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\rsid16664516\rsid16664768\rsid16678488\rsid16730953\rsid16738175\rsid16739285\rsid16741034\rsid16741992}{\*\generator Microsoft Word 10.0.6612;}{\info{\title Outline of Paper}{\author Mark S. Davis}{\operator Computing Services}
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\par }}{\*\pnseclvl1\pnucrm\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl2\pnucltr\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl3\pndec\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl4\pnlcltr\pnstart1\pnindent720\pnhang {\pntxta )}}
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\pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl9\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}\pard\plain \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 
\fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid11813397 
\par 
\par 
\par 
\par 
\par }\pard \qc \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11813397 {\fs32\insrsid11813397\charrsid11813397 The Effects of }{\fs32\insrsid8472498 False Claims Act }{\fs32\insrsid11813397\charrsid11813397 
Whistleblowers on the Pharmaceutical Industry
\par 
\par 
\par 
\par 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11813397 {\fs32\insrsid11813397\charrsid11813397 
\par }\pard \qc \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11813397 {\fs32\insrsid11813397\charrsid11813397 Mark S. Davis
\par }{\fs32\insrsid4850927 May}{\fs32\insrsid11813397\charrsid11813397  2006
\par Harvard Law School, Class of 2006
\par }{\fs32\insrsid5456173 Third-}{\fs32\insrsid11813397\charrsid11813397 Year Paper in Satisfaction of the }{\fs32\insrsid7881479 Food & Drug Law Course}{\fs32\insrsid5456173  Requirement and the }{\fs32\insrsid11813397\charrsid11813397 
Written Work Requirement
\par Peter Barton Hutt, Adviser
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid11813397 
\par }\pard \qc \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11813397 {\insrsid11813397 \page }{\b\ul\insrsid11813397\charrsid8454717 Abstract
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11813397 {\insrsid8454717 The whistleblower (or \'93qui tam\'94) provisions of the False Claims Act }{\insrsid991641 
allow private citizens to bring suit on behalf of the government against individuals or corporations who have submitted false or fraudulent claims to the government.  }{\insrsid10182728 
Under the Act, a whistleblower is entitled to a percentage of the damages or settlement that the government ultimately receives as a result of the lawsuit.  The qui tam provisions have been used with increasing frequency in recent years to in
itiate lawsuits against pharmaceutical manufacturers for fraud that these companies have allegedly committed against federal and state health care programs.  This paper attempts to explain the effects that these whistleblower lawsuits have had upon}{
\insrsid5923868  the pharmaceutical industry.  This paper also}{\insrsid10182728  propo}{\insrsid5923868 ses ways}{\insrsid10182728  that the False Claims Act and go}{\insrsid5923868 vernment enforcement efforts could}{\insrsid10182728  be reformed }{
\insrsid5923868 in order to reduce both frivolous qui tam lawsuits and the need for such extensive False Claims Act prosecution.}{\insrsid11813397 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid991641 {\insrsid11813397 
\par 
\par 
\par 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11813397 {\insrsid11813397 \page }{\b\caps\insrsid11813397\charrsid11813397 Introduction
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11813397 {\insrsid664655 Whistleblowers are employees who expose what they perceive to be the illega}{\insrsid15429247 
l activities of their employers, as well as organizations with which their employers interact, }{\insrsid664655 through means other than those designated by the corpora}{\insrsid9049866 tion itself.  Since 198
6, and particularly in the last decade, the United States pharmaceutical industry has been faced with increased costs of litigation and government scrutiny as a result of whistleblowers within the industry.  
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2687312 {\insrsid98258 This }{\insrsid2687312 paper }{\insrsid98258 anal}{\insrsid2687312 yzes the effects that }{\insrsid98258 whistleblowers }{
\insrsid2687312 who disclose corporate fraud through the False Claims Act }{\insrsid9583109 (\'93FCA\'94) }{\insrsid2687312 and related statutes }{\insrsid98258 have had upon the pharmaceutical industry and }{\insrsid15429247 addresses potential}{
\insrsid98258  area}{\insrsid15429247 s of reform of}{\insrsid9583109  the FCA}{\insrsid15429247  and pharmaceutical business practices}{\insrsid991641 .  Section}{\insrsid7997257  I provides a history of the dev}{\insrsid9583109 elopment of the }{
\insrsid1140114 civil }{\insrsid9583109 FCA}{\insrsid7997257  }{\insrsid664655 and its whistleblower (or \'93qui tam\'94) provisions }{\insrsid7997257 with particular em}{\insrsid664655 phasis on the aspects of the whistleblower provisions}{
\insrsid7997257  which }{\insrsid664655 are most relevant to}{\insrsid7997257  the pharmaceutical industry.  }{\insrsid991641 This section}{\insrsid9583109  also discusses the Anti-Kickback Act and its interaction with the FCA.  }{\insrsid991641 Section}{
\insrsid8472498  II}{\insrsid2454179  describes}{\insrsid14382731  whistleblower}{\insrsid2454179 s\rquote  use of the FCA to bring suit against }{\insrsid14382731 pharmaceutical companies for their role}{\insrsid9583109 s}{\insrsid14382731  in alleged }{
\insrsid15743672 forms of }{\insrsid14382731 fraud against the government through illegal }{\insrsid8472498 reimbursement claims made by health care providers to }{\insrsid14382731 Medica}{\insrsid8472498 re, Medicaid, and state health care programs}{
\insrsid13704381 .  }{\insrsid991641 Section}{\insrsid8472498  III}{\insrsid7881479  analyzes the effect}{\insrsid15429247 s}{\insrsid12478614  that litigati}{\insrsid8472498 on incited by whistleblowers ha}{\insrsid7881479 s}{\insrsid12478614 
 had upon the }{\insrsid8472498 business conduct}{\insrsid4791276  and }{\insrsid12478614 general financial status of the pharmaceutical industry and what consequences }{\insrsid4791276 these changes could hold for consumer}{\insrsid991641 
s of pharmaceuticals.  Section}{\insrsid15429247  IV proposes various}{\insrsid8472498  }{\insrsid4791276 reform}{\insrsid15429247 s}{\insrsid4791276  that could alleviate th}{\insrsid15743672 e excessive burden of FCA settlement costs}{\insrsid4791276 
 that has been imposed upon ph}{\insrsid685836 armaceutical companies.  These reforms}{\insrsid15429247  }{\insrsid664655 could }{\insrsid4791276 ultimately benefit }{\insrsid15429247 the government, industry, and the American public}{\insrsid4791276 .}{
\insrsid991641   Section}{\insrsid15429247  V provides a brief set of closing remarks.}{\insrsid15620879 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid7997257 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid7240249 {\b\insrsid592135\charrsid11813397 I.  }{\b\insrsid8472498 HISTORY OF THE WHISTLEBLOWER PROVISIONS OF THE FALSE CLAIMS ACT}{
\b\insrsid592135\charrsid7240249 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid12350026 \tab The False Claims Act}{\insrsid15022078  (\'93FCA\'94)}{\insrsid12350026 , currently enacted as 31 U.S.C. }{
\insrsid7691692 \'a7 3729}{\insrsid685836 -33 (2000)}{\insrsid7691692 , is one of the strongest tools the government possesses for combating fraud against the United States.  }{\insrsid15022078 
While the government may bring suit to recover losses from fraud without cooperation from private citizens, the FCA also authorizes private citizens wit
h non-public information relating to the fraud to bring suit on behalf of the government.  These whistleblower (or \'93qui tam\'94
) suits entitle the claimant to receive a percentage of the recovery for the government, that percentage varying depending upon whether or not the government itself intervenes in the suit.}{\insrsid15740724   }{\insrsid1392117 
By empowering private persons to initiate FCA }{\insrsid5243360 law}{\insrsid1392117 suits and guaranteeing them a portion of the government\rquote s recovery, the }{\insrsid6500075 government is able to punish}{\insrsid1392117 
 more fraud against the United States tha}{\insrsid6500075 n the Department of Justice could on its own}{\insrsid5729443 
.  Qui tam suits create a significant financial incentive for whistleblowers to come forward, and they allow the government to avoid diverting resources to litigating fraud claims tha}{\insrsid685836 t are weaker than others}{\insrsid5729443  but may stil
l ultimately be successful.}{\insrsid4138174   These same incentives that justify the government\rquote s endorsement of qui tam suits, however, also constitute the reasons to fear that qui tam suits will be abused and lead to excessive litigation.}{
\insrsid592135 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6500075 {\insrsid4138174 \tab }{\insrsid3417828 This section begin}{\insrsid9786654 s with a brie
f history of the FCA in order to illustrate the strengths and weaknesses of previous incarnations of the Act that allowed for both greater and lesser flex}{\insrsid11040694 ibility for whistleblowers.  The discussion then progresses to the}{
\insrsid9786654  cur}{\insrsid11040694 rent state of the FCA, as}{\insrsid9786654  defined by the 1986 False}{\insrsid11040694  Claims Reform Act}{\insrsid7233358 , and the}{\insrsid5243360  related aspects of the}{\insrsid7233358  Anti-Kickback Act}{
\insrsid9786654 .  
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid15022078 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5526400 {\b\insrsid592135\charrsid5526400 A.  }{\b\insrsid2431282 Early }{\b\insrsid592135\charrsid5526400 History of the False Claims Act}{
\b\insrsid5514379\charrsid5526400 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11235674 {\insrsid592135 \tab }{\insrsid6633527 
The original False Claims Act was passed in 1863 in response to defense contractor fraud against the Union during the Civil War.}{\cs16\super\insrsid2373099 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13639777 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Act of Mar. 2, 1863, ch. 67, 12 Stat. 696; 132 }{
\scaps\insrsid9982956\charrsid10762880 Cong. Rec.}{\insrsid9982956  22,339 (Sept. 9, 1986) (statement of Rep. Berman).}}}{\insrsid6633527   }{\insrsid15691090 
Contractors who were paid for muskets instead provided the Union army with boxes of sawdust, and they sometimes resold horses to the U}{\insrsid12077320 nion cavalry multiple times}{\insrsid15691090 .}{\cs16\super\insrsid2373099 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16006582 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  132 }{
\scaps\insrsid9982956\charrsid10762880 Cong. Rec.}{\insrsid9982956  22,339 (Sept. 9, 1986) (statement of Rep. Berman).}}}{\insrsid15691090   }{\insrsid12992522 In response, the 1863 Act prohibited anyone from knowingly committing or agreeing
 to commit any fraud against the United States government}{\insrsid2193877  through the submission of false }{\insrsid5065751 or fraudulent }{\insrsid2193877 claims for payment}{\insrsid12992522 
, and it established both civil and criminal punishments for conviction.}{\cs16\super\insrsid12992522 {\*\bkmkstart _Ref131862779}\chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1706559 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  \'a7\'a7 1, 3, 12 Stat. at 696-98.}}}{\insrsid12992522 {\*\bkmkend _Ref131862779}  }{\insrsid15691090 
President Abraham Lincoln, frustrated with the Justice Department\rquote s handling of the problem, }{\insrsid10897411 also }{\insrsid15691090 successfully urged Congress to enact the }{\insrsid8337507 \'93}{\insrsid15691090 qui tam}{\insrsid8337507 \'94}
{\insrsid15691090  provisions in the FCA}{\insrsid13322138 , allowing whistleblowers}{\insrsid12073118  (known}{\insrsid10897411  as \'93relators\'94)}{\insrsid13322138  to supplement the efforts of the }{\insrsid10897411 apparently }{\insrsid13322138 
overwhelmed Justice Department}{\insrsid15691090 .}{\cs16\super\insrsid2373099 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  132 }{\scaps\insrsid9982956\charrsid10762880 Cong. Rec.}{\insrsid9982956  22,339-40 (Sept. 9, 1986) (statement of Rep. Bedell).}}}{\insrsid15691090   }{\insrsid10897411 Whistleblowers who 
prosecuted their }{\insrsid7233358 law}{\insrsid10897411 suits to judgment were entitled to one-half of the damages recovered, with the remaining half }{\insrsid15164304 belonging to the government.}{\cs16\super\insrsid1706559 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  \'a7 6, 12 Stat. at 698.}}}{\insrsid15164304   These}{
\insrsid524844  whistleblowers }{\insrsid15164304 were liable for all costs incurred in bringing their qui tam suits and had no claim}{\insrsid7233358 s}{\insrsid15164304  for reimbursement against the United States.}{\cs16\super\insrsid15164304 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1706559 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid1706559 Id.}}}{\insrsid524844   }{\insrsid156530 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15338970 {\insrsid156530 The pertinent provisions of the 1863 Act were reenacte}{\insrsid6180917 d in 1875 as Revised Statutes Sections 3490-3494,
}{\insrsid156530  5438.}{\cs16\super\insrsid156530 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{
\insrsid9982956  }{\scaps\insrsid9982956\charrsid12653005 Robert Salcido}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid12653005 False Claims Act & The Healthcare Industry: Counseling & Litigation}{\insrsid9982956  7-9 (1999).}}}{\insrsid156530   }{
\insrsid15338970 The Revised Statutes }{\insrsid8594273 separately }{\insrsid15338970 codified the civil and criminal provisions }{\insrsid8594273 of the FCA}{\insrsid15338970 , creating a}{\insrsid8594273 n independent}{\insrsid15338970  \'93
Civil False Claims Act\'94 that remains to this day (henceforth}{\insrsid12077320 ,}{\insrsid15338970  }{\insrsid1140114 \'93False Claims Act\'94 and }{\insrsid15338970 \'93FCA\'94 refe}{\insrsid1140114 r}{\insrsid15338970  to o}{\insrsid1140114 nly}{
\insrsid15338970  the civil provisions of the FCA).}{\cs16\super\insrsid8594273 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8594273 See}{\insrsid9982956  Pamela H. Bucy, }{\i\insrsid9982956\charrsid8594273 Private Justice}{\insrsid9982956 , 76 }{\scaps\insrsid9982956\charrsid8594273 
S. Cal. L. Rev.}{\insrsid9982956 , 1, 45 (2002).  The primary criminal provisions of the original False Claims Act are now codified as amended at 18 U.S.C. \'a7\'a7 287, 1001 (2000).}}}{\insrsid15338970 
  The substance of the civil aspects of the FCA, however}{\insrsid14494728 , remained essentially the same}{\insrsid15338970  as a result of the reenactment.}{\cs16\super\insrsid1140114 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1140114 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid16015877 See}{
\insrsid9982956  }{\scaps\insrsid9982956\charrsid12653005 Salcido}{\insrsid9982956 , }{\i\insrsid9982956\charrsid3683514 supra}{\insrsid9982956  note 7, at 7-9.}}}{\insrsid15338970   Yet}{\insrsid524844  despite the financial incentives that the FCA }{
\insrsid156530 continued to create}{\insrsid524844  for the government and private citizens alike, the FCA \'93fell into disuse}{\insrsid156530 \'94 soon after its reenactment}{\insrsid524844 .}{\cs16\super\insrsid524844 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1387208 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956   }{\i\insrsid9982956\charrsid1387208 Id.}{
\insrsid9982956  at 9.}}}{\insrsid524844   }{\insrsid657931 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid156530 {\insrsid1387208 \tab Due to its}{\insrsid1140114  infrequent usage, }{\insrsid10975121 the }{\insrsid8594273 FCA }{\insrsid1140114 was}{
\insrsid8594273  not amended again}{\insrsid524844  until 1943.}{\cs16\super\insrsid11423322 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid4289659 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8080142 See}{\insrsid9982956  
Act of Dec. 23, 1943, ch. 377, 57 Stat. 608.  Section 5438 of the 1875 Revised Statutes was repealed in 1909.  }{\i\insrsid9982956 See}{\insrsid9982956  Act of Mar. 4, 1909, ch. 321, \'a7
 341, 35 Stat. 1153.  However, this change to the Revised Statutes was of little import.  Section 5438 of the Revised Statutes primarily served to \'93set forth those acts creating civil liability\'94 under \'a7\~
3490 of the Revised Statutes, and courts interpreted \'a7 3490 as having incorporated those portions of \'a7\~5438 that enumerated actionable violations of \'a7 3490.}{\scaps\insrsid9982956\charrsid16015877   }{\scaps\insrsid9982956\charrsid12653005 Salci
