict motions filed by the defendants in the State of Alabama’s first Medicaid fraud case to go to trial. All of the liability-related motions were denied. However, the punitive damages award was reduced by Judge Price to $120 Million in compliance with Alabama law. The compensatory damages were left at $40 Million. The judge wrote in his order that the amount of damages was supported by the substantial evidence of fraud introduced at trial. It was most significant that the judge found the punitive damages award to be supported by substantial evidence, which is the standard for review for the awarding of punitive damages. He found that AstraZeneca had engaged in intentional fraud and that there was clear and convincing evidence in support of the jury’s verdict. In his order, Judge Price stated further:
At trial, the State introduced evidence to establish that the Defendants (AstraZeneca) fraudulently diverted Medicaid funds intended to benefit the State’s poor, elderly, and infirm citizens. … The State also established that Defendants (AstraZeneca) wrongful acts constituted willful, intentional fraud and suppression … .
We were completely satisfied with the judge’s order, but AstraZeneca has appealed to the Alabama Supreme Court. The evidence of fraudulent conduct was very strong against AstraZeneca in this case. It was obvious that the company intended to cheat the Medicaid program and thought it would never be caught. The company’s strategy appeared to be – if caught – simply pay the money back to the state plus interest. That strategy was proved by the evidence at trial.
State Of Alabama Offers To Settle The Medicaid Drug Claims
After being successful against three drug manufacturers in the trials held so far, I believe the time has come for all parties to reach a global settlement of the remaining cases. There are 69 drug companies with cases pending in the Circuit Court of Montgomery County involving false pricing in the Medicaid program. We have given each of these companies that were sued 30 days in which to start settlement negotiations. The defendants will have a 30-day window in which to make an acceptable settlement offer to the state. For those companies which make no offer, there will be no further settlement negotiations by the state.
Based on our investigation, all of the companies have collectively cheated the state Medicaid Agency out of approximately $1 billion. This is money that could have been used to benefit the folks who qualify to be on the Medicaid program. Those beneficiaries include the elderly, the disabled, the poor and children. It’s impossible to understand a corporate mentality that would put a scheme in place designed to cheat the folks who are beneficiaries of the Medicaid program. Our intention is to try the cases against those drug companies not willing to pay back to the state their ill-gotten gain. We will also seek punitive damages against those companies. Those companies can’t say they were
Next Trial Date Set
Judge Price has set October 27th as the date to start the next trial, which will be against Bristol-Myers Squibb Co. If there is no settlement, we will try this case as scheduled. We believe it to be one of the strongest of the remaining cases.
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