State Reaches Settlement in Pharma Pay-for-Play Scheme

The California Dept. of Insurance and whistleblowers reached a $23.2 million settlement with pharmaceutical company, Warner Chilcott. Three former employees said that Warner Chilcott paid kickbacks to doctors and falsified prior authorization forms to increase the number of prescriptions for several medications. Whistleblowers alleged that Warner Chilcott used illegal kickbacks to influence treatment decisions. They said that the company often hosted events at high-end hotels and spas with little or no educational content in order to encourage physicians to write more prescriptions for Warner Chilcott medications.

As part of the settlement, Warner Chilcott will refrain from promoting its pharmaceutical products identified in the complaint and sold in California. Of the $23.2 million state settlement, California will get $11.8 million, which is to be used for enhanced insurance fraud investigation and prevention efforts.

Scott Simmer, the whistleblowers’ lead counsel said, “The federal False Claims Act allows whistleblowers to sue for fraud related to government health plans, but only California and Illinois have statutes that allow whistleblowers to bring claims alleging illegal kickbacks to health care providers for the purpose of defrauding private health insurance plans.” In California, private citizens can sue and get a share of the recovery. The whistleblower’s share of a federal recovery in a non-intervened case is 25% to 30%.

“This case really should get the attention of state insurance commissioners around the country. To put things in perspective, the federal False Claims settlement returned a net of around $2.3 million to California’s Medicaid program, but this settlement will bring in a net of $11.8 million to the state’s general fund. Most importantly, drug companies have received a clear message not to engage in drug marketing fraud in the state of California,” he said.

A separate lawsuit was filed in federal court in Massachusetts alleging that Warner Chilcott violated the Federal False Claims Act. Also, the Dept. of Justice announced a settlement of the federal allegations on October 29, in which Warner Chilcott pleaded guilty to healthcare fraud and agreed to pay $125 million to resolve federal civil and criminal liability for alleged activities that violated the federal anti-kickback and HIPAA statutes, and for false claims submitted to Medicare and Medicaid.

State Reaches Settlement with Life Insurance Companies

State Controller John Chiang announced multi-state settlements over unpaid life insurance benefits with 11 life insurance companies, including Transamerica and New York Life. The Controller’s five-year investigation revealed an industry-wide practice of failing to pay death benefits to beneficiaries and ignoring a legal duty to turn the money over to the State for safe keeping.

Instead, companies would draw down the policies’ cash reserves to continue collecting premium payments from the deceased and then cancel the policy once the cash reserves were depleted. Also, insurers did not routinely crosscheck the owners of dormant accounts with government databases of the deceased. In other cases, companies had direct knowledge of the policy owner’s death, but still did not notify the beneficiaries of the policy. The companies have agreed to make policy beneficiaries whole, pay 3% compounded interest, and adopt business procedures to ensure full compliance with the unclaimed property laws. California’s 50-year-old consumer protection law requires businesses to send lost or abandoned properties to the State after three years of inactivity. These multi-state settlements are worth up to $763 million nationwide, with up to $86.7 million going to California beneficiaries.

Companies involved in the latest settlements include Transamerica, New York Life, Western & Southern, Pacific Life, Genworth, Hartford, ING, Symetra, Northwest Mutual, Sammons (Midland and North American), and TIAA-CREF.

Like previous settlements, the agreements announced require the companies to do the following:
• Restore the full value of all effected accounts dating back to 1995.
• Fully comply with California’s unclaimed property laws and cooperate with the Controller’s efforts to reunite these death benefits, annuity contracts, and retained asset accounts with their owners or, in many cases, the owners’ heirs.
• Pay beneficiaries 3% compounded interest on the value of the held amounts from 1995, or from the date of the owner’s death, whichever is later. To date, Controller Chiang has reached global settlements with 18 life insurance companies, with an aggregate value of $266.7 million belonging to California beneficiaries, and an estimated $2.4 billion nationally. These 18 companies write more than 50% of all the issued and active life insurance policies nationwide.

Last Updated 06/23/2021

Arch Apple Financial Services | Individual & Family Health Plans, Affordable Care California, Group Medical Insurance, California Health Insurance Exchange Marketplace, Medicare Supplements, HMO & PPO Health Care Plans, Long Term Care & Disability Insurance, Life Insurance, Dental Insurance, Vision Insurance, Employee Benefits, Affordable Care Act Assistance, Health Benefits Exchange, Buy Health Insurance, Health Care Reform Plans, Insurance Agency, Westminster, Costa Mesa, Huntington Beach, Fountain Valley, Irvine, Santa Ana, Tustin, Aliso Viejo, Laguna Hills, Laguna Beach, Laguna Woods, Long Beach, Orange, Tustin Foothills, Seal Beach, Anaheim, Newport Beach, Yorba Linda, Placentia, Brea, La Habra, Orange County CA

12312 Pentagon Street - Garden Grove, CA 92841-3327 - Tel: 714.638.0853 - 800.731.2590
Email:
Jay@ArchApple.com
Copyright @ 2015 - Website Design and Search Engine Optimization by Blitz Mogul