do}{\insrsid9982956 , }{\i\insrsid9982956\charrsid3683514 supra}{\insrsid9982956  note 7, at 7-8.}}}{\insrsid156530  }{\insrsid10975121  }{\insrsid4336895 The 1943 amendments to the FCA (referred to henceforth as \'93the 1943 Act\'94
) were passed in response to a barrage o}{\insrsid15081159 f so-called \'93parasitic\'94 lawsuits}{\insrsid4336895  filed starting in the late 1930s}{\insrsid10975121  by qui tam relators who essentially \'93revived\'94 the FCA.}{
\cs16\super\insrsid15873957 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16015877 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{
\insrsid9982956  }{\scaps\insrsid9982956\charrsid12653005 Salcido}{\insrsid9982956 , }{\i\insrsid9982956\charrsid3683514 supra}{\insrsid9982956  note 7, at 9.}}}{\insrsid4336895   As it was or
iginally designed, the FCA contained no measures to prevent private individuals from filing qui tam suits based on public information of fraud.  As a result, private parties could file }{\insrsid335570 \'93parasitic\'94 }{\insrsid4336895 
civil lawsuits against contractors who were already under criminal indictment by the government based solely on information contained in the criminal indictments or in media reports of those indictments.}{\cs16\super\insrsid15869854 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  James B. Helmer, Jr. & Robert Clark Neff, Jr., }{
\i\insrsid9982956\charrsid10844557 War Stories: A History of the Qui Tam Provisions of the False Claims Act, the 1986 Amendments to the False Claims Act, and Their Application in the United States Ex Rel. Gravitt v. General Electric Co. Litigation}{
\insrsid9982956 , 18 }{\scaps\insrsid9982956\charrsid2236766 Ohio N.U. L. Rev.}{\insrsid9982956  35, 38 (1991).}}}{\insrsid4336895   }{\insrsid1140404 While the filing of such }{\insrsid12477136 law}{\insrsid1140404 suits did fulfill the 1863 Act\rquote 
s intent of partly shifting the burden of litigating fraud claims from the Justice Department to the public, it failed to reveal undetected fraud against the government}{\insrsid3677895 , which was the primary goal of the 1863 Act}{\insrsid1140404 .  }{
\insrsid5188578 On the other hand, }{\insrsid15081159 Attorney General Biddle, who was a major proponent of reform of the FCA qui tam provisions in 1943, was most concerned with the race to the courtroom }{\insrsid5188578 created by \'93parasitic\'94
 lawsuits. W}{\insrsid15081159 henever a criminal indictment under the FCA was returned, the government was forced to make a hasty decision whether to also file a civil a}{\insrsid12077320 ction or }{\insrsid15081159 
risk sharing the civil damage rewards with unhelpful \'93informers.\'94}{\cs16\super\insrsid11106227 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8545846 See}{\insrsid9982956  }{\scaps\insrsid9982956\charrsid12653005 Salcido}{\insrsid9982956 , }{
\i\insrsid9982956\charrsid3683514 supra}{\insrsid9982956  note 7, at 9-10.}}}{\insrsid657931 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid3096106 {\insrsid15081159 \tab }{\insrsid5188578 The 1943 Act substantially reduced the viability and incentives of filin}{\insrsid10359104 
g qui tam lawsuits by }{\insrsid7233358 requiring that a}{\insrsid5311290  whistleblower provide original information, }{\insrsid5188578 reducing the percentage of damages awarded to }{\insrsid10359104 qui tam relators}{\insrsid5311290 ,}{\insrsid5188578 
 and allowing the government more time to decide whether to file a civil action before a whistleblower }{\insrsid5311290 (with original}{\insrsid10359104  information) }{\insrsid5188578 could do so.}{\cs16\super\insrsid5311290 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 Although the restrictions placed on qui tam suits by the 1943 Act were severe, they were not as substantial as they 
might have been.  One bill introduced in the House of Representatives early in the debate over reform of the FCA would have eliminated qui tam suits entirely.  }{\i\insrsid9982956\charrsid3683514 See id.}{\insrsid9982956  at 10.  }}}{\insrsid5188578   }{
\insrsid5311290 First, the Act }{\insrsid3674444 placed a jurisdictional bar on any qui tam }{\insrsid5243360 law}{\insrsid3674444 suit for fraud if the government had any knowledge of the fraud at the time the suit was filed.}{\cs16\super\insrsid3674444 
\chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid3871949 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 Act of Dec. 23, 1943, ch. 377, 57 Stat. 608, 608-09.}}}{\insrsid3674444   This amendment clearly went much further than prohibiting the types of \'93parasitic\'94 lawsuits based on public informa}{\insrsid3683514 tion that }{\insrsid9453663 had }{
\insrsid3683514 provoked the 1943 Act.  I}{\insrsid3674444 t also barred }{\insrsid5243360 law}{\insrsid3674444 suits brought by whistleblowers with original information in regard to fraud }{\insrsid876504 of which the government had only }{
\insrsid13596399 minimal knowledge at the time.  }{\insrsid11147679 According to the decisions of some cour}{\insrsid15419627 ts, a qui tam suit was even barr}{\insrsid11147679 ed under the 1943 Act if the government\rquote s kno
wledge of the fraud at issue was solely the result of disclosure by the relator himself to the government, as long as the relator had not yet filed a lawsuit at the time of disclosure.}{\cs16\super\insrsid11147679 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956 See}{\insrsid9982956\charrsid3871949  }{
\insrsid9982956 Helmer & Neff, }{\i\insrsid9982956\charrsid11630104 supra}{\insrsid9982956  note 13, at 40.  The case of }{\i\insrsid9982956\charrsid7949130 Wisconsin v. Dean}{\insrsid9982956 
, 729 F.2d 1100 (7th Cir. 1984), which some courts have said spurred Congress to later pass the 1986 Reform Act to the FCA, provides an example of how a result so unfair to a qui tam relator could occur under the 1943 Act:
\par }\pard \s15\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid11823372 {\insrsid9982956 In }{\i\insrsid9982956\charrsid11823372 Dean}{\insrsid9982956 
, the State of Wisconsin, acting independently of the federal government, had investigated and uncovered instances of Medicare fraud.  The state had disclosed its evidence of fraud to the federal government prior to bringing the acti
on because the Social Security Act required states to report instances of fraud and abuse to the federal government.  The United States informed the district court that it did not know of the fraud until Wisconsin\rquote 
s disclosure.  Nonetheless, the Seventh Circuit, reversing the district court, held that the district court lacked subject matter jurisdiction over the plaintiff\rquote s action.
\par }\pard \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\scaps\insrsid9982956\charrsid12653005 Salcido}{\insrsid9982956 , }{\i\insrsid9982956\charrsid11823372 supra}{\insrsid9982956 
 note 7, at 20.  Hence qui tam relators could not necessarily avoid the jurisdictional bar by choosing not to re
veal information to the federal government before filing a qui tam suit; sometimes the relators had no choice but to inform the government first.}}}{\insrsid11147679   }{\insrsid16678488 Se}{\insrsid14626492 cond, the Act mandated that }{\insrsid16678488 
whistleblowers disclose all of their evidence to the governme}{\insrsid1472563 nt at the time they filed}{\insrsid16678488  qui tam suits.  The government then had sixty days in which to decide whether to prosecute the claim itself or allow the relator}{
\insrsid3097119 s}{\insrsid16678488  to han}{\insrsid14626492 dle the case alone (but still on behalf}{\insrsid16678488  of the United States).}{\cs16\super\insrsid2507721 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid3871949 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  57 Stat. at 608.}}}{\insrsid16678488   }{
\insrsid13973118 Third, whistleblowers were no longer guaranteed one-half of the amount recovered by the government in a qui tam }{\insrsid1472563 law}{\insrsid13973118 suit.}{\cs16\super\insrsid11630104 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  57 Stat. at 609.}}}{\insrsid13973118 
  In fact, they were no longer guaranteed any reward at all.  Rewards for relators were capped at twenty-five percent of the damages if the go
vernment did not take over prosecution of the case and ten percent if the government did intervene, while courts were granted absol}{\insrsid3683514 ute discretionary power to reduce}{\insrsid13973118  the whistleblowers\rquote 
 recovery to as low as zero.}{\cs16\super\insrsid338243 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn 
}{\insrsid9982956  }{\i\insrsid9982956 I}{\i\insrsid9982956\charrsid8545846 d.}}}{\insrsid13973118   }{\insrsid657931 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid2507721 \tab }{\insrsid15885676 The 1943 Act took the most restrictive approach to qui tam }{\insrsid7233358 
lawsuits under the FCA that has}{\insrsid15885676  existed to date.  Indeed, it has been argued that the 1943 Act \'93virtually eliminated the qui tam suit as an effective weapon in combating fraud upon the United States Government.\'94}{
\cs16\super\insrsid15885676 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 Helmer & Neff, }{\i\insrsid9982956\charrsid11630104 supra}{\insrsid9982956  note 13, at 39}{\i\insrsid9982956\charrsid8545846 .}}}{\insrsid15885676   }{\insrsid3096106 In particular, the design of the qu}{\insrsid9320157 i tam jurisdictional bar}{
\insrsid3096106  provided contractors who had committed fraud against the government with opportunities to avoid prosecution through limited disclosure of their own wrongdoing:
\par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid15010133 {\insrsid3096106 Under this ill-defined jurisdictional bar, contractors cou
ld make vague and limited disclosures to government officials which would support a claim of prior government knowledge, thereby discouraging any investigation by the government.  Similarly, the 1943 amendments permitted government contractors to take adv
antage of over-burdened federal agencies by providing a modicum of information to officials who had neither }{\insrsid15010133 the time n}{\insrsid7233358 or the resources to investigate}{\insrsid15010133 
 and prosecute the fraud.  Under the [1943 Act], by taking advantage of these practical realities, unscrupulous contractors could immunize themselves from any qui tam suit.}{\cs16\super\insrsid15010133 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid15010133 Id.}{\insrsid9982956 
 at 48-49.}}}{\insrsid3096106 
\par }{\insrsid15010133 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid540311 
Despite the apparent ineffectiveness of the 1943 Act, however, the FCA was not amended in any significant way between 1943 and 1986, at which poi}{\insrsid6118851 nt the Act underwent major}{\insrsid540311  reforms.}{\cs16\super\insrsid540311 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  In fact, 
the FCA was only amended once between the 1943 Act and the 1986 Reform Act; technical amendments were made during the recodification of Title 31 of the United States Code in 1982.  132 }{\scaps\insrsid9982956\charrsid809579 Cong.}{\scaps\insrsid9982956  }
{\scaps\insrsid9982956\charrsid809579 Rec.}{\insrsid9982956  22,335 (Sept. 9, 1986) (statement of Rep. Glickman).}}}{\insrsid2644764   }{\insrsid657931 
\par }{\insrsid11166230 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\b\insrsid13265255\charrsid5526400 B.  The Current False Claims Act: The 1986 Reform Act and Subsequent Amendments}{
\b\insrsid11166230\charrsid5526400 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6118851 {\insrsid13265255 \tab }{\insrsid3683514 Congress }{\insrsid3212638 greatly altered the FCA with its}{\insrsid3683514 
 passage of the 1986 Reform Act.}{\cs16\super\insrsid16013439 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16013439 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  False Claims Amendments Act of 1986, Pub. L. No. 99-562, 100 Stat. 3153 (codified as amended at 31 U.S.C. \'a7\'a7\~3729-33 (2000)).  The 1986 Act was also sometimes referred to as the \'93
1986 Reform Act,\'94 as it is likewise referred to in this paper.}}}{\insrsid16205894   }{\insrsid8159204 Several factors help to explain }{\insrsid4616943 why Congress chose to}{\insrsid15877588  }{\insrsid6118851 make substantial}{\insrsid15877588 
 amendments to the FCA in 1986 after taking no action for so many years.  First, }{\insrsid1507868 Congress viewed the 1943 Act as simply too weak to sufficiently deter fraud against the government.}{\cs16\super\insrsid4616943 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid11033120 See}{
\insrsid9982956  }{\scaps\insrsid9982956\charrsid11630104 Salcido}{\insrsid9982956 , }{\i\insrsid9982956\charrsid11033120 supra}{\insrsid9982956  note 7, at 21.}}}{\insrsid1507868   Some members of Congress felt }{\insrsid4616943 
this weakness had become an immediate problem due to \'93the recent indications of massive procurement abuses occurring in the\'85military buildup\'94 of the 1980s.}{\cs16\super\insrsid4616943 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  132 }{\scaps\insrsid9982956\charrsid809579 Cong.}{
\scaps\insrsid9982956  }{\scaps\insrsid9982956\charrsid809579 Rec.}{\insrsid9982956  22,336 (Sept. 9, 1986) (statement of Rep. Brooks); }{\i\insrsid9982956\charrsid4616943 see also}{\insrsid9982956  132 }{\scaps\insrsid9982956\charrsid809579 Cong.}{
\scaps\insrsid9982956  }{\scaps\insrsid9982956\charrsid809579 Rec.}{\insrsid9982956  22,335 (Sept. 9, 1986) (statement of Rep. Glickman, citing the growing deficit as a justification for reforming the FCA to make it a \'93workable law\'94).}}}{
\insrsid1507868  }{\insrsid4616943  }{\insrsid9259231 Second, recent case law had illust}{\insrsid15735317 rated some of the unusual}{\insrsid1472563  consequences}{\insrsid15419627  of }{\insrsid9320157 the broad qui tam }{\insrsid15419627 
jurisdictional bar}{\insrsid1472563 , and these consequences}{\insrsid6635145  threatened to further undermine the value of the qui tam provisions}{\insrsid15419627 .}{\cs16\super\insrsid15419627 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid15419627 See, e.g., supra}{
\insrsid9982956  note 17.}}}{\insrsid15419627  }{\insrsid4877810  In addition, Congress hoped}{\insrsid6635145  to address the continuing disagreement between federal appeals courts as to the appropriate intent standard to apply under the 1943 Act.}{
\cs16\super\insrsid6635145 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid11033120 See}{\insrsid9982956  }{\scaps\insrsid9982956\charrsid11630104 Salcido}{\insrsid9982956 , }{\i\insrsid9982956\charrsid11033120 supra}{\insrsid9982956  note 7, at 21.}}}{\insrsid6635145  }{\insrsid15419627  }{
\insrsid6635145 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6635145 {\insrsid8273716 The new formulation of the FCA reestablished strong }{\insrsid6494691 financial }{\insrsid8273716 
incentives for qui tam relators to come forward with information of fraud }{\insrsid10097850 against the government}{\insrsid6494691 , while also increasing the overall penalties for defendants (and hence incre}{\insrsid7233358 asing the government
\rquote s FCA damage}{\insrsid6494691 s as well)}{\insrsid10097850 .  The }{\insrsid935508 1986 Act also created rem
edies for FCA whistleblowers who faced retaliation from their employers, and it defined an intent standard that worked to the detriment of defendants in FCA lawsuits.  In total, the Reform Act created th}{\insrsid9465680 
e pro-whistleblower FCA that exists}{\insrsid6830162  today, and it established the whistleblower protections necessary}{\insrsid935508  for the remarkable increase in qui tam suits over the last decade.}{\insrsid9465680   }{\insrsid3887836 
While the Reform Act amended the FCA in many ways, }{\insrsid8795316 knowledge of }{\insrsid3887836 only a few of these chan}{\insrsid8795316 ges is particularly essential}{\insrsid3887836  }{\insrsid8795316 to understand}{\insrsid3887836  the inc
rease in qui tam suits against pharmaceutical companies after 1986.}{\insrsid935508 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid935508 {\insrsid935508 \tab }{\insrsid10828214 
First, the Reform Act increased the civil penalties for false claims for the first time since the creation of the FCA in 1863.  }{\insrsid11033120 Between 1863 and 1986, the civil penalty remained two thousand dollars per false claim.}{
\cs16\super\insrsid11033120 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid11033120 See}{\insrsid9982956  Act of Mar. 2, 1863, ch. 67, \'a7 3, 12 Stat. 696, 698.}}}{\insrsid11033120   }{\insrsid15821948 
