Conn. To Get Share Of $40 Million National Settlement

, The Connecticut Law Tribune

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United States ex rel. Kirk v. CareFusion et al.: A medical device maker has agreed to pay $40.1 million to various states and the federal government, including $77,000 to Connecticut, to resolve civil claims by the U.S. government that it used unlawful marketing tactics and kickbacks to promote its products.

San Diego, Cal.-based CareFusion allegedly promoted and marketed their surgical preparation solution called Chloraprep for uses that were not approved by the Food and Drug Administration and for uses that were not medically intended.

ChloraPrep has been approved by the FDA for the preparation of a patient's skin prior to surgery or injection.

According to the Attorney General's Office in Connecticut, during the period of Sept. 1, 2009 through Aug. 31, 2011, CareFusion promoted Chloraprep for off-label uses; made false and misleading statements about the uses for Chloraprep and paid illegal kickbacks to promote and induce providers to use Chloraprep.

According to the U.S. Department of Justice, CareFusion paid $11.6 million in kickbacks alone to Dr. Charles Denham while Denham served as the co-chair of the Safe Practices Committee at the National Quality Forum, a non-profit organization that reviews, endorses and recommends standardized health care performance measures and practices. Denham is an influential physician who has taught at the Harvard School of Public Health and whose writings have appeared in The Wall Street Journal.

The government contends that the purpose of those payments was to induce Denham to recommend, promote and arrange for the purchase of ChloraPrep by health care providers. Denham, after the settlement was announced in January, released a statement calling the kickback allegations "blatantly false."

The states further contend that CareFusion's alleged unlawful conduct caused false and fraudulent claims to be submitted to government funded health care programs, including the state Medicaid programs.

CareFusion agreed to pay the states and the federal government $40.1 million to resolve the allegations, including approximately $8 million for state Medicaid programs. The portion of the settlement attributable to the state and federal shares of Connecticut's Medicaid Program is $135,433, of which the state will receive $76,859.

"Improper marketing of drugs that violated approved uses leads to fraudulent and false claims against our Medicaid programs and ultimately puts patients at risk," Connecticut Attorney General George Jepsen said in a statement. "We take allegations of fraud or abuse very seriously, and we will continue to work to hold accountable those who seek to defraud our taxpayers."

State Department of Social Services Commissioner Roderick Bremby added: "While the dollar amount coming to the state is small compared to other actions, this settlement is important because it's yet another indication of the need for constant vigilance in safeguarding public health programs."

The settlement resolves a lawsuit filed by Dr. Cynthia Kirk, a former vice president of regulatory affairs for the Infection Prevention Business Unit of CareFusion. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens with knowledge of false claims to file suit on behalf of the government and to share in any recovery. Kirk's share in this case is $3.26 million.

CareFusion, a corporation spun off from Cardinal Health in 2009, denied any liability as part of the settlement terms. According to a statement released by the corporation, they have already paid the settlement.

"We are pleased to resolve this matter and are confident we have strong practices, processes and controls in place," said Kieran Gallahue, CareFusion's chairman and CEO. "We have made significant investments during the past several years to improve our quality and compliance systems, including our sales and marketing practices, and will continue to do so as part of our commitment to adhering to the highest standards and aligning with best global practices."

Assisting Jepsen and the Department of Social Services in this case was the Medicaid Fraud Control Unit in the Office of the Chief State's Attorney.

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