"Lap Dances," Mortgage Payments and Other Kickbacks Leads to $12.2 Million Settlement With Victory Pharma, Inc. in False Claims Act Case Brought by Ellis & Rapacki LLP

BOSTON, Dec. 27, 2012 /PRNewswire/ -- In the second False Claims Act brought by whistleblowers represented by the Boston law firm of Ellis & Rapacki LLP to have settled in the last eight days, Victory Pharma, Inc. ("Victory") has agreed to pay $12.2 million to the federal and state governments and has entered into a deferred criminal prosecution agreement.  The settlement with Victory resolves allegations that, from 2007 to 2009, the pharmaceutical company offered and paid illegal remuneration to physicians to induce them to prescribe the company's pain medications (i.e., Naprelan, Xodol and Fexmid) in violation of the federal False Claims Act and similar state false claims acts.  According to the whistleblower's complaint, which was filed in March 2009, Victory paid kickbacks to physicians in the form of cash, tickets to sporting events and concerts, golf outings and other trips, alcohol and dinners and other personal gifts.  As part of its illegal marketing strategy, Victory gave a physician money to help make a house payment, paid for a physician's staff's outing at a strip club, including "lap dances" for the female staff, and offered a physician and his staff an all-expense paid trip to Las Vegas.  Victory's illegal practices caused false or fraudulent claims for payment to be submitted to Medicare, Medicaid and other federally funded health programs.  The whistleblower represented by Ellis & Rapacki LLP has been awarded more than $1.7 million for pursuing the False Claims Act case against Victory. 

Ellis & Rapacki LLP also represented the whistleblower in the False Claims Act case against sanofi-aventis U.S., Inc., now Sanofi US Services Inc., and sanofi-aventis U.S., LLC, that resulted in a payment of $109 million to the federal and state governments.  The Department of Justice announced that settlement on December 19, 2012.  In the sanofi-aventis case, the whistleblower alleged that the company engaged in a nationwide practice of using "free samples" of its pharmaceutical product Hyalgan (used to treat knee pain) to improperly induce physicians to buy the product and to unlawfully bill Medicare and Medicaid and other federally funded health care programs. 

"By bribing physicians with cash, concert tickets, tickets to sporting events, dinners and other inducements, Victory Pharma compromised what is supposed to be the physician's independent and sound medical judgment when they prescribe drugs to their patients," said Joseph Makalusky, lead counsel for the whistleblower.  "The practice of providing these kickbacks, which puts a patient's health secondary to profits, is a clear violation of the False Claims Act.  I am proud that my client had the courage to step forward and put an end to this fraud, and I hope that this case and others like it emboldens would-be whistleblowers to do the same."  Mr. Makalusky added, "The hard work of Assistant US Attorney Joseph Price and DOJ Attorney Renee Orleans in successfully resolving this case should also be recognized."

About the False Claims Act

The False Claims Act is a federal law that authorizes private citizens to bring cases on behalf of the federal government against those who defraud the federal government.  These whistleblower or qui tam actions are perhaps the most effective tool that the federal government has in combating fraud and returning ill-gotten gains to the public fisc.  The United States Department of Justice recently announced that it secured nearly $5 billion in False Claims Act cases in fiscal year 2012.  The whistleblowers (also known as relators) are entitled to recover between 15 and 30 percent of the proceeds recovered in their False Claim Act cases.

On the state level, thirty states, including Massachusetts, have enacted similar qui tam statutes that enable private citizens to bring cases on behalf of the respective state against those who defraud the state.

For more information about the False Claims Act and the Massachusetts False Claims Act, please see, Blowing the Whistle on the Need to Clarify and Correct the Massachusetts False Claims Act, 94 Mass. Law Rev. 41 (March 2012), available at www.massbar.org/publications/massachusetts-law-review/2012/vol-94-no-2.

About Ellis & Rapacki LLP

Ellis & Rapacki LLP is a Boston law firm that represents whistleblowers in qui tam actions throughout the country.  With more than 75 years of combined experience, our attorneys are committed to providing clients with the highest quality legal service in a timely and cost-effective manner.  For more information about the firm, please visit www.ellisandrapacki.com. 

SOURCE Ellis & Rapacki LLP