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Two employees of Orange, CA-based Bergen Brunswig Corp. who reported the company was allegedly recycling and reselling pills will receive $750,000 as their cut of a $4 million payment made by Bergen to the state of Hawaii last month. The case marks the first settlement under the Hawaii False Claims Act (FCA), but Thomas Grandy, an attorney for the whistle-blowers, predicts it won’t be the last.
In fact, Grandy, of Davis Levin in Honolulu, forecasts that similar suits filed under state FCA statutes in at least a dozen other states are likely to grow exponentially in the next few years. The Hawaii FCA statute was passed by the Hawaii state legislature last year.
The two women who filed suit were pharmacy technicians. "They were told to reuse old drugs —take blister packs of drugs that were returned, remove the drugs, and then repackage them," Grandy says.
Grandy says the Bergen case, settled last month, is the largest ever obtained in Hawaii by either the federal or state government. It was spearheaded by the Hawaii Medicaid Fraud Unit. Grandy expects to see that trend repeated in other states as well.
So does health care attorney William Saraille of Arent Fox in Washington, DC, who says that it is now much more common to find joint investigations between state and federal investigators. "There is a more significant, and in some cases, a leading role played by a state investigator or state Attorney General," he reports. As successful as the federal government has been with the FCA, there are many states that want to make their mark as well, he argues.
John Boese of Fried, Frank in Washington, DC says he expects state FCAs to become a significant, but not overwhelming issue. "I think more and more states are going to pass FCA statutes, and I think there is going to be more and more activity," he asserts. But state FCA statutes will never rival the impact of the federal FCA either in monetary terms or importance, he predicts.
"Even in a large state like California, you are still only dealing with one state," he explains. "The big numbers are with the nationwide companies where you have nationwide offices and alleged false claims being submitted across the country."