Week In Review, April 15, 2011

The PharmaCertify™ Team

It’s April 15, and it’s not tax day! What a way to start out a Friday! Here’s the week that was in PharmaCertify compliance news.

There were more developments this week in the FCPA case against Lindsey Manufacturing. The judge in the case heard arguments to dismiss, on the basis that the law was not intended to apply to employees of entities like the government run power company in Mexico. The defense argued it was not the intent of the Act to include such entities in the definition of “foreign official,” and to include them made the law untenably broad. The judge disagreed, and held that the employees of the power company were indeed foreign officials, under the FCPA.

Also on the FCPA front, Grant Thorton and Ethicspoint teamed up to write a whitepaper on 10 common misconceptions that could expose companies to FCPA violations. The DOJ has made it clear that FCPA is an area of priority for them, and has even created special units to investigate possible violations.  The misconceptions range from “my ethics and compliance program is already clear” to “provision of travel expense is common place in my industry.”

In settlement news this week, J&J agreed to pay $78M in fines to both the U.S. and U.K. to settle bribery and kickback charges. The investigation arose after a self-disclosure by J&J, and the U.S. authorities praised the drug maker for its cooperation and remedial efforts. Other pharma companies have announced they are subject to similar investigations. Are we on the verge of seeing similar settlement announcements?

The week also found individuals entering into settlement arrangements. The former CEO of Mequon agreed to plead guilty to mail fraud and pay $27M in fines for improper Medicare reimbursements to the company. The company makes Dr. Comfort shoes and inserts for diabetics. The plea and fines come as a condition of sale of the company to DJO Global Inc. In addition to possible jail time, the CEO will be barred from participating in federal healthcare programs, and the company will enter into a CIA with the OIG.

In the words of Gomer Pyle, “Surprise, surprise, surprise.”  Just weeks after the case was dismissed, a former GSK lawyer was re-indicted on charges of making false statements and obstruction in connection to an investigation of the company’s marketing practices. The trial is tentatively scheduled to begin next month.

On the state forefront, two members of the Ohio General Assembly introduced legislation that would create an Ohio False Claims Act. The legislation, which has the backing of state AG, Mike DeWine, would make the submission of fraudulent reimbursement claims illegal and give the Attorney General’s Office investigatory authority. The law also includes a Whistleblower provision, allowing whistleblowers to collect a portion of the recoveries and protect them from retaliation by their employer.

In North Carolina, a bill has been introduced that, according to Attorney General Roy Cooper, will jeopardize the state’s ability to receive recoveries in Medicaid and other settlements. The AG warned that if passed, the bill would cost the state hundreds of millions of dollars in settlements over illegal marketing and other violations.

Our final story is so full of twists, turns, and scandal, that if hadn’t appeared in the Wall Street Journal, you’d swear it was a plot line of one of the soaps ABC canceled this week.

A Portland, OR neurosurgeon had his operating room privileges revoked in the wake of a controversy of unnecessary surgeries and his business relationship with the medical device distributorship that supplied him with spinal implants. In a previous article, the WSJ found that the surgeon in question was performing spinal fusion surgeries at ten times the national rate. In the latest developments, the WSJ found the surgeon had a business interest in the distributorship that supplied him with the spinal implants. Apparently, the distributorship paid the surgeon a “dividend” each time one of its spinal implants were used. Both the OIG and CMS have stated that this type of business arrangements (known as physician-owned distributorships, or PODS) may violate the Anti-kickback Statute. The surgeon has denied that he performed unnecessary surgeries and that he has a business interest in the medical device distributorship.

That’s the PC news roundup for this week. Remember, PharmaCertify offers training on a variety of commercial compliance topics, including the Anti-kickback Statute, False Claims Act and the FCPA. Please visit www.pharmacertify.com for more information.

Until next week, keep an eye on this blog, and don’t forget to follow us on Twitter.

Enjoy the weekend!

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