CareFusion Corp. has agreed to pay the federal government $40.1 million to settle allegations that it violated the False Claims Act by paying kickbacks and promoting its products for uses that were not approved by the Food and Drug Administration (FDA). The Justice Department said in announcing the settlement that CareFusion, a California-based medical technology company, develops, manufactures and sells pharmaceutical products, including products sold under the trade name ChloraPrep. Stuart F. Delery, an Assistant Attorney General for the Justice Department’s Civil Division, had this to say:
When companies pay kickbacks to doctors, especially doctors involved in setting standards for the health care industry, they undermine the integrity of the health care system. Corrupting the standard-setting process through kickbacks can affect the health care treatment choices that doctors and hospitals may make for patients.
The settlement resolves allegations that, under agreements entered into in 2008 by CareFusion’s predecessor, CareFusion paid $11.6 million in kickbacks to Dr. Charles Denham while Dr. Denham served as the co-chair of the Safe Practices Committee at the National Quality Forum, a non-profit organization that reviews, endorses and recommends standardized health care performance measures and practices. The government contends that the purpose of those payments was to induce Denham to recommend, promote and arrange for the purchase of ChloraPrep by health care providers. ChloraPrep has been approved by the FDA for the preparation of a patient’s skin prior to surgery or injection.
This settlement also resolves allegations that, during the period between September 2009 and August 2011, CareFusion knowingly promoted the sale of ChloraPrep for uses that were not approved by the FDA, some of which were not medically accepted indications, and made unsubstantiated representations about the appropriate uses of ChloraPrep. Barry Grissom, U.S. Attorney for the District of Kansas, observed:
Health care fraud drives up the cost of health care and jeopardizes the strength of our health care system. This case demonstrates that our fight against health care fraud is helping to protect all Americans, including the elderly, the disabled and the most vulnerable among us.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.
One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $17 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs. The settlement with CareFusion was the result of a coordinated effort involving the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Kansas, the U.S. Department of Health and Human Services Office of Inspector General and the Food and Drug Administration Office of the Chief Counsel.
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