Congress, based on the testimony of several witnesses during legislative hearings, determined that its failure to adjust the penalties upward during this period had rendered the monetary penalties \'93no longer a serious deterre
nt to the filing of false claims.\'94}{\cs16\super\insrsid15821948 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15821948 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  132 }{\scaps\insrsid9982956\charrsid809579 Cong.}{\scaps\insrsid9982956  }{\scaps\insrsid9982956\charrsid809579 Rec.}{\insrsid9982956 
 22,335 (Sept. 9, 1986) (statement of Rep. Glickman).  In order to show how dated this unadjusted $2,000 penalty was, Rep. Glickman pointed out that the \'93equivalent of $2,000 in 1863 would [in 1986] be close to $18,000.\'94  }{
\i\insrsid9982956\charrsid7889077 Id.}}}{\insrsid15821948   }{\insrsid15012899 Accordingly, Congress raised the penalties to a minimum of $5,000 and a maximum of $10,000 per false claim.}{\cs16\super\insrsid15012899 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  False Claims Amendments Act of 1986, Pub. L. No. 99-562, sec. 2, 
\'a7 3729(a), 100 Stat. 3153, 3153 (codified as amended at 31 U.S.C. \'a7\~3729(a) (2000)).}}}{\insrsid15012899   }{\insrsid9207624 For the same purposes, the Reform Act entitled the government to receive triple its actual damages caused by the defendant
\rquote s false claims;}{\cs16\super\insrsid9207624 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{
\insrsid9982956  }{\i\insrsid9982956\charrsid9207624 Id.}}}{\insrsid9207624  previously, the FCA only allowed for double damages.}{\cs16\super\insrsid9207624 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid9207624 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  132 }{\scaps\insrsid9982956\charrsid809579 Cong.}{
\scaps\insrsid9982956  }{\scaps\insrsid9982956\charrsid809579 Rec.}{\insrsid9982956  22,336 (Sept. 9, 1986) (statement of Rep. Brooks).}}}{\insrsid9207624   }{\insrsid13591149 Thes}{\insrsid1524153 e amendments obviously multiplied}{\insrsid13591149  the 
}{\insrsid1524153 size of the civil}{\insrsid9638919  rewards that the government could}{\insrsid1524153  earn through FCA actions, and correspondingly increased qui tam relators}{\insrsid7802889 \rquote }{\insrsid1524153  }{\insrsid7802889 po
tential share}{\insrsid9638919 .}{\insrsid935508 
\par }{\insrsid15482981 \tab Second, Congress created guaranteed minimum rewards for qui tam relators and raised the percentage caps on qui tam rewards.  }{\insrsid5790583 Now, under the}{\insrsid6049042  Reform A}{\insrsid5790583 
ct, if the government intervenes}{\insrsid6049042  in a relator\rquote s lawsuit, the relator receives at least 15% and n}{\insrsid3308332 o more than 25% }{\insrsid6049042 of the court-awarded damages or settlement of the lawsuit.}{
\cs16\super\insrsid13390729 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Sec. 3, 
\'a7 3730(d)(1), 100 Stat. at 3156 (codified as amended at 31 U.S.C. \'a7\~3730(d)(1) (2000)).  The 15% minimum reward for a qui tam relator is contingent upon the court\rquote s finding that the relator\rquote 
s contribution to the prosecution of the lawsuit does not consist primarily of the contribution of public information.  }{\i\insrsid9982956\charrsid8740754 See id.}}}{\insrsid6049042   If the government does not intervene}{\insrsid7037421  in a lawsuit}{
\insrsid6049042 , the relator is guaranteed 25% of the proceeds, with a maximum }{\insrsid2425139 share of 30}{\insrsid6049042 %.}{\cs16\super\insrsid13390729 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Sec. 3, \'a7
 3730(d)(2), 100 Stat. at 3156-57 (codified as amended at 31 U.S.C. \'a7\~3730(d)(2) (2000)).}}}{\insrsid6049042   }{\insrsid3308332 In either situation, the qui tam relator is al
so entitled to reasonable expenses incurred in the litigation, as well as attorneys\rquote  fees.}{\cs16\super\insrsid3308332 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6641401 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Sec. 3, \'a7 3730(d), 100 Stat. at 3156-57 (codified as amended at 31 U.S.C. \'a7\~3730(d) (2000)).}{\insrsid9982956\charrsid6641401 
\par }}}{\insrsid3308332   }{\insrsid1318788 In the opinion of one Congressman, the new guaranteed minimums created \'93a critical incentive and reward for persons who come forward with informatio}{\insrsid1200576 n}{\insrsid1318788 \'94}{\insrsid1200576 
 which did not exist under the more restrictive 1943 Act.}{\cs16\super\insrsid1318788 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1318788 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  132 }{\scaps\insrsid9982956\charrsid809579 Cong.}{\scaps\insrsid9982956  }{\scaps\insrsid9982956\charrsid809579 Rec.}{\insrsid9982956 
 22,339 (Sept. 9, 1986) (statement of Rep. Berman).}}}{\insrsid1318788   }{\insrsid15482981 
\par }{\insrsid9403488 \tab Third,}{\insrsid3887836  }{\insrsid3097119 the Reform Act }{\insrsid9993476 slightly }{\insrsid3097119 eased the qui tam}{\insrsid9320157  jurisdictional bar}{\insrsid3097119  that had made the 1943 Act such a weak tool for comb}{
\insrsid3096106 ating fraud}{\insrsid3097119 .  }{\insrsid6497253 Section 3730(}{\insrsid9453663 e)(3)}{\insrsid6115838  of the Reform Act }{\insrsid9453663 ap}{\insrsid6115838 plied}{\insrsid9453663  a}{\insrsid15419627  jurisdictional bar}{
\insrsid6497253  against qui tam actions \'93based upon allegations or transactions\'94 already being addressed in a civil or administrative }{\insrsid6115838 civil money penalty }{\insrsid6497253 hearing in which the government is a party.}{
\cs16\super\insrsid6497253 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6641401 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{
\insrsid9982956  Sec. 3, \'a7 3730(e)(3), 100 Stat. at 3157 (codified as amended at 31 U.S.C. \'a7 3730(e)(3) (2000)).}}}{\insrsid6497253   }{\insrsid6115838 As written, this provision clearly did not significantly alter}{\insrsid9320157  the 1943 Act
\rquote s jurisdiction}{\insrsid4877810 al}{\insrsid9320157  bar}{\insrsid6115838 
, since it continued to forbid the filing of qui tam lawsuits based on information of which the government already had knowledge, regardless of whether the relator was the government\rquote s original source for that information.}{
\cs16\super\insrsid6115838 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 The text of \'a7 3730(e)(3) reveals that Congress\rquote 
s intent was to create a broad jurisdictional bar against all qui tam actions based on similar allegations to those alleged in a hearing brought by the government, but not all courts have interpreted the law this way: 
\par }\pard \s15\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid15472178 {\insrsid9982956 The case law construing the provision\'85
has mistakenly viewed it as simply another antiparasitic provision and thus has permitted actions to proceed in which the relator did not usurp the critical facts underlying a governmental proceeding. 
 The proper reading of the provision is that it bars all actions that mirror or are similar to a governmental civil lawsuit or administrative civil money proceeding regardless of whether the lawsuit is public and regardless of whether a relator may qualif
y as an original source.
\par }\pard \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15472178 {\scaps\insrsid9982956\charrsid11630104 Salcido}{\insrsid9982956 , }{\i\insrsid9982956\charrsid15472178 supra}{\insrsid9982956  note 7, at 256-57.}}}{
\insrsid6115838   }{\insrsid6376358 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6376358 {\insrsid3438808 Section 3730(e)(4)}{\insrsid9453663 , however, narrowed the jurisdiction}{\insrsid15419627 al bar}{\insrsid9453663 
 on qui tam action}{\insrsid11669111 s based on public information.  Congress\rquote s creation of Section 3730(e)(4) represented}{\insrsid9453663  an effort to prevent the litigation of \'93parasitic\'94 lawsuits that the }{\insrsid15419627 
1943 Act originally meant to bar}{\insrsid9453663 , without undermining }{\insrsid6031883 legitimate relators\rquote  lawsuits as the 1943 Act\rquote s \'93government knowledge\'94 standard did.  }{\insrsid3627138 Speci}{\insrsid15419627 
fically, Section 3730(e)(4) barr}{\insrsid3627138 ed qui tam actions \'93based upon the public disclosure of allegations or transactions in a criminal, civil, or admini
strative hearing, in a congressional, administrative, or [GAO] report, hearing, audit, or investigation, or from the n}{\insrsid1403060 ews media,\'94 unless the relator wa}{\insrsid3627138 s an \'93original source of the information.\'94}{
\cs16\super\insrsid3627138 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6641401 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{
\insrsid9982956  Sec. 3, \'a7 3730(e)(4), 100 Stat. at 3157 (codified as amended at 31 U.S.C. \'a7\~3730(e)(4) (2000)).}}}{\insrsid3627138   }{\insrsid14828574 Section 3730(e)(4)(B) clarified that \'93original source\'94 referred to \'93
an individual who has direct and independent knowledge of the information on which the allegations are based an}{\insrsid9993476 d}{\insrsid14828574  has voluntarily provided the information to the Government before filing an action\'85
which is based on the information.\'94}{\cs16\super\insrsid14828574 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6641401 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Sec. 3, \'a7 3730(e)(4)(B), 100 Stat. at 3157.}}}{\insrsid14828574   }{\insrsid1998451 Hence}{\insrsid15419627  the Reform Act continued to bar}{\insrsid1998451  qui tam lawsuits that were strictly \'93
parasitic,\'94 in that they were based on information that was readily available to the government or upon which the gove}{\insrsid6493026 rnment was already acting.  On the other hand, the 1986 amendments}{\insrsid1998451  altered the 194}{
\insrsid12124160 3 Act to allow in two more categories}{\insrsid1998451  of whistleblower lawsuits}{\insrsid10961741  that were frequently not}{\insrsid12124160  parasitic}{\insrsid1998451 .  }{\insrsid10961741 The \'93original source\'94 exception of 
\'a7 3730(e)(4) eliminated the }{\insrsid15419627 patently unjust practice of barr}{\insrsid10961741 ing qui tam actions brought by relators }{\insrsid15735235 who provided relevant information to the government before filing a lawsuit.  Assuming these 
\'93original sources\'94 could establish their status as such, t}{\insrsid15419627 hen they no longer would be barr}{\insrsid15735235 ed for bringing fraud to the attention of the g}{\insrsid1653646 overnment (which was, after all, the prim
ary goal of the original qui tam provisions).  In addition, by abandoning the broad \'93government knowledge\'94 standard, the Reform Act permitted relators to bring actions \'93
based upon independent information that the government also happened to possess but upon which it failed to act.\'94}{\cs16\super\insrsid1653646 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\scaps\insrsid9982956\charrsid11630104 Salcido}{\insrsid9982956 , }{\i\insrsid9982956\charrsid1653646 supra}{\insrsid9982956  note 7, at 204.}}
}{\insrsid1653646   }{\insrsid2499352 This reform furthered the FCA\rquote s other major goal: the prosecution of fraud against the government by private parties in order to alleviate an over-burdened Justice Department.}{\insrsid14505036 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1131682 {\insrsid5330963 While the Reform Act opened the courts to qui tam s
uits based on information that was already (at least in part) possessed by the government, the amendments did incl}{\insrsid11604206 ude an exception that negated}{\insrsid5330963  the new minimum guaranteed reward for }{\insrsid5790583 
a qui tam relator if his or her}{\insrsid5330963  information was not helpful enough to the government\rquote s FCA case.  Section 3730(d)(1) }{\insrsid1131682 eliminated the guaranteed minimum and }{\insrsid5330963 placed a }{\insrsid1131682 
cap of 10% on the qui tam rewards of \'93those \lquote original sources\rquote  who bring cases based on information already publicly disclosed where only an insignificant amount of that information stemmed from that original source.\'94}{
\cs16\super\insrsid13005083 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  132 }{
\scaps\insrsid9982956\charrsid809579 Cong. Rec.}{\insrsid9982956  28,580 (Oct. 3, 1986) (statement of Sen. Grassley, discussing the proposed version of 31 U.S.C. \'a7 3730(d)(1) that was later passed by Congress).}}}{\insrsid1131682   }{\insrsid14705764 
This exception illustrated that while Congress wanted to strengthen the incentives to provide the government with information of fraud, Congress was only willing to provide large financial rewards to wh
istleblowers who provided significant assistance to the government.}{\insrsid2499352 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid4264881 {\insrsid12200175 As a further illustration }{\insrsid4264881 of Congress\rquote s desire to reward only qui tam relators who assist}{
\insrsid5790583 ed}{\insrsid4264881  in the prevention of fraud against the government, Congress again amended the qui tam provisions in }{\insrsid5440392 1988.  The 1988 amendment allowed}{\insrsid4264881 
 the court trying an FCA action to reduce the qui tam reward of any relator who \'93planned and initiated\'94}{\insrsid5790583  the violation of the FCA that wa}{\insrsid4264881 s the basis of the relator\rquote s claim.}{\cs16\super\insrsid4264881 
\chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1531338 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 Major Fraud Act of 1988, Pub. L. No. 100-700, sec. 9, \'a73730(d)(3), 102 Stat. 4631, 4638-39 (codified as amended at 31 U.S.C. \'a7 3730(d)(3) (2000)).}}}{\insrsid4264881   In addition, \'93[i]f the person bringing the ac
tion is convicted of criminal conduct arising from his or her role in the violation of [the FCA], that person shall be dismissed from the civil action and shall not receive any share of the proceeds of the action.\'94}{\cs16\super\insrsid4264881 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid4264881 Id.}}}{
\insrsid4264881   The 1988 amendment thus }{\insrsid15105923 attempted to prevent employees of the targets of FCA action from being rewarded for their own complicity in false claims.}{\insrsid12200175 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid3887836 {\insrsid1524153 \tab }{\insrsid9009036 Fourth}{\insrsid3887836 , }{\insrsid1269268 Congress }{\insrsid4264881 used the 1986 Reform Act to end}{
\insrsid1269268  the conflict}{\insrsid4264881  between the federal }{\insrsid11543342 courts\rquote }{\insrsid1269268  differing interpretations of the FCA\rquote s intent standard for liability.  The Reform Act specified that \'93
no proof of specific intent to defraud is required\'94 for a person to be liable for \'93knowingly\'94 making or causing to be made false claims.}{\cs16\super\insrsid1269268 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6641401 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Sec. 2, \'a7
 3729(b), 100 Stat. at 3154 (codified as amended at 31 U.S.C. \'a7 3729(b) (2000)).  }}}{\insrsid1269268   Instead a person acts \'93knowingly\'94 with respect to information that a false claim is being made when the person \'93
(1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information\'85.\'94}{\cs16\super\insrsid1269268 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid1269268 Id.}{
\insrsid9982956   }}}{\insrsid1269268   }{\insrsid11543342 This amendmen
t assured that all FCA defendants would be subject to a more easily-fulfilled intent standard, whereas previously only those unfortunate defendants in particular federal circuits had faced liability without a showing of specific intent to defraud.}{
\cs16\super\insrsid11543342 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  \'93
[T]he majority of courts, prior to the 1986 amendments, ruled that the government must prove that defendants possessed a specific intent to deceive (\lquote ill will\rquote ) in order to establish a violation of the FCA\'85
Conversely, courts within the Seventh, Eighth and Tenth Circuits and the Court of Claims held that an intent to deceive was not necessarily a requisite element of proof under the pre-1986 Act.\'94  }{\scaps\insrsid9982956\charrsid10697476 Salcido}{
\insrsid9982956 , }{\i\insrsid9982956\charrsid11543342 supra}{\insrsid9982956  note 7, at 16-17.  }}}{\insrsid11543342   }{\insrsid13264422 Congress did }{\insrsid12063167 not mince words about why it}{\insrsid13264422 
 decided to establish this harsher intent standard:}{\insrsid1524153 
\par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid13264422 {\insrsid16738175 
