Whistleblower gets cut of $38 million fraud case
A drug company has agreed to pay $38 million to settle a federal fraud case launched by a whistleblowing sales representative from Germantown.
Kurt Kroening sued Forest Laboratories and its subsidiary, Forest Pharmaceuticals, in 2012 under the federal False Claims Act. Prosecutors took over the case and alleged that from 2008 through 2011 the firms improperly paid kickbacks to physicians based on how many prescriptions they wrote for the firm’s drugs, including Bystolic, Savella and Namenda. The drugs are used to treat hypertension, fibromyalgia and Alzheimer’s, respectively.
For blowing the whistle, Kroening is entitled to $7.8 million of the settlement.
Kroening, 38, who now lives near Appleton and works for GE Medical, said he was reluctant to go against the grain at first, and hated the term whistleblower.
“Five years later ... I am proud to say what I did was courageous and the right thing to do,” he said through his attorney, Nola Hitchcock Cross.
Though the $38 million is the largest False Claims Act settlement in the eastern district of Wisconsin, Cross called it “no more than the cost of doing business” for Forest, which is now part of pharma giant Allergan. The company did not return emails to its media contacts seeking comment on the case.
Cross said without Kroening’s actions, patients may have been prescribed drugs “not based on their medical conditions, but in response to monetary inducement to the physician by Forest.”
Kroening claimed that his employer monitored doctors’ prescription rates and paid them for meals and speaking engagements based on how much Forest product the doctors prescribed, and made the payments even if no other doctors heard the talks, or if the events were canceled.
“Kickback schemes undermine the integrity of medical decisions and increase the costs of health care for everyone,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, in a statement about the settlement. The statement notes that the settlement only resolves the lawsuit and did not determine liabilities.
Kroening said early in his sales career he felt brainwashed by Forest’s methods and didn’t even realize “I was basically ‘paying’ them to write my specific drug,” by offering travel, meals, drinks and lodging. When he later expressed concerns to company executives, he said, it “backfired” and he found himself on the outs.
He resigned in late 2012, a few months after secretly filing the whistleblower action and gathering more evidence.
The False Claims Act allows people with inside knowledge of fraud against the federal government to sue on the government’s behalf. The suits are filed under seal to allow federal prosecutors to review them and consider taking them over. When they do, the cases can remain under seal for years while investigators gather evidence. They often result in settlements.
The original plaintiffs — called relators — have to move fast; there can be other whistleblowers and only the first to sue is entitled to a share of a recovery if they both reveal the same information.
Since January 2009, the False Claims Act cases have brought in more than $31 billion, more than $19.4 billion of it from cases involving fraud against federal health care programs such as Medicare and Medicaid, according to the U.S. Department of Justice.