Zoeller: Indiana to receive $6.3 million in settlement with drug-maker GSK


Largest healthcare fraud settlement: $2B civil damages, $1B criminal penalty

INDIANAPOLIS – The State of Indiana will receive more than $6.3 million as its share of a $2 billion civil settlement that drug manufacturer GlaxoSmithKline will pay various states and the federal government to resolve Medicaid fraud allegations, Indiana Attorney General Greg Zoeller announced today. The $2 billion national civil settlement with GSK is the largest civil recovery in a health care fraud investigation in U.S. history, and the company has also agreed to pay a $1 billion criminal fine to resolve federal charges.

Zoeller said Indiana will join in the national settlement and GlaxoSmithKline will pay the state $6,386,277.19 to resolve allegations that Indiana Medicaid was wrongly billed for ineligible claims for certain drugs GSK manufactures. The civil settlement is based in part on four whistleblower lawsuits filed under the False Claims Act that exposed illegal drug marketing practices, and the whistleblowers will be eligible to receive a state portion of the recovery specifically related to the Indiana claims, approximately $245,000.

“The False Claims Act has shown itself to be a powerful tool whistleblowers can use to stop fraud against the Medicaid program and the state can use to recover Medicaid funds that had been wrongly paid out. The broader national settlement, the largest ever involving a health care fraud investigation, sends a powerful message that state governments and our federal partners will not tolerate overbilling and wrongful billing of Medicaid,” Zoeller said. The Attorney General’s Medicaid Fraud Control Unit (MFCU) participated in the settlement.

A British pharmaceutical manufacturer with a U.S. subsidiary in Delaware, GlaxoSmithKline or GSK has agreed to pay $2 billion in damages and civil penalties to compensate various other states, Indiana and the federal government in a combined civil settlement to resolve the allegations.

One component of the civil agreement settles the four whistleblower lawsuits, called qui tam lawsuits, filed in U.S. District Court in Massachusetts. The lawsuits alleged GSK engaged in illegal off-label marketing of some of its drugs to induce physicians to prescribe them for uses not approved by the Food and Drug Administration; and as a result, ineligible claims for those prescriptions then were submitted to Medicaid for reimbursement.

While it is not illegal for physicians to prescribe drugs for uses not approved by the FDA, it is illegal for the drug manufacturer to market drugs for non-approved uses. The whistleblowers alleged that GSK paid physicians illegal kickbacks – such as speaker programs and trainings and gifts of travel, entertainment and cash – to induce them to prescribe the drugs for non-approved uses.

The whistleblower lawsuits alleged GSK illegally marketed off-label the following products: the antidepressants Paxil and Wellbutrin, the respiratory drug Advair, the anti-seizure drug Lamictal and the anti-nausea drug Zofran. The lawsuits also alleged GSK offered illegal kickbacks for promoting and prescribing those drugs as well as four other GSK products – Imitrex, Lotronex, Flovent and Valtrex.

GSK will pay $1.042 billion in that part of the national civil settlement. Indiana Medicaid will recover $3.4 million for the off-label marketing and kickbacks involving claims paid for the drugs.

The national settlement agreement resolves two other investigations initiated by the government and not whistleblowers. One involves allegations that GSK engaged in misleading and improper promotion of its diabetes drug Avandia, through false representations made about the drug’s cardiovascular effect to physicians and providers. GSK agreed to pay a total settlement of $657 million involving claims paid by Medicaid for Avandia, of which Indiana will recover $1.75 million.

The settlement also resolves allegations that GSK failed to comply with federal “best price” requirements for drug reimbursements by underpaying rebates to state Medicaid programs. GSK agreed to pay $300 million in the national settlement, from which Indiana Medicaid will receive $1.22 million.

As part of the settlement, GSK also agreed to plead guilty to federal criminal charges that it violated the federal Food, Drug, and Cosmetic Act. The federal government alleged that GSK introduced Wellbutrin and Paxil into interstate commerce when the drugs were misbranded, meaning they contained labels not in accordance with their FDA approvals, and that GSK failed to report certain clinical data regarding Avandia to the FDA. GSK has agreed to pay a $1 billion criminal fine in connection with those allegations.

Funds the state recovers through the civil settlement will go back into the Indiana Medicaid program and pay for investigations of other providers.

Since January 2009, the Attorney General’s Medicaid Fraud Control Unit has joined in 17 settlements of whistleblower lawsuits against drug manufacturers for illegal off-label marketing that has resulted in approximately $35 million in recovery to the Indiana Medicaid program.

As part of a public awareness effort called “Blow the Whistle on Fraud,“ Zoeller and deputy attorneys general from the Medicaid Fraud Control Unit have spoken to groups of workers from the health care industry to explain their legal rights as whistleblowers under the False Claims Act. If a whistleblower files a qui tam lawsuit alleging fraud on a government contract, then under the False Claims Act the whistleblower is eligible for a percentage of any damages or settlement recovered at the end of the litigation. The whistleblowers in the GSK case will be eligible for a portion of the national settlement funds, not yet calculated.

“Whistleblowers who have the courage to file these types of lawsuits and expose Medicaid fraud are typically company insiders, and the False Claims Act provides them a percentage of settlement funds as a reward for their effort and hardship in bringing a lawsuit against their employer and to possibly help them transition to new employment,” Zoeller said.

To learn more about how whistleblowers can file suit under the False Claims Act, visit this link:


Members of the public can report fraud against the Medicaid program or Medicaid patient abuse and neglect by contacting the Attorney General’s Medicaid Fraud Control Unit at (800) 382-1039.