Given the sorry record of hundreds of millions of dollars in fraudulent claims by Federal contractors, persons and entities doing business with the Government must be ma
de to understand that they have an affirmative obligation to ascertain the truthfulness of the claims they submit.  }{\insrsid13264422 
No longer will Federal contractors be able to bury their heads in the sand to insulate themselves from the knowledge a prudent person should
 have before submitting a claim to the Government.  Contractors who ignore or fail to inquire about red flags that should alert them to the fact that false claims are being submitted will be liable for those false claims.}{\cs16\super\insrsid13264422 
\chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  132 }{
\scaps\insrsid9982956\charrsid809579 Cong.}{\scaps\insrsid9982956  }{\scaps\insrsid9982956\charrsid809579 Rec.}{\insrsid9982956  22,339 (Sept. 9, 1986) (statement of Rep. Berman).}}}{\insrsid13264422 
\par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13264422 {\insrsid13264422 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11543342 {\insrsid12063167 By assigning federal contractors an \'93affirmative obligation\'94
 to prevent false claims from being submitted to the government, Congress made contractors liable for not only unintended fraud by their own employees but also for the fraudulent actions of some parties related to the contractor
, such as customers.  This low standard for proving intent has significant consequences}{\insrsid5790583  today}{\insrsid12063167 
 for the pharmaceutical industry, who are sometimes found liable for the false claims for Medicare reimbursement made by their customers, which include doctors and hospitals.}{\insrsid4025355   In general, however}{\insrsid4064092 
, the intent standard created by the Reform Act provided }{\insrsid4025355 greater }{\insrsid4064092 opportunities}{\insrsid4025355  for the government and qui tam relato}{\insrsid12987904 
rs to succeed in FCA litigation, and hence also encouraged the pursuit of more FCA claims against contractors.}{\insrsid12063167 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10180758 {\insrsid10180758 \tab Similarly, the Reform Act clarified that all elements of an FCA claim, including damages, must be proven \'93
by a preponderance of the evidence.\'94}{\cs16\super\insrsid10180758 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Sec. 5, \'a7 3731(c), 100 Stat. at 3158 (codified as amended at 31 U.S.C. \'a7 3731(c) (2000)).}}}{\insrsid10180758   This clarification was necessary because \'93some courts, because of the FCA\rquote 
s possibly penal application, had required that the government prove its case by clear and convincing evidence.\'94}{\cs16\super\insrsid10180758 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid4205344 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\scaps\insrsid9982956\charrsid10697476 Salcido}{
\insrsid9982956 , }{\i\insrsid9982956\charrsid10180758 supra}{\insrsid9982956  note 7, at 329.  A congressional proposal to amend the FCA in 1998 would have raised the burden of proof to \'93clear and convincing evidence,\'94
 in an attempt to protect defendants from being found guilty under the FCA for \'93minor, technical regulatory breaches.\'94  Robert Salcido, }{\i\insrsid9982956\charrsid4205344 The Government\rquote 
s Increasing Use of the False Claims Act Against the Health Care Industry}{\insrsid9982956 , 24 }{\scaps\insrsid9982956\charrsid4205344 J. Legal Med.}{\insrsid9982956 
 457, 464 (2003) (discussing the Health Care Claims Guidance Act, S. 2007 and H.R. 3523, 105th Cong. (1998)).  The amendment had \'93roughly 180 cosponsors,\'94 but failed to pass.  }{\i\insrsid9982956 Id.}{\insrsid9982956  at 464-65.}}}{\insrsid10180758 
  This amendment ensured that FCA claims would be subject to the lower burden of proof typical of a civil claim.
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid12404969 {\insrsid12063167 \tab }{\insrsid13988760 Lastly, }{\insrsid14222221 the Reform Act added a whistleblower retaliation p}{\insrsid9261694 rovi
sion that protects}{\insrsid14222221  qui tam relators\rquote  employment s}{\insrsid1377801 tatus if they are involved in }{\insrsid14222221 qui tam }{\insrsid1377801 law}{\insrsid14222221 suit}{\insrsid1377801 s}{\insrsid14222221 .  }{\insrsid16664516 
Section 3730(h) provides relief }{\insrsid14564719 for employees who are \'93discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employe}{
\insrsid4670383 r\'94 because of the employees\rquote  \'93investigation for, initiation of, testimony for, or assistance in\'94 a qui tam action.}{\cs16\super\insrsid4670383 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid12218399 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Sec. 4, \'a7
 3730(h), 100 Stat. at 3157-58 (codified as amended at 31 U.S.C. \'a7 3730(h) (2000)).  }}}{\insrsid4670383   Relief under this provision includes reinstatement at the same level of seniority as the employee would have had if not for the employer\rquote 
s discrimination and two times the employee\rquote s back pay plus interest.}{\cs16\super\insrsid4670383 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid4670383 Id.}}}{\insrsid4670383   }{\insrsid12404969 Prior to the Reform Act, relators had \'93
few legal protections against the crudest forms of reprisals\'85.\'94}{\cs16\super\insrsid12404969 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid12404969 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  132 }{\scaps\insrsid9982956\charrsid857971 Cong.}{\scaps\insrsid9982956  }{\scaps\insrsid9982956\charrsid857971 Rec.}{\insrsid9982956 
 22,340 (Sept. 9, 1986) (statement of Rep. Bedell).}}}{\insrsid12404969   This provision represented yet one more attempt by Congress}{\insrsid6361294  to incentivize qui tam suits.}{\insrsid13264422 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid418865 {\insrsid12404969 \tab }{\insrsid1206860 The 1986 Reform Act remains essentially the same today.}{\cs16\super\insrsid1206860 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  The current FCA is codified at 31 U.S.C. \'a7\'a7
 3729-33 (2000).}}}{\insrsid1206860   As a whole, the Reform Act }{\insrsid13263166 created }{\insrsid9714393 a FCA forum far more friendly to whistleblowers by guaranteeing the qui tam relators (in most 
cases) some form of financial reward, allowing more qui tam suits to be heard in court, and making success in a qui tam lawsuit more likely than it had been in most}{\insrsid1731077  fede}{\insrsid6962686 ral circuits.  Following a short}{\insrsid1731077 
 explanation of the Medicaid/Medicare Anti-Kickback Act and how it has ov}{\insrsid6962686 erlapped with the F}{\insrsid5243360 CA, Section}{\insrsid6962686  II}{\insrsid9714393 
 of this paper will discuss the consequences of this pro-whistleblower form of the FCA on the pharmaceutical industry.}{\insrsid12404969 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid16070021 
\par }{\b\insrsid6962686 C}{\b\insrsid13982544\charrsid12666934 .  }{\b\insrsid12666934\charrsid12666934 The Medic}{\b\insrsid1377801 are/Medicaid Anti-Kickback Act a}{\b\insrsid12666934\charrsid12666934 s It Relates to False Claims Act}{\b\insrsid12666934 
 Actions}{\b\insrsid13982544\charrsid12666934 
\par }{\insrsid12666934 \tab The Medicare/Medicaid Anti-Kic}{\insrsid2452408 k}{\insrsid12666934 back Act }{\insrsid5256679 (\'93Anti-Kickback Act\'94) }{\insrsid12666934 is a }{\insrsid5256679 criminal statute created to prevent health care fraud.}{
\cs16\super\insrsid12656431 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 42 U.S.C. \'a7 1320a-7b (2003) (commonly referred to as the \'93Medicare/Medicaid Anti-Kickback Act,\'94 or simply the \'93Anti-Kickback Act\'94).}}}{\insrsid5256679   }{\insrsid4867650 Congress originally passed t}{\insrsid4325876 he Anti-Kickback }{
\insrsid4867650 Act }{\insrsid4325876 in 1972,}{\cs16\super\insrsid4325876 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid4325876 See}{\insrsid9982956  Social Security Amendments of 1972, Pub. L. No. 92-603, sec. 242, \'a7\'a7 1877, 1909, 86 Stat. 1329, 1419.}}}{\insrsid4325876  }{
\insrsid4867650 with}{\insrsid4325876  the rather narrow goal of \'93outlawing referral activities that most professional organizations had considered to be unethical and activities that led to the inappropriate use of scarce federal funds.\'94}{
\cs16\super\insrsid4325876 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid4325876 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{
\insrsid9982956  Robert Salcido, }{\i\insrsid9982956\charrsid12398627 Mixing Oil and Water: The Go}{\i\insrsid9982956 vernment\rquote s Mistaken Use of the M}{\i\insrsid9982956\charrsid12398627 
edicare Anti-Kickback Statute in False Claims Act Prosecutions}{\insrsid9982956 , 6 }{\scaps\insrsid9982956\charrsid12398627 Ann. Health L.}{\insrsid9982956  105, 110 (1997).}}}{\insrsid4325876   }{\insrsid16255613 Since 19}{\insrsid15346551 
72, the Act has been expanded }{\insrsid12077320 so}{\insrsid15346551  that it}{\insrsid16255613  not only forbid}{\insrsid15346551 s}{\insrsid16255613  the offer or acceptance of \'93kickback[s] or bribe[s]\'94 }{\insrsid15346551 or \'93rebate[s]\'94
 to induce referrals for medical treatment that is paid for by a federal health care program,}{\cs16\super\insrsid721961 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Sec. 242, \'a7 1877, 86 Stat. 1329, 1419 (1972).}}}{\insrsid15346551  but now also }{\insrsid14227389 provides greater deterrence by prohibiting}
{\insrsid15346551  \'93any remuneration\'94 to induce such referrals.}{\cs16\super\insrsid721961 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  42 U.S.C. \'a7 1320a-7b(b)(2) (2003).}}}{\insrsid15346551   This broader formulation of the Anti-Kickback
 Act has in turn been limited by a number of safe harbors that allow individuals or corporations to provide rebates }{\insrsid721961 on medical treatment or products }{\insrsid15346551 under certain circumstances}{\insrsid721961 
, while at the same time punishments for violations of}{\insrsid15346551  the Act have been increased.}{\cs16\super\insrsid721961 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid14227389 See}{\insrsid9982956  Sec. 242, \'a7
 1877, 86 Stat. 1329, 1419 (1972) (stating that conviction of a violation of the Anti-Kickback Act was punishable by fines of up to $10,000 or imprisonment for up to one year); 42 U.S.C. \'a7 1320a-7b(b)(2) (2003) (stating 
that conviction of a violation of the Anti-Kickback Act now is punishable by fines of up to $25,000 or imprisonment for up to five years).}}}{\insrsid4867650 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid4867650 {\insrsid5256679 The Anti-Kickback Act exists entirely separately from the FCA, which is a civil statute }{\insrsid4867650 
(rather than a criminal statute, like the Anti-Kickback Act) }{\insrsid5256679 used to prevent a broader range of false claims against th}{\insrsid16524391 e government.  Nonetheless, over the last decade}{\insrsid5256679 
, the Anti-Kickback Act has been used by the government and qui tam relators to establish FCA charges against pharmaceutical companies and }{\insrsid3548678 to increase the pressure on these}{\insrsid5256679 
 companies to settle FCA actions at larger settlement figures.}{\insrsid4085475   Hence a brief explanation of the provisions of the Anti-Kickback Act is necessary to fully understand the later discussion of FCA actions against pharmaceutical companies.}{
\insrsid12666934 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16402259 {\insrsid5256679 \tab }{\insrsid16524391 The Anti-Kickback Act forbids any type of payment, \'93including any kickback, bribe, or rebate,\'94
 that is made \'93directly or indirectly, overtly or covertly, in cash or in kind to any person\'94 for the purpose of inducing that person \'93
to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program\'85.\'94}{\cs16\super\insrsid14181380 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  42 U.S.C. \'a7 1320a-7b(b)(2).}}}{\insrsid16524391 
  The Act also prohibits such inducements }{\insrsid14181380 to order goods or services which are reimbursable by a federal health care program, specifically Medicare and Medicaid.}{\cs16\super\insrsid14181380 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  42 U.S.C. \'a7 1320a-7b(b)(2)(B).}}}{\insrsid794234 
  Parallel provisions likewise prohibit}{\insrsid14181380  the solicitation or acceptance of such payments.}{\cs16\super\insrsid14181380 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid14181380 See}{\insrsid9982956  42 U.S.C. \'a7 1320a-7b(b)(1).}}}{\insrsid14181380   }{\insrsid16402259 
The Act classifies these offenses as felonies; those convicted are subject to fines up to $25,}{\insrsid794234 000 and imprisonment for up to}{\insrsid16402259  five years.}{\cs16\super\insrsid16402259 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  42 U.S.C. \'a7 1320a-7b(b)(2).}}}{\insrsid794234   }{
\insrsid16538946 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13249521 {\insrsid16538946 To narrow this }{\insrsid13249521 broad prohibition, the Anti-Kick
back Act establishes a number of exceptions as well.  The most relevant of these exceptions to pharmaceutical companies allows for discounts on services or products that are subject to reimbursement under Medicare or Medicaid if the price reduction is 
\'93properly disclosed and appropriately reflected in the costs claimed\'94 by the recipient of the discount.}{\cs16\super\insrsid13249521 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  42 U.S.C. \'a7 1320a-7b(b)(3)(A).}}}{\insrsid13249521 
  The Act also allows the Secretary of the Department of Health and Human Services to establish additional exceptions.}{\cs16\super\insrsid13249521 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid6434724 See}{\insrsid9982956 
 42 U.S.C. \'a7 1320a-7b(b)(3)(E).}}}{\insrsid6434724   }{\insrsid5256679 
\par }{\insrsid12398627 The Anti-Kickback Act thus differs from the FCA in three particularly significant ways: \'93(1) it is a criminal statute, (2) it requires that the violator act in a \lquote knowing and willful\rquote 
 manner, and (3) it does not contain any provisions that would permit a private individual to enforce its provisions.\'94}{\cs16\super\insrsid12398627 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid4867650 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Salcido, }{\i\insrsid9982956\charrsid4867650 supra}
{\insrsid9982956  note 58, at 106-07.}}}{\insrsid12398627   }{\insrsid9978760 Despite these }{\insrsid13117051 crucial differences between the two statutes, federal prosecutors and qui tam relators have repeatedly based civil }{\insrsid9205777 FCA }{
\insrsid13117051 charges against defendants }{\insrsid1377801 on }{\insrsid9205777 the Anti-Kickback Act.  Specifically, those bringing suit often assert that the
 defendant made claims to Medicare or Medicaid for reimbursement for services or products that were provided to patients due to i}{\insrsid4418575 llegal inducements under the Anti-Kickback Act}{\insrsid9205777 .}{\cs16\super\insrsid4418575 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid4418575 
See, e.g., id.}{\insrsid9982956  at 126 (describing the claims brought by a qui tam relator in }{\i\insrsid9982956\charrsid4418575 U.S. ex rel. Pogue v. American Healthcorp, Inc.}{\insrsid9982956 , 914 F. Supp. 1507 (M.D. Tenn. 1996)).}}}{\insrsid4418575 
  }{\insrsid5333747 
\par }{\insrsid4418575 The argument in favor of such a claim is that the inducement makes the reimbursement claim \'93so tainted as to be a false claim;\'94
 the Medicare and Medicaid programs are forced to reimburse a physician or health care provider for products or ser}{\insrsid5440392 vices that might not have been pr}{\insrsid4418575 escribed if not for the alleged kickback. }{\insrsid16255332  }{
\insrsid4418575 This tactic allows qui tam relators to effectively bring }{\insrsid6961116 civil }{\insrsid4418575 suit for violations of the }{\insrsid6961116 criminal }{\insrsid4418575 Anti-Kickback Act without a private right of action under}{
\insrsid5333747  the Act.  These claims also allow both the government a}{\insrsid14763174 nd relators to bring civil FCA actions that successfully assert that the defendant made or received a kickback under}{\insrsid5333747  the less }{\insrsid14763174 
stringent intent standard of the FCA, when in some cases the defendant\rquote s actions would not constitute a kickback under the \'93knowing and willful\'94 intend standard of the criminal Anti-Kickback Act.}{\cs16\super\insrsid14763174 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid14763174 See id.
