Osteoporosis Prosecutions Highlight DOJ Strategy

The Department of Justice (DOJ) recently announced the arrests of Rita Luthra, M.D., and W. Carl Reichel, a former drug company president for violating the Anti-Kickback Statute over the company’s osteoporosis drugs, Actonel and Atelvia. The company, Warner Chilcott also agreed to plead guilty to healthcare fraud in Massachusetts and pay the government $125 million to settle both civil and criminal allegations against it

Then on November 12, 2015, Landon Eckles, a former district manager for Warner Chilcott pleaded guilty in connection with wrongfully accessing patients’ protected personal health information.

DOJ’s “Yates Memorandum”

This follows on the heels of the recent “Yates Memorandum” from the Justice Department which reemphasized its commitment to pursue individuals when dealing with corporate misconduct. Is the Warner Chilcott case evidence that the government is getting ready to arrest more physicians and medical industry executives if they are suspected of wrongdoing?

Anne Walsh and John Fleder of the law firm of Hyman, Phelps & McNamara wrote on November 11 that it was impossible to tell whether the case against the Warner Chilcott individuals were a fall-out from the Yates Memorandum, or whether they had long been in the works and the outcomes set well before DOJ’s statement a month before. “Of course, the Yates Memorandum was developed over months. Thus, it is certainly possible that the decision to prosecute these individuals was based on the policy determinations already developed by DOJ leading up to issuance of the Yates Memorandum.”

Looking at the plea agreement between the company and the government also, say the lawyers, “shows extensive language detailing the scope of cooperation required from the company. This type of cooperation is in line with what Deputy Attorney General [Sally Quillian] Yates outlined in her Memorandum, including ‘completely and truthfully disclosing all non-privileged information’ about activities of ‘present and former officers, directors, employees and agents of Warner Chilcott, ‘ and providing ‘active assistance’ in connection with the criminal prosecution against these present or former individuals. These requirements for cooperation credit are not novel in plea agreements, and thus unlikely to have been commanded by the Yates’ directive. What will be telling is whether these provisions become standard or expanded in future resolutions.”

Eckles, pleaded guilty to wrongful disclosure of identifiable health information, in violation of the criminal provisions of the Health Insurance Portability and Accountability Act (HIPAA).

Patient Record Violations

According to the government, Atelvia had poor insurance coverage when it was launched in 2011, and many insurance companies required a prior authorization before covering the drug. A prior authorization contains protected health information. Certain insurance companies require prior authorizations signed by a patient’s doctor in order to overcome restrictions that favor less expensive prescription drugs. Eckles directed his sales representatives that, if physicians refused to fill out Atelvia prior authorizations, they should fill them out themselves. By doing that they accessed patients’ protected health information in violation of the HIPAA law.

Eckles and a sales representative also placed Atelvia brochures in patient charts so that physicians would be reminded to prescribe it. “Eckles bragged about this tactic to his sales representatives, stating, ‘I guarantee you that this is going to drive business, ‘ and encouraged his sales representatives to follow suit. In part, as a result of his scheme, Eckles received a bonus of approximately $60, 000 in 2011, ” stated a government press release.