Fentanyl False Claims Act Qui Tam Case Leads to $9M Settlement

PHILADELPHIA, June 1, 2023 /PRNewswire/ — Kang Haggerty LLC announced today that they obtained a $9 Million settlement in a non-intervened fentanyl false claims act qui tam case against private equity firm Belhealth Investment Partners, its principals, Harold Blue, Inder Tallur, and Dennis Drislane, and its pharmacy portfolio companies, Linden Care and Quick Care.

The parties have agreed to settle alleged violations of the False Claims Act (FCA) based on a complaint originally filed in 2016, asserting that the settling defendants violated the False Claims Act, §§ 3729-3722, and related laws, by conspiring to submit, submitting, and/or causing the submission of false claims for payment to the federal and state governments for prescriptions of Subsys, a potent, rapid-onset fentanyl sublingual spray.

The qui tam complaint alleged that between 2013 through at least 2016, mail-order specialty pharmacies Linden Care and Quick Care, under the control of and at the direction of Belhealth and its principals, dispensed and shipped thousands of prescriptions of Subsys nationwide to participants of Medicare, Medicaid, and TRICARE for widespread off-label, illegitimate, and non-medically accepted or necessary uses, despite the high potential for abuse of the drug, the FDA’s narrow approval of the drug for use only in the management of “breakthrough cancer pain” in patients who are 18 years of age and older and are opioid tolerant, and the “corresponding responsibility” owed by Linden Care and Quick Care under the Controlled Substances Act, as described in 21 C.F.R. § 1306.04(a), to ensure that prescriptions of Subsys were within the usual course of professional treatment.

The federal government and seven state governments intervened in this case (and four other FCA cases) in 2018 only as to the claims against Defendant Insys Therapeutics, Inc., the well-known defunct manufacturer of Subsys.

“The addition of Belhealth and its principals to this case represents the need to hold private equity firms and their principals liable when they implement profit schemes that trade patient safety for investor returns,” said attorney Edward Kang. “Private equity firms in the healthcare industry must act with the utmost diligence, for if they do not, not only can there be fraud on government payors, but there are also often dire consequences for the patients, including death.”

Over the last ten years, there have been a number of settlements with healthcare companies in FCA cases, resulting in more than half-a-billion dollars for allegedly violating the FCA while under private equity ownership. In most instances, however, the private equity firms working behind the scenes were not included in the actions or settlements.

The Centers for Medicare & Medicaid Services (CMS) Programs estimated that in 2021, almost $100 billion of the spending from the Medicare program alone was directed for potentially fraudulent payments. That same year, the total amount recovered by the federal government in FCA cases was $5.6 billion (of which, $2.8 billion was from the settlement with Purdue). Approximately $1.7 billion (or 30%) of the amount recovered in 2021 was a result of qui tam filings.

Successfully resolving claims alleging that Defendants unlawfully distributed Subsys, a potent, rapid-onset fentanyl sublingual spray, in violation of the Controlled Substances Act, were Edward T. Kang, Kandis L. Kovalsky, Ross M. Wolfe, Susan Moon O, Kyle Garabedian, and Kelly Lavelle of Kang Haggerty, and Eric Young of the Young Law Group as Lead Litigation Counsel.  Also joining in the successful resolution of the claims were James E. Miller and Kolin C. Tang of Miller Shah LLP and Richard J. Hollawell of Richard J. Hollawell & Associates.

Case citation: United States ex rel. Jane Doe v. Insys Therapeutics, No. 2:16-cv-7937-JLS-AS (C.D. Cal.)

About Kang Haggerty

Kang Haggerty, based in Philadelphia, PA and Marlton, NJ, has obtained millions of dollars in recoveries for its clients in high-stakes commercial litigation and FCA qui tam cases. Kang Haggerty is an active participant in Taxpayers Against Fraud (TAF), a non-profit dedicated to advancing the interests of whistleblowers and fighting fraud against the government.

Edward T. Kang, Managing Member
Kandis L. Kovalsky, Member
123 South Broad Street, Suite 1670
Philadelphia, PA 19102
Tel: (215) 525-5850

SOURCE Kang Haggerty LLC