}{\insrsid9982956  at 130-33 (arguing that courts should not allow FCA actions based on Anti-Kickback Act violations to proceed to trial due to the difference in intent standards between the two statutes).}}}{\insrsid14763174   }{\insrsid6434724 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid6516082 \tab Disagreement exists between the }{\insrsid1377801 federal }{\insrsid6516082 
district courts as to whether the government or qui tam relators should be allowed to predicate FCA actions on violations of the Anti-Kickback Act.}{\cs16\super\insrsid6516082 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Alissa M. Nann, Janine Catherine Ashe & Kimberly Hope Levy , }{
\i\insrsid9982956\charrsid1532811 Health Care Fraud}{\insrsid9982956 , 42 }{\scaps\insrsid9982956\charrsid1444019 Am. Crim. L. Rev.}{\insrsid9982956  573, 627 (2005); }{\i\insrsid9982956\charrsid1532811 see also}{\insrsid9982956  Salcido, }{
\i\insrsid9982956\charrsid1532811 supra}{\insrsid9982956  note 58, at 124-30 (discussing examples of the conflicting precedent in district courts as of 1997 regarding whether the FCA allows plaintiffs, 
including qui tam relators, to bring FCA actions predicated on violations of the Anti-Kickback Act).}}}{\insrsid6516082   }{\insrsid9530786 Due to many pharmaceutical companies\rquote  fear}{\insrsid9845539 s}{\insrsid9530786  of going t
o trial when FCA claims have been brought against them (a topic which will be discussed in the following section), opportunities for clarification by courts of the interaction between the FCA and the Anti-Kickback Act are rare.}{\insrsid13982544 
\par }{\insrsid14310296 
\par }{\b\insrsid6962686 II}{\b\insrsid3107464\charrsid5526400 .  }{\b\caps\insrsid12858827\charrsid6962686 False Claims Act }{\b\caps\insrsid15562216\charrsid6962686 Laws}{\b\caps\insrsid12858827\charrsid6962686 uits}{\b\caps\insrsid11491873\charrsid6962686 
 Against the Pharmaceutical Industry}{\b\caps\insrsid3107464\charrsid6962686 
\par }{\insrsid11876016 \tab The qui tam provisi}{\insrsid6500075 ons of the FCA have spawned a number of lawsuits against pharmaceutical manufacturers since }{\insrsid4065868 the 1986 Reform Act.  FCA lawsuits}{\insrsid6500075  have risen con}{
\insrsid4065868 siderably in the last decade}{\insrsid6500075 , with qui tam relators and intervening federal prosecutor}{\insrsid4065868 s using }{\insrsid6500075 prog}{\insrsid4065868 ressively more creative}{\insrsid11040694  }{\insrsid13513540 
ways to assert that various types of marketing tactics employed by pharmaceutical companies constitute violations of}{\insrsid4065868  the FCA.  }{\insrsid3107464 
\par }{\insrsid11876016 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6962686 {\b\insrsid6962686 A}{\b\insrsid11075698\charrsid5526400 .  TAP Pharmaceutical}{\b\insrsid6962686 s}{\b\insrsid11075698\charrsid5526400 
 Products Settlement
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid2102590 \tab A case that demonstrates the typical progression of a qui tam suit under the }{\insrsid2843316 current }{\insrsid13974903 
FCA and the harmful (and possibly unwarranted) }{\insrsid2102590 effects it may have on a pharmaceutical compan}{\insrsid2914343 y }{\insrsid1462287 and its employees }{\insrsid2914343 is that of TAP Pharmaceutical Products}{\insrsid2102590 .  }{
\insrsid13974903 The TAP case is significant not only for the size of the settlement (TAP paid more than $1 billion in total fines as a result of federal and state lawsuits), but also because it was the first settlement}{\insrsid12340526 
 by a pharmaceutical}{\insrsid13974903  manufacturer under the FCA that involved both civil and criminal fines.}{\cs16\super\insrsid13974903 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Jonathan K. Henderson & Quintin Cassady, }{\i\insrsid9982956\charrsid12941263 Drug Deals in}{\i\insrsid9982956  2006: Cutting Edge Legal and Reg}
{\i\insrsid9982956\charrsid12941263 ulatory Issues in the Pharmaceutical Industry}{\insrsid9982956 , 15 }{\scaps\insrsid9982956 Ann.}{\scaps\insrsid9982956\charrsid12941263  Health L.}{\insrsid9982956  107, 114 (2006).}}}{\insrsid2102590 
\par }{\insrsid13974903 \tab }{\insrsid69172 The qui tam suit against TAP was initiated by Douglas Durand, a vice president of sales at the Chicago-based pharmaceutical company from February 1995 to January 1996.  A major part of Durand\rquote s job wa}{
\insrsid8471422 s to sell Lupron, a drug used to treat prostate cancer.  }{\insrsid5136373 As of 2002, annual sales of Lupron equaled $800 million, about 25% of TAP\rquote s revenues.}{\cs16\super\insrsid5136373 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\insrsid9982956\charrsid3435371 Charles Haddad & Amy Barrett, }{
\i\insrsid9982956\charrsid3435371 A Whistle-Blower Rocks an Industry}{\insrsid9982956\charrsid3435371 , }{\scaps\insrsid9982956\charrsid3435371 Bus. Wk.}{\insrsid9982956\charrsid3435371 , June 24, 2002, at 126}{\insrsid9982956 , 126}{
\insrsid9982956\charrsid3435371 .}}}{\insrsid5136373   }{\insrsid1314853 Despite competition from AstraZeneca Pharmaceuticals\rquote  competing drug, Zoladex, a less expensive alternative to Lupron, }{\insrsid5581525 TAP }{\insrsid1314853 
managed to establish Lupron as the top prostate drug on the market, thanks in part to the fact }{\insrsid4351440 that prostate cancer patients fou}{\insrsid1314853 nd injecting Lupron to be less painful than }{\insrsid7292176 injecting }{\insrsid1314853 
Zoladex.}{\cs16\super\insrsid1314853 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 Melody Petersen, }{\i\insrsid9982956\charrsid12941263 Court Papers Depict Scheme in Drug Billing}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid12941263 N.Y. Times}{\insrsid9982956 , Feb. 20, 2001, at C1.  }{\i\insrsid9982956\charrsid8545846 See}{
\insrsid9982956  }{\i\insrsid9982956\charrsid8545846 also}{\insrsid9982956  Shannon P. Duffy, }{\i\insrsid9982956\charrsid12941263 Pharmaceutical Sales Practices Net $1.2 Billion in \lquote Qui Tam\rquote  Settlements}{\insrsid9982956 , }{
\scaps\insrsid9982956\charrsid12941263 Legal Intelligencer}{\insrsid9982956 , June 23, 2003, at 1 (\'93Patients preferred Lupron, which is injected into the buttocks, over Zoladex, which is injected with a larger needle into a more sensitive spot, the
 abdomen.  Both drugs serve as alternatives to surgery.\'94).}}}{\insrsid1314853   }{\insrsid14887380 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid12022850 Soon after assuming his position with TAP, however, Durand be}{\insrsid7829363 gan to suspect that Lupron\rquote s suc}{
\insrsid12022850 cess was being boosted by illegal sales tactics.}{\insrsid6957780   Through sales trips and a discussion with TAP\rquote s finance department, Durand discovered that }{\insrsid984824 TAP had given }{\insrsid6957780 large-sc}{
\insrsid984824 reen televisions }{\insrsid6957780 to a }{\insrsid9978366 significant}{\insrsid11208314  }{\insrsid6957780 number of doctors.}{\cs16\super\insrsid984824 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8545846 See}{\insrsid9982956 
 Lisa Biank Fasig, }{\i\insrsid9982956\charrsid12941263 Whistle-Blower Wiser, Now \endash  Exposing Medicaid Fraud Costs Up-and-Comer His Career Trajectory}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid12941263 Providence-Journal Bulletin}{
\insrsid9982956 , Sept. 15, 2002, at F1.  Durand claimed that when he asked the finance department how many televisions had been given to doctors, the reply was, \'93More than there are urologists.\'94  }{\i\insrsid9982956\charrsid8545846 Id.}}}{
\insrsid6957780   }{\insrsid984824 The televisions were one of only a number 
of items (including VCRs and trips to resorts) that the eventual indictment against TAP alleged were given to doctors as a form of bribe to encourage them to prescribe Lupron over competing drugs.}{\cs16\super\insrsid984824 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid984824 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Alice Dembner, }{\i\insrsid9982956\charrsid12941263 
Drug Firm to Pay $875M Fine for Fraud: US Alleges Bribery, Price Manipulation}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid12941263 Boston Globe}{\insrsid9982956 , Oct. 4, 2001, at A13.}}}{\insrsid984824   }{\insrsid11208314 
Durand also found evidence that TAP sales managers were not properly accounting for their Lupron samples, leading him to suspect that a number of samples had been gifted to doctors who could then sell the samples at a profit.  }{\insrsid7996453 Failing to
}{\insrsid5440392  account for even one sample could have}{\insrsid7996453  result}{\insrsid5440392 ed}{\insrsid7996453  in a fine of $1 million.}{\cs16\super\insrsid3039379 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid460352 See}{\insrsid9982956 
 Federal Food, Drug, and Cosmetic Act, 21 U.S.C. \'a7 333(b)(2)(B) (2000); }{\i\insrsid9982956\charrsid460352 see also}{\insrsid9982956  Fasig, }{\i\insrsid9982956\charrsid10697476 supra}{\insrsid9982956 
 note 75 (citing information obtained from the Food and Drug Administration).}}}{\insrsid7996453   }{\insrsid11208314 When}{\insrsid11735014 , in August 1995,}{\insrsid8522495  the TAP}{\insrsid11208314  sales staff discussed }{\insrsid11735014 
the possibility of }{\insrsid11208314 paying two-percent }{\insrsid16063557 \'93}{\insrsid11208314 administrative fees}{\insrsid16063557 \'94}{\insrsid11208314 
 to doctors who prescribed Lupron (a plan later implemented by TAP) and, according to Durand, merely laughed off the possible criminal }{\insrsid2107363 implications of that cou}{\insrsid11735014 rse of action, Durand committed to}{\insrsid2107363  }{
\insrsid11735014 pursuing}{\insrsid7996453  legal action to guarantee he would not be complicit in any fraud}{\insrsid2818114 .}{\cs16\super\insrsid2818114 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8545846 See}{\insrsid9982956  Fasig, }{
\i\insrsid9982956\charrsid10697476 supra}{\insrsid9982956  note 75.}}}{\insrsid9978366   }{\insrsid13974903 
\par }{\insrsid10685659 The approach that Durand then took to build his case against TAP raises questions as to the societal value of qui tam suits in general.  }{\insrsid11735014 
Durand did not quickly resign his position at TAP once he determined that he could not tolerate the company\rquote s sales practices; in fact, he did not leave TAP for another f}{\insrsid3492213 ive months.  Nor is there any evidence that Durand}{
\insrsid11735014  attempted}{\insrsid14771671 , as a vice president of TAP,}{\insrsid11735014  to }{\insrsid14771671 rectify what he perceived as rampant fraud in his company}{\insrsid10954508  after August 1995}{\insrsid14771671 
.  Prior to committing himself in August to the whistleblower option, Durand did implement a plan to base sale}{\insrsid4737113 s}{\insrsid14771671  managers\rquote  bonuses on the percentage of samples for whi
ch they accounted in an attempt to minimize the free sample problem.}{\cs16\super\insrsid9715096 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8545846 See}{\insrsid9982956  }{\i\insrsid9982956\charrsid8545846 id.}}}{\insrsid14771671   TAP\rquote 
s decision to abandon this bonus plan after three months, however, seems to have signaled the end of Durand\rquote s attempts to combat the fraud himself.  Instead, Durand spent his remain
ing months at TAP gathering evidence of fraud and communicating with an attorney about the possibility of bringing a l}{\insrsid16527585 awsuit against his employer.}{\cs16\super\insrsid16527585 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid3435371 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8545846 See}{
\insrsid9982956  }{\i\insrsid9982956\charrsid8545846 id.}{\insrsid9982956 ;}{\insrsid9982956\charrsid3435371  Neil Weinberg, }{\i\insrsid9982956\charrsid3435371 The Dark Side of Whistleblowing}{\insrsid9982956\charrsid3435371 , }{
\scaps\insrsid9982956\charrsid3435371 Forbes}{\insrsid9982956\charrsid3435371 , Mar. 14, 2005, at 90}{\insrsid9982956 , 96}{\insrsid9982956\charrsid3435371 .}}}{\insrsid16527585   }{\insrsid14561816 Even after Durand provided his}{\insrsid10888378 
 attorney with the evidence he had thus far collected of the alleged fraud and the attorney informed }{\insrsid14561816 him }{\insrsid10888378 
that he had a chance of bringing a successful qui tam suit against TAP, Durand still stayed at TAP for two more months before accepting a post at Astra Merck in January 1996.}{\cs16\super\insrsid10888378 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8545846 See}{\insrsid9982956  Fasig, }{
\i\insrsid9982956\charrsid8545846 supra}{\insrsid9982956  note 75.}}}{\insrsid2818114 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10489030 {\insrsid3239815 \tab }{\insrsid8980397 In May 1996, Durand filed a civil FCA suit }{\insrsid6188420 in }{\insrsid8980397 feder
al district court.  }{\insrsid16063557 Durand\rquote s complaints included the allegation that TAP paid illegal kickbacks to doctors in several ways, such as by granting two-percent administrative fees to doctors for prescribing Lupron.}{
\cs16\super\insrsid16063557 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 As noted previously, the discussion of these administrative fees was the event that triggered Durand\rquote s decision to pursue a qui tam suit against TAP.}}}{\insrsid13717178   More importantly, Durand alleg}{\insrsid16063557 ed that }{\insrsid2843454 
TAP conspired with}{\insrsid12735673  doctors to }{\insrsid9067093 charge Medicare }{\insrsid12735673 at average wholesale price}{\insrsid1377801 s}{\insrsid12735673  }{\insrsid9067093 for }{\insrsid12735673 samples of }{\insrsid9067093 Lupron}{
\insrsid12735673  that the doctors had received from TAP sales managers for free or at a discounted price}{\insrsid9067093 .}{\cs16\super\insrsid2843454 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid13849061 See}{\insrsid9982956  Fasig, }
{\i\insrsid9982956\charrsid13849061 supra}{\insrsid9982956  note 75 (stating that Durand\rquote s original complaints against TAP included \'93
paying illegal kickbacks to doctors, causing doctors to charge Medicare for free samples of Lupron, and encouraging doctors to overcharge for the drug.\'94).}}}{\insrsid9067093   }{\insrsid4729523 
Although the over-billing itself would not benefit TAP, complicity in such over-billing would allow TAP to indirectly bribe doctors into prescribing Lu}{\insrsid7538039 pron}{\insrsid1856092  instead of AstraZeneca\rquote s Zoladex}{\insrsid7538039 .  T}{
\insrsid11886013 he bribes would unwittingly}{\insrsid12735673  }{\insrsid4729523 be paid by the government through its Medicare }{\insrsid11886013 reimbursement }{\insrsid4729523 program}{\insrsid1377801 .  }{\insrsid13835664 
Medicare would reimburse the doctors for the average wholesale price of Lupron doses that they had prescribed, even though the}{\insrsid199155  doctors}{\insrsid13835664  paid far less than the wholesale price}{\insrsid2843454  for those same doses}{
\insrsid4729523 .  }{\insrsid3811955 Durand also }{\insrsid9666156 made a related accusation that TAP made}{\insrsid13911180  }{\insrsid13835664 public reports of Lupron\rquote s average wholesale price}{\insrsid13911180 
 in which the price was falsely inflated}{\insrsid13835664 , }{\insrsid7227295 thus}{\insrsid1114792  causing}{\insrsid7227295 
 doctors to overcharge Medicare in this sense as well, and consequently making it less expensive for TAP to grant discounts to doctors}{\insrsid1114792  (since the price was already inflated)}{\insrsid7227295 .}{\cs16\super\insrsid10489030 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid13849061 See}{
\insrsid9982956  }{\insrsid9982956\charrsid3435371 Weinberg, }{\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956  note 80, at 98}{\insrsid9982956\charrsid3435371 .}}}{\insrsid10489030   These practices are collectively referred to as \'93
marketing the spread.\'94}{\cs16\super\insrsid11143932 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }
{\insrsid9982956  The strategy of persuading doctors to purchase a drug based on the potential profits to the doctor from Medicare reimbursement at inflated average wholesale prices is commonly referred to as \'93marketing the spread.\'94
  Marc J. Scheineson & Shannon Thyme Klinger, }{\i\insrsid9982956\charrsid12941263 Lessons From Expanded Government Enforcement Efforts Against Drug Companies}{\insrsid9982956 , 60 }{\scaps\insrsid9982956\charrsid12941263 Food Drug L.J.}{\insrsid9982956 
 1, 8 (2005).}}}{\insrsid14440807 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6454358 {\insrsid14440807 Five years later, in the fall of 2001, the US Attorney\rquote s Office in Boston}{\insrsid4729523  }{\insrsid14440807 
finally }{\insrsid4729523 intervened in Durand\rquote s suit}{\insrsid16196503 .  Prior to the government\rquote s taking over the case}{\insrsid14440807 , Durand had cooperated with the government in
 its own secret investigation of TAP, ultimately feeding 200 pages of information to the federal prosecutor.}{\cs16\super\insrsid14440807 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\insrsid9982956\charrsid3435371 Haddad & Barrett, }{\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956  note 73, at 126}{
\insrsid9982956\charrsid3435371 .}}}{\insrsid14440807   }{\insrsid11493107 In October 2001, soon after the government officially intervened in the suit, TAP }{\insrsid12084990 ple}{\insrsid352904 a}{\insrsid12084990 d}{\insrsid352904 ed}{\insrsid12084990 
 guilty }{\insrsid12583162 to criminal conspiracy for providing }{\insrsid13707001 doctors with }{\insrsid12583162 free samples of Lupr}{\insrsid13707001 on}{\insrsid12736541  for which Medicare was then billed.  }{\insrsid13707001 The }{\insrsid3561249 
financial }{\insrsid13707001 settlement that TAP and the government reached was enormous.}{\cs16\super\insrsid8017890 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  At the time of the settlement, the total amount of fines was the largest ever paid in a health fraud case.  Dembner, }{
\i\insrsid9982956\charrsid7427917 supra}{\insrsid9982956  note 76.}}}{\insrsid13707001   TAP paid $290 million in criminal fines,}{\cs16\super\insrsid6172276 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid14698878 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 The criminal fines against TAP stemmed from its guilty plea for conspiracy (in cooperation with its doctor/customers) to violate the Prescription Drug Marketing Act.  }{\i\insrsid9982956\charrsid6172276 See}{\insrsid9982956  }{
\i\insrsid9982956\charrsid12941263 Top 20 Cases}{\insrsid9982956 ,}{\insrsid9982956\charrsid14698878  }{\insrsid9982956 The False Claims Act Legal Center, }{\i\insrsid9982956\charrsid14698878 at}{\insrsid9982956  }{\insrsid9982956\charrsid9524157 
http://www.taf.org/top20.htm}{\insrsid9982956  (Feb. 6, 2006).}}}{\insrsid13707001  and in order to settle the civil FCA claims, TAP paid $559 million to the federal government and $25.5 million to state governments.}{\cs16\super\insrsid8219084 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Dembner, }{
\i\insrsid9982956\charrsid13849061 supra}{\insrsid9982956  note 76.}}}{\insrsid13707001   }{\insrsid3561249 Durand received 14% of the federal FCA settlem}{\insrsid945385 ent, or $78 million}{\insrsid3561249 ,}{\cs16\super\insrsid945385 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 Durand earned about $42 million after subtracting taxes and legal fees.  Fasig, }{\i\insrsid9982956\charrsid13849061 supra}{\insrsid9982956  note 75.}}}{\insrsid3561249  while a}{\insrsid945385 n unrelated}{\insrsid3561249 
 whistleblower who was not as central to the government\rquote s case, Dr. Joseph Gerstein, received 3% of the federal FCA fines, or $16 million}{\insrsid7700223 , for himself and his employer}{\insrsid3561249 .}{\cs16\super\insrsid487986 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid487986 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Duffy, }{
\i\insrsid9982956\charrsid13849061 supra}{\insrsid9982956  note 74.  Gerstein was the medical director of pharmacy 
programs for the Tufts Health Plan.  Zoladex had been chosen as the preferred prostate cancer treatment of Tufts.  A TAP employee offered Gerstein tens of thousands of dollars in \'93educational grants\'94
 if he would use his position at Tufts to make Lupron the
 favored drug of the health plan.  Upset at this attempt to bribe him, Gerstein quickly filed a FCA suit.  Gerstein ultimately assisted federal prosecutors by recording conversations with TAP employees in which they offered him even more sizeable educatio
nal grants.   Of the $16 million qui tam award to Tufts and Gerstein, Gerstein received $5 million, which amounted to a little over $1 million after taxes and legal fees.  }{\i\insrsid9982956\charrsid13849061 See}{\insrsid9982956  Tim Bryant, }{
\i\insrsid9982956\charrsid2295393 Whistleblowers Reap Rewards But Suffer Consequences}{\insrsid9982956 , }{\scaps\insrsid9982956 Tribune}{\insrsid9982956  (Port St. Lucie/For Pierce, FL), Aug. 13, 2002, Domestic News; Dembner, }{
\i\insrsid9982956\charrsid13849061 supra}{\insrsid9982956  note 76.}}}{\insrsid6239894   Together these criminal and civil fines \'93amounted to roughly one year\rquote s worth of Lupron sales in the late 1990s\'85}{\insrsid8017890 .}{\insrsid6239894 \'94
}{\cs16\super\insrsid6239894 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6239894 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{
\insrsid9982956  }{\i\insrsid9982956\charrsid1460857 Settlement Valuations}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid3285047 Pharmaceutical Corp. Compliance Rep.}{\insrsid9982956 , Mar. 16, 2004.}}}{\insrsid6239894   }{\insrsid6454358 
TAP settled for this amount despite the fact }{\insrsid10489030 that }{\insrsid6454358 the government estimated that \'93TAP bilked federal and state medical programs out of $145 million throughout the 1990s.\'94}{\cs16\super\insrsid6454358 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\insrsid9982956\charrsid3435371 
Haddad & Barrett, }{\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956  note 73, at 126}{\insrsid9982956\charrsid3435371 .}}}{\insrsid6454358   }{\insrsid10240676 After adding in TAP\rquote s related $150 million }{\insrsid14562046 RICO }{
\insrsid10240676 settlement with patients and private health insurance companies in November 2004, the total payout by TAP to settle lawsuits relating to its sales tactics was over $1 billion.}{\cs16\super\insrsid10240676 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Bruce Japsen, }{\i\insrsid9982956\charrsid2295393 TAP\rquote 
s Bill for Lupron Grows; $150 Million Deal Covers Civil Suits}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid2295393 Chi. Trib.}{\insrsid9982956 
, Nov. 30, 2004, at C1.  The private insurance companies involved in the settlement claimed that they based their reimbursement to insurance beneficiaries on the same Lupron average wholesale prices (which were allegedl
y inflated by TAP) as Medicare used.  }{\i\insrsid9982956\charrsid162394 See}{\insrsid9982956  }{\i\insrsid9982956 i}{\i\insrsid9982956\charrsid162394 d.}}}{\insrsid14562046   }{\insrsid3239815 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid15421943 \tab }{\insrsid8788651 Although the corporation agreed to settle with the government, TAP refused to public}{\insrsid12606742 
ly concede that it had engaged in significant illegal behavior}{\insrsid8788651 .  }{\insrsid16405327 TAP admitted that it gave free samples of Lupron to doctors who themselves received illegal reimbursement from the Medicare program.}{
\cs16\super\insrsid16405327 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid16405327 See}{\insrsid9982956\charrsid3435371  Weinberg, }{\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956  note 80, at 98}{\insrsid9982956\charrsid3435371 .}}}{\insrsid16405327   }{\insrsid8017890 TAP\rquote 
s president stated that the company did not feel that \'93it ha[d] done anything inappropriate in the way it ha[d] priced or reported pricing to the government.\'94}{\cs16\super\insrsid8017890 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid8017890 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Dembner, }{\i\insrsid9982956\charrsid7427917 supra}
{\insrsid9982956  note 76.}}}{\insrsid6033427   TAP }{\insrsid16405327 instead }{\insrsid6033427 justified the}{\insrsid8017890  settlement }{\insrsid4195835 based }{\insrsid8017890 on its fear that }{\insrsid6033427 the alternative was to face}{
\insrsid8017890  even more expensive government reprisal \endash  the federal}{\insrsid16405327  government could have }{\insrsid8017890 exclude}{\insrsid16405327 d}{\insrsid8017890  TAP\rquote s drugs from the Medicare program}{\insrsid16405327 
 if TAP had lost at trial}{\insrsid8017890 .}{\cs16\super\insrsid8017890 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8017890 See}{\insrsid9982956  }{\i\insrsid9982956\charrsid8017890 id.}}}{\insrsid8017890   }{\insrsid6033427 The legitimacy
 of this justification is supported by the subsequent criminal trial and acquittal of eight TAP sales managers in 2004.  The sales managers were charged with conspiracy to defraud Medicare and provide illegal kickbacks}{\insrsid15280609 
 to doctors.  Durand was a crucial}{\insrsid6033427  witness for the government in the trial, and th}{\insrsid14439895 e defense managed to expose }{\insrsid6170074 
major weaknesses in the evidence that Durand and the government had used to influence TAP to settl}{\insrsid12086307 e back in 2001.  As one reporte}{\insrsid3294865 r }{\insrsid6170074 wrote in regard to the trial:  
\par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid731674 {\insrsid6170074 As the trial of a dozen TAP employees played out last year, defense attorneys poked holes in Durand\rquote 
s claims.  Kickbacks he said TAP paid to doctors never happened.  Price hikes he had accused the firm of imposing to overcharge Medicare hadn\rquote t actually taken place.  A fancy co
nference Durand had described as a way to bribe doctors into selling TAP\rquote s drugs was in fact paid for by the attendees themselves.}{\cs16\super\insrsid6170074 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\insrsid9982956\charrsid3435371 Weinberg, }{
\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956  note 80, at 90}{\insrsid9982956\charrsid3435371 . }{\insrsid9982956  }}}{\insrsid7620856 
\par }{\insrsid8605676 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16741034 {\insrsid16741034 Specifically, Durand\rquote s claims against TAP }{\insrsid12060984 
were all based on conduct in which TAP did in fact engage, but not nearly to the 
degree that Durand alleged and, in some cases, in ways that did not violate any federal statute.  Durand claimed that TAP sales managers did not account for half of their free samples; defense counsel showed that the percentage of unrecorded free samples 
was much lower.}{\cs16\super\insrsid12060984 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{
\insrsid9982956  }{\i\insrsid9982956\charrsid12060984 See id.}{\insrsid9982956  at 98.  }}}{\insrsid12060984   Durand\rquote 
s lawsuit asserted that the two-percent administrative fees were paid to a number of doctors as kickbacks.  Defense counsel provided evidence that only one organization received the fees, and they were legal; the customer \'93had a leg
al safe harbor to receive the fees.\'94}{\cs16\super\insrsid12060984 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid12060984 Id.}{\insrsid9982956  (stating that Durand justified his claims in regard to the two-percent \'93kickbacks\'94 by arguing that TAP had \'93
intended to kick the money back\'94 to other customers).}}}{\insrsid12060984   }{\insrsid3999081 Perhaps due in part to the apparent overzealousness of the government\rquote 
s key source of information against TAP (whose financial motives under the FCA were revealed during the trial as well), the jury found all of the TAP defendants not guilty.}{\cs16\super\insrsid3999081 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid3999081 See}{\insrsid9982956 
 Robert W. Tarun, }{\i\insrsid9982956\charrsid2295393 The TAP Pharmaceutical Acquittals}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid2295393 Bus. Crimes}{\insrsid9982956 
, Mar. 2005, at 1 (discussing the cross-examination of Durand in which his financial motives and his failure to reform the sales methods of TAP were emphasized by defense counsel).}}}{\insrsid6170074 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid14562046 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6962686 {\b\insrsid6962686 B}{\b\insrsid5526400\charrsid5526400 .  }{\b\insrsid7620856\charrsid5526400 Analysis of }{\b\insrsid5526400\charrsid5526400 
the }{\b\insrsid7620856\charrsid5526400 TAP Case
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6690793 {\insrsid12022850 \tab }{\insrsid6690793 The TAP settlement \'93
set the standard for future settlements with pharmaceutical manufacturers for fraudulent drug pricing and marketing activities.\'94}{\cs16\super\insrsid6690793 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Henderson & Cassady, }{\i\insrsid9982956\charrsid6690793 supra}{
\insrsid9982956  note 72, at 114.}}}{\insrsid6690793   Accordingly, both the }{\insrsid22918 settlement and the related acquittal of TAP employees inspi}{\insrsid6690793 red a great amount}{\insrsid2976013  of debate}{\insrsid4615373 
.  First, both the pharmaceutical industry and those aware of the TAP case in the general public discussed}{\insrsid22918  the wisdom of rewarding}{\insrsid6438977  whistleblowers under the FCA.  }{\insrsid4615373 In addition, t}{\insrsid6438977 he ph}{
\insrsid9568581 armaceutical industry and}{\insrsid6438977  mem}{\insrsid5447692 bers of the legal community}{\insrsid6438977  questioned }{\insrsid14354188 the fairness of the government\rquote s use of }{\insrsid22918 
prosecutorial discretion in cases against pharmaceutical corporations}{\insrsid5447692 , particularly due to the financial incentives prosecutors\rquote  offices have to extort settlements from corporations}{\insrsid22918 .  
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6438977 {\insrsid11082092 
\par }\pard \ql \li720\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid6962686 {\b\insrsid6962686 1}{\b\insrsid11082092\charrsid11082092 .  The Whistleblower Rewards in the TAP Case
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13903816 {\insrsid4615373 The circumstances of Durand\rquote 
s involvement in the TAP investigation and settlement provided ample fodder for criticism of qui tam suits in general.  }{\insrsid3492213 While Durand\rquote s strategy of remaining in TAP\rquote s employmen}{\insrsid7275690 t furthered the FCA\rquote 
s primary}{\insrsid3492213  goal of uncovering}{\insrsid13903816  potential}{\insrsid3492213  fraud against the }{\insrsid10954508 government}{\insrsid3492213 , one may also argue that }{\insrsid10954508 his actions}{\insrsid3492213  simultaneously }{
\insrsid10954508 facilitated the continuation of the fraud for several more months.  As a vice president of sales, Durand was specially situa}{\insrsid9715096 ted to implement reforms of TAP\rquote s sales practices.  Although Dur}{\insrsid9922229 and }{
\insrsid9715096 experienced frustration with at least one reform t}{\insrsid1930630 hat he proposed, Durand continued to have}{\insrsid9715096  a responsibility as a TAP vice presiden}{\insrsid7275690 t to inform TAP of some of }{\insrsid15280609 what
 he perceived to be}{\insrsid7275690  improper company practices.  }{\insrsid13903816 One episode during Durand\rquote s investigation illustrates how his pursuit of the qui tam }{\insrsid15280609 law}{\insrsid13903816 
suit trumped his continuing duty to TAP: 
\par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid13903816 {\insrsid13903816 As Ainslie [Durand\rquote s attorney] wooed the feds, Durand put on a show of remain
ing a team player at TAP.  In truth, he was the opposite.  When word reached him of a California rep w}{\insrsid5455176 hose tactics were \'93out of line,\'94}{\insrsid13903816 
 he left the matter to a subordinate to handle.  Then he forwarded internal TAP correspondence on the matter to Ainslie.}{\cs16\super\insrsid13903816 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\insrsid9982956\charrsid3435371 Weinberg, }{
\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956  note 80, at 96}{\insrsid9982956\charrsid3435371 .}}}{\insrsid13903816 
\par 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13903816 {\insrsid7275690 Corporate executives, such as Durand, are expected to provide a form of oversigh}{\insrsid11939419 
t in regard to employees under their super}{\insrsid7275690 vision.  }{\insrsid9922229 If a pharmaceutical company}{\insrsid12923898 , which is subject to a multitude of complex regulations that govern its sales practices and }{\insrsid9783107 the 
use of its products, cannot rely on the devotion of its executives to report violations of these regulations to the company itself due to the }{\insrsid13045256 financial }{\insrsid5447692 and legal }{\insrsid9783107 
incentives created by qui tam suits, then }{\insrsid5447692 the company may have no way of knowing that it needs to take corrective action.  In essence, }{\insrsid9783107 the FCA may actually be helping to perpetuate fraud against the government.}{
\insrsid3294865   }{\insrsid12022850 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid9464056 {\insrsid9783107 The }{\insrsid10188481 sheer size of the }{\insrsid13045256 reward that Durand received }{\insrsid12208135 
raises concerns that }{\insrsid16071239 corporate employees will pursue the qui tam route at the first sig
n of fraud.  Enticed by the possibility of financial gain that will provide for an early and extravagant retirement, pharmaceutical employees may be quick to neglect their roles in their corporations and gamble on the hope that they will be able to uncove
r extensive fraud when they catch the first }{\insrsid5320980 whiff of such fraud.  }{\insrsid15346360 
\par T}{\insrsid16071239 here is ample reason to believe that Dur}{\insrsid5320980 and\rquote s actions }{\insrsid727306 in the TAP case }{\insrsid6579844 were not motivated solely by}{\insrsid5320980  greed.  First, }{\insrsid15280609 Durand realized he could
}{\insrsid14185005  bring his claim under the}{\insrsid5320980  False Claims Act }{\insrsid14185005 only af
ter consulting an attorney, suggesting that he may not have been familiar with the system of rewards under the FCA until after he had been documenting TAP\rquote s marketing practices for two months.}{\cs16\super\insrsid16664768 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid7482083 See}{
\insrsid9982956  }{\insrsid9982956\charrsid3435371 Haddad & Barrett, }{\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956  note 73, at 128, 130 (stating that after two months of copying company documents, Durand spoke to his attorney who \'93
urged Durand to sue TAP under the federal whistle-blower program\'85.\'94  Durand\rquote s decision to contact the attorney was based on the advice of a former colleague at Merck & Co., Durand\rquote s employer before he left for TAP);  }{
\i\insrsid9982956 s}{\i\insrsid9982956\charrsid7482083 ee}{\insrsid9982956  }{\i\insrsid9982956\charrsid7482083 also}{\insrsid9982956  Fasig, }{\i\insrsid9982956\charrsid7482083 supra}{\insrsid9982956  note 75 (reporting that \'93Durand didn\rquote 
t fully understand the law\'94 when he began his investigation of TAP and that he instead had to rely on \'93advice from friends\'94). }}}{\insrsid2767512   }{\insrsid727306 Durand also expressed surprise that the government\rquote s case aga
inst TAP resulted in }{\insrsid5440392 a }{\insrsid727306 large settlement.  Durand }{\insrsid13896557 claimed to have }{\insrsid727306 anticipated that \'93
the government would demand that TAP cease and desist, and then settle for a nominal amount of money.\'94}{\cs16\super\insrsid727306 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Fasig, }{\i\insrsid9982956\charrsid7482083 supra}{\insrsid9982956  note 75.  Durand did realize that there was
 the possibility of financial gain, but his awareness of this incentive was only displayed after speaking with his attorney, and the reward he would have anticipated was probably much smaller than the $78 million reward he ultimately received.  }{
\i\insrsid9982956\charrsid6372301 See}{\insrsid9982956  }{\insrsid9982956\charrsid3435371 Weinberg, }{\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956  note 80, at 96 (recounting that Durand sent his attorney a story with the headline \'93
Rugby Laboratories Pays $7.5 Million to Settle Government VA Fraud Allegations; Former Employee Who Brought Qui Tam Suit Receives $1.1 Million\'94 to confirm that this was the type of lawsuit his attorney was planning; she said it was).}}}{\insrsid727306 
  }{\insrsid13896557 Second, }{\insrsid338176 even after the TAP settlement, Durand did not express the disapproval of the entire pharmaceutical industry one would expect from a man desperate to retire and \'93get out of the business.\'94  }{
\insrsid11100012 In fact, }{\insrsid338176 Durand continued to have glowing words for Merck & Co., the pharmaceutical corporation by whom Durand was employed }{\insrsid11100012 up to the time he took}{\insrsid338176  a position with TAP.}{
\cs16\super\insrsid338176 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid7482083 See}{\insrsid9982956  Fasig, }{\i\insrsid9982956\charrsid9464056 supra}{\insrsid9982956  note 75 (quoting Durand as summarizing the Merck culture, of which Durand particularly approved, as \'93
take care of the patients, the profits will follow\'85.\'94).}}}{\insrsid338176   }{\insrsid11100012 Last, and most importantly, }{\insrsid10957075 
Durand was afraid he might face legal repercussions if he did not pursue some form of legal action against TAP.  Durand\rquote s fear of criminal prosecution may have been }{\insrsid154787 exaggerated (as evide
nced by the acquittal of his co-workers years later on charges that were arguably \'93trumped-up\'94 due to Durand\rquote s own }{\insrsid15280609 in}{\insrsid154787 accurate information).}{\cs16\super\insrsid12678936 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  If Durand\rquote 
s fears of personal legal trouble were excessive, TAP\rquote 
s indifference to his concerns is at least partly to blame.  During one TAP meeting in which a sales manager questioned the legality of their two-percent administrative fees, one employee unwisely joked, \'93How would Doug look in stripes?\'94  }{
\i\insrsid9982956\charrsid7482083 Id.}}}{\insrsid154787   Still there is no question that Durand\rquote s desire to obtain legal immunity played a major part in Durand\rquote s decision 
to pursue legal action against TAP; he was not solely motivated by financial concerns}{\insrsid12678936 .}{\insrsid9783107 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid14042829 \tab }{\insrsid15346360 The existence of other factors in Durand\rquote s case, however, does not justify }{\insrsid85976 
discounting the possibility of future qui tam suits being pursued solely for financial gain as a result of Durand\rquote s windfall in this}{\insrsid2498991  case.  Corporate employees facing}{\insrsid85976  }{\insrsid2498991 even }{\insrsid85976 
less exposure to personal liability for their corporations\rquote  actions may }{\insrsid2498991 still }{\insrsid85976 follow Durand\rquote s track in the hope of winning a jackpot.  }{\insrsid4277620 Durand\rquote s qui tam reward displayed to the c
ountry that there is no cap to whistleblower rewards under the FCA.  The rapid increase in the number of FCA suits brought by health-care industry employees since the time that D}{\insrsid7537240 urand began his suit suggests that corporate}{
\insrsid4277620  employees took notice of this fact.}{\insrsid2498991   The extent of Durand\rquote s reward, and the realization that others may follow Durand}{\insrsid5455176 \rquote s lead, has led some to propose the institution of}{\insrsid2498991  }
{\insrsid9132399 hard caps on qui tam rewar}{\insrsid7537240 ds rather than percentage caps}{\insrsid9132399 :}{\insrsid2102590 
\par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid9132399 {\insrsid9132399 TAP may have deserved to get sma}{\insrsid6167330 c}{\insrsid9132399 ked down by prosecutors, and 
Durand may have deserved a reward for helping to deliver it.  But in other areas the government caps whistleblowers\rquote  rewards at sane levels -- $250,000 in customs cases and $1.6 million in those involving bank fraud.  It\rquote 
s an odd law that makes whistleblowers centimillionaires for repo}{\insrsid14514076 r}{\insrsid9132399 ti}{\insrsid14514076 ng on bad behavior after silent}{\insrsid9132399 ly watching it take place under their noses.}{\cs16\super\insrsid9132399 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13126264 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\insrsid9982956\charrsid3435371 Weinberg, }{\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956  note 80, at 98}{\insrsid9982956\charrsid3435371 .}}}{\insrsid9132399 
\par }\pard \ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid9132399 {\insrsid9132399 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid4737336 {\insrsid8920497 S}{\insrsid11277847 ome commentators defend the size of the rewards that relators like Durand }{\insrsid285850 stand to }
{\insrsid11277847 receive.  }{\insrsid1467312 Many of these }{\insrsid12853089 supporters of uncapped rewards point to the }{\insrsid6780185 professional }{\insrsid12853089 risks that }{\insrsid6780185 
whistleblowers take when they file a FCA suit and argue that handing out large rewards is the only way to encourage these whistleblowers to come forward.}{\cs16\super\insrsid6780185 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid6780185 See, e.g.,}{\insrsid9982956 
 David Greising, }{\i\insrsid9982956\charrsid2295393 Think About It: Whistleblowing Not Easy Money}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid2295393 Chi. Trib.}{\insrsid9982956 
, Oct. 7, 2001, at C1 (arguing that professional and societal pressures make whistleblowing such a costly endeavor that the large reward that Durand received was appropriate).}}}{\insrsid6780185 
  Yet this argument does not explain why rewards cannot be capped at a 
level far below the $77 million that Durand received.  Supporters also point to the large rewards that the government receives in qui tam suits, particularly considering how large a return the government makes on FCA suits as a whole.}{
\cs16\super\insrsid6780185 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid6780185 See id.}{\insrsid9982956  (providing an estimate that \'93the government rakes in $8 for every $1 it spends pursuing whistleblower cases,\'94 and noting that \'93for whistleblowers, no big payoff is guaranteed\'94).}}}{
\insrsid16730953   This argument, howe
ver, begs the question: should the government intervene in as many cases as it does, the factor which pressures so many FCA defendants to settle early and creates such a high rate of return for the government in such cases?}{\insrsid11277847 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid8788659 {\insrsid8788659 
\par }\pard \ql \li720\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid6962686 {\b\insrsid6962686 2.  The Government\rquote s Role in}{\b\insrsid11082092\charrsid11082092  the TAP Case}{
\b\insrsid9132399\charrsid11082092 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid731674 {\insrsid11082092 \tab }{\insrsid15996097 
The TAP settlement illustrates the overwhelming power that the government wields over health care companies accused of fraud.  The case also demonstrates the ince}{\insrsid7537240 ntives that the government and, in particular, federal prosecutors\rquote 
 offices have}{\insrsid15996097  to prosecute fraud in cases that government attorneys feel}{\insrsid15347007  will result in settlement.  These incentives may win out}{\insrsid15996097  }{\insrsid15347007 even }{\insrsid15996097 if these }{
\insrsid15347007 government }{\insrsid15996097 attorneys are uncertain whether the defendants are guilty of wrongdoing worthy of punishment.}{\insrsid11082092 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10561537 {\insrsid15996097 \tab }{\insrsid3371142 The weapon the government has at its disposal}{\insrsid14906100 
 that garners the most fear and criticism}{\insrsid3371142  from the pharmaceutical industry is debarment.  If the government punishes a pharmaceutical company with debarment, the company is no longer permitted to serve as a Medicare pr}{\insrsid5004177 
ovider or a state health care program provider for a set period of time}{\insrsid3371142 .  }{\insrsid5004177 
In several situations, a company is subject to mandatory exclusion from federal and state health care programs for a period of at least five years.}{\cs16\super\insrsid5004177 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid6238625 See}{\insrsid9982956 
 42 U.S.C. \'a7 1320a-7(a) (2000); Timothy Stoltzfus Jost & Sharon L. Davies, }{\i\insrsid9982956\charrsid6238625 The Empire Strikes Back: A Critique of the Backlash Against Fraud and Abuse Enforcement}{\insrsid9982956 , 51 }{
\scaps\insrsid9982956\charrsid2295393 Ala. L. Rev.}{\insrsid9982956  239, 248 (1999) (discussing the federal administrative sanctions, including debarment, that the government may or must use to punish government health care providers). }}}{
\insrsid12800163   One of these}{\insrsid5004177  situations that }{\insrsid13780793 trigger}{\insrsid5004177  a company\rquote s mandatory exclusion occurs if the company is convicted of a }{\insrsid669252 criminal }{\insrsid5004177 
felony for fraud against a state or federal health care program.}{\cs16\super\insrsid6238625 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Jost & Davies, }{\i\insrsid9982956\charrsid2108256 supra}{\insrsid9982956  note 111, at 261.  }}}{\insrsid6238625   }{\insrsid14906100 In }{
\insrsid8872595 addition, the Inspector General}{\insrsid14906100  }{\insrsid8872595 for the Department of Health and Human Services}{\cs16\super\insrsid8872595 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  The Office of the Inspector General (\'93OIG\'94
) holds the primary authority in \'93protecting the Medicare program and its beneficiaries.\'94  Lewis Morris & Gary W. Thompson, }{\i\insrsid9982956\charrsid2295393 Reflections on the Government\rquote 
s Stick and Carrot Approach to Fighting Health Care Fraud}{\insrsid9982956 , 51 }{\scaps\insrsid9982956\charrsid2295393 Ala. L. Rev.}{\insrsid9982956  319, 319 (1999).  OIG is responsible for \'93providing leadership and recommending po
licies designed to promote efficiency and to prevent fraud and abuse in the operation of the federal health care programs.\'94  }{\i\insrsid9982956\charrsid8872595 Id.}}}{\insrsid8872595  }{\insrsid14906100 has the discretion to initiate ex
clusion proceedings on other grounds as well.}{\cs16\super\insrsid14906100 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956 See}{\insrsid9982956\charrsid2108256  }{\insrsid9982956 Jost & Davies, }{\i\insrsid9982956\charrsid8872595 supra}{\insrsid9982956 
 note 111, at 248 (stating that the Inspector General has the option of bringing exclusion proceedings based on sixteen other grounds,\'94 meaning grounds other than those that lead to mandatory exclusion).  }}}{\insrsid14906100   }{\insrsid15224662 
Together, these provisions for mandatory and discretionary debarment provide the government with a potent threat against pharmaceutical companies accused of violating the FCA.  Since a trial for accusations o
f fraud could lead to mandatory debarment, pharmaceutical companies who are dependent upon revenues from drugs that are popular with Medicare}{\insrsid7537240  or Medicaid}{\insrsid15224662 
 recipients often feel like they have no option but to settle before trial.  As one defense attorney who represented a TAP vice president in the TAP criminal trial stated, \'93A company has no choice \endash 
 they have to settle no matter how minor their exposure may be because the threat of debarment is so great, even for relatively minor conduct.\'94}{\cs16\super\insrsid15224662 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Leonard Post, }{\i\insrsid9982956\charrsid2295393 
Heath Care Fraud Score: Big Fines, Little Jail; Recent Acquittals Spark Criticism That U.S. Fraud Unit Is Overzealous}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid2295393 Nat\rquote l L. J.}{\insrsid9982956 , Jul
y 26, 2004, at 6 (quoting attorney David Stetler, defense counsel who successfully represented a TAP vice president in the TAP criminal trial).}}}{\insrsid15224662   }{\insrsid15996097 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid9306808 {\insrsid15224662 \tab }{\insrsid6619240 The extent to which the threat of debarment was responsible for TAP\rquote 
s decision to settle with the }{\insrsid12800163 government remains }{\insrsid6619240 in dispute.  }{\insrsid2958395 As noted before}{\insrsid16405327 , }{\insrsid6372503 TAP\rquote s pre}{\insrsid6566534 sident publicly denied the government\rquote 
s claims that }{\insrsid16080309 TAP\rquote s \'93pricing and reimbursement policies\'94 were illegal even though, as part of the settlement, TAP pleaded guilty to violating the Prescription Drug Marketing Act on these grounds.}{
\cs16\super\insrsid9306808 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6172276 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{
\insrsid9982956  }{\insrsid9982956\charrsid3435371 Weinberg, }{\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956  note 80, at 98; }{\i\insrsid9982956\charrsid6172276 see also}{\insrsid9982956  }{\i\insrsid9982956\charrsid13585548 supra}{
\insrsid9982956  notes 95-97 and accompanying text.}}}{\insrsid16080309   }{\insrsid9306808 Instead TAP\rquote s president publicly stated that TAP\rquote s actual reason for settling the government\rquote }{\insrsid9524157 s clai}{\insrsid9306808 
ms for such a large amount of money was the company\rquote s fear of debarment.}{\cs16\super\insrsid9524157 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956 See }{\insrsid9982956 Weinberg, }{\i\insrsid9982956\charrsid3298137 supra}{\insrsid9982956  note 80, at 98.}}}{
\insrsid9306808   }{\insrsid9524157 The federal judge who approved the TAP settlement ordered TAP to cease these apparent ass}{\insrsid1972095 ertions that TAP was not guilty.  The judge said}{\insrsid157571  that he did no}{\insrsid9524157 t \'93
want some p.r. flack saying this is all just a big misunderstanding,\'94 referring to the charges against TAP.}{\cs16\super\insrsid9524157 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8200247 Id.}{\insrsid9982956  (quoting William Young, the U.S. District Court judge who oversaw the settlement).}}}{
\insrsid9524157   }{\insrsid11735707 Regardless of the degree to which the possibility of debarment deter}{\insrsid600385 mined TAP\rquote s decision to settle, there remains no question that }{\insrsid12923915 debarment factored heavily in TAP\rquote s }
{\insrsid6690793 willingness to settle}{\insrsid12923915  for such a large figure.}{\insrsid1997584   }{\insrsid9306808 
\par }{\insrsid12923915 \tab }{\insrsid1445990 Considering the evidence that was unveiled in the criminal tri}{\insrsid9584166 al of the TAP executives, which undermined }{\insrsid1445990 the legitimacy of many of the claims against TAP, }{\insrsid8414458 
some industry observers}{\insrsid9584166  questioned the fairness of granting the government debarment power}{\insrsid9058997 . In debarment, }{\insrsid13052052 the government possesses a tool that}{\insrsid8414458  }{\insrsid9584166 
virtually ensures that a corporation will se}{\insrsid8414458 ttle once the government }{\insrsid9058997 has enough evidence to}{\insrsid8593486  intervene}{\insrsid8414458  in an FCA lawsuit}{\insrsid9584166 .  }{\insrsid9058997 
As a result, if a company under investigation is likely to be found guilty on at 
least one count of fraud, they will feel compelled to settle, but the settlement figure will be boosted by any flimsier fraud charges the government has simultaneously brought against the company.  In other words, \'93
[a] company has a legal gun to its head: They can win on 99% of the charges and lose on a relatively minor charge and they bet the company and they bet it the wrong way.\'94}{\cs16\super\insrsid9058997 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Post, }{\i\insrsid9982956\charrsid8200247 supra}{\insrsid9982956 
 note 115 (quoting David Stetler, an attorney who successfully represented a TAP vice president in the TAP criminal trial).}}}{\insrsid9058997   }{\insrsid291855 The threat of debarment is so severe that it has been described as the \'93death penalty\'94
 for pharmaceutical corporations;}{\cs16\super\insrsid13921061 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 
\chftn }{\insrsid9982956  Patrick Clinton, Editorial, }{\i\insrsid9982956\charrsid2245682 End Pharma\rquote s Death Penalty}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid2245682 Pharmaceutical Executive}{\insrsid9982956 
, Aug. 1, 2004, at 14 (arguing that, unlike the defendants in the TAP criminal trial, TAP itself was forced to settle because it faced potential debarment, which would have been the equivalent of the death penalty for TAP).}}}{\insrsid291855  the
 rewards that the government and qui tam relators have extracted from the corporations as a result of the debarment threat have been }{\insrsid13921061 characterized as \'93the healthcare equivalent of \lquote greenmail.\rquote \'94}{
\cs16\super\insrsid13921061 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 Michael D. Lam, }{\i\insrsid9982956\charrsid2245682 Is Eve}{\i\insrsid9982956 ryone a Target? }{\i\insrsid9982956\charrsid2245682 A New Legal Theory, the Latest Off-label Commotion, Appears Far-Fetched to Some, But R}{\i\insrsid9982956 
aises a Few Serious Questions. }{\i\insrsid9982956\charrsid2245682 Here\rquote s One}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid2245682 Pharmaceutical Executive}{\insrsid9982956 , Mar. 1, 2004, at 56 (quoting Da
vid Hyman, a professor at the University of Maryland school of law).}}}{\insrsid13921061   }{\insrsid12923915 
\par }{\insrsid9333705 \tab The problem}{\insrsid291855 s of debarment are}{\insrsid9333705  complicated by what some people have termed a \'93conflict of interest\'94 for the federal prosecutors who oversee the government\rquote s FCA lawsuits.}{
\cs16\super\insrsid8280035 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Clinton, }
{\i\insrsid9982956\charrsid8280035 supra}{\insrsid9982956  note 120.}}}{\insrsid9333705   }{\insrsid222702 Since 1996, some of the rewards that a federal prosecutor\rquote }{\insrsid9526338 s office earns from FCA cases}{\insrsid222702 
 are re-appropriated to the prosecutor\rquote s office, allowing the office to function with greater resources in future cases.}{\cs16\super\insrsid222702 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid5340109 See}{\insrsid9982956  }{
\insrsid9982956\charrsid3435371 Weinberg, }{\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956  note 80, at 92}{\insrsid9982956\charrsid3435371 .}}}{\insrsid222702 
  This budgeting mechanism creates a cycle that continuously increases the advantage of a prosecutor\rquote s office in its cases against corporations: \'93For several consecutive years the larger enf
orcement budgets have led to larger settlements, which in turn have funded still larger enforcement budgets.\'94}{\cs16\super\insrsid222702 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8280035 Id.}}}{\insrsid739598   }{\insrsid9526338 The hypocrisy inherent in the aggressive prose}{\insrsid15622706 
cution of companies such as TAP}{\insrsid9526338  }{\insrsid15622706 (}{\insrsid9526338 who are guilty of paying what are only argua}{\insrsid15622706 bly \'93kickbacks}{\insrsid9526338 \'94}{\insrsid15622706 ) by prosecutors\rquote  offices}{
\insrsid9526338  }{\insrsid15622706 (}{\insrsid9526338 who have an enormous financial stake in accomplishing larg}{\insrsid15622706 e settlements with corporations)}{\insrsid9526338  is not lost on the pharmaceutical industry:
\par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid9526338 {\insrsid9526338 Because [the Office of the Inspector General] benefits financially from its prosecutions, it has a c
onflict of interest, one that surely should be obvious to people who have meditated long and hard on how a physician can be corrupted by the gift of a ballpoint pen.  Could a doctor be influenced by a kickback?  Sure.  Could a government official be misle
d by the prospect of enlarging his department\rquote s budget by millions of dollars?  Of course.  Prosecutors are only human.  It\rquote s one reason we have trials.}{\cs16\super\insrsid9526338 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Clinton, }{\i\insrsid9982956\charrsid14224285 supra}{
\insrsid9982956  note 120.}}}{\insrsid9333705 
\par }{\insrsid9526338 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid9306808 {\insrsid7545687 Hence the incentives that exist for prosecutors to pursue large settlements with pharmaceutical compan
ies make it uncertain whether the United States}{\insrsid12800163  can rely upon the existence}{\insrsid7545687  of \'93prosecutorial discretion\'94 to ensure that the threat of debarment is not wielded against undeserving corporations.  }{
\insrsid9526338 
\par }{\insrsid3681084 \tab The TAP settlement thus demonstrates the quandary that face
s the target of a whistleblower suit that contains a number of claims, some with merit and some without.  Prosecutors, who have the threat of debarment on their side, have an incentive to intervene, regardless of the}{\insrsid16270625 
 meritless whistleblower claims.}{\insrsid3681084  }{\insrsid16270625  T}{\insrsid3681084 he targets of the lawsuits have no choice but to settle for a much larger sum than that which is warranted by the company\rquote s actual wrongdoing.
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15346360 {\insrsid11075698 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6962686 {\b\insrsid6962686 C}{\b\insrsid7962435\charrsid7962435 .}{\b\insrsid7962435   Other }{\b\insrsid13394838 Major }{\b\insrsid7962435 Lawsuits }{
\b\insrsid10821537 Initiated by Whistleblowers }{\b\insrsid7962435 Against the Pharmaceutical Industry Under the False Claims Act}{\b\insrsid7962435\charrsid7962435 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15346360 {\insrsid1913332 \tab }{\insrsid13654614 
The TAP investigation and settlement provides one detailed example of how a qui tam suit progresses against a pharmaceutical company and }{\insrsid16588981 illustrates some of }{\insrsid13654614 the benefits and harms that a qui tam suit can impose on }{
\insrsid15934608 the industry and }{\insrsid13654614 society}{\insrsid15934608  as a whole}{\insrsid13654614 .  }{\insrsid2300998 To a
scertain the extent to which whistleblower suits under the FCA have impacted the pharmaceutical industry, however, it is useful to look }{\insrsid12801207 at the circumstances of several}{\insrsid2300998  of the largest qui tam lawsuits in recent years.}{
\cs16\super\insrsid15339915 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 For the opinions of the Department of Justice on the major FCA settlements (including s
everal of the settlements discussed in this section, along with two settlements with Bayer Corporation in 2001 and 2003 for false claims made to the Medicare and Medicaid programs) negotiated by the government with pharmaceutical manufacturers between 200
1 and 2005, }{\i\insrsid9982956\charrsid15339915 see generally}{\insrsid9982956  }{\i\insrsid9982956\charrsid16583671 Medicaid Issues: Hearing Before the Senate Finance Comm.}{\insrsid9982956\charrsid16583671 
, Federal Document Clearing House Congressional Testimony (June 29, 2005) (statement of Thomas J. Coleman, Senior Counsel, Deputy Attorney General, Department of Justice).}}}{\insrsid7962435 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid8151802 {\insrsid2300998 \tab }{\insrsid15811316 The first qui tam lawsuit that settle
d for an amount comparable to the TAP case occurred in February 1997.}{\cs16\super\insrsid11297442 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  T
his is not to say that there were no sizeable FCA settlement figures prior to 1997, only that there were no FCA settlements with individual pharmaceutical manufacturers that were of roughly similar size to the settlement amount in the TAP case.  In fact, 
in the four years prior to February 1997, clinical laboratories \'93paid more than $800 million to settle various Medicare fraud cases.\'94  Marc Meltzer & Julie Knipe Brown, }{\i\insrsid9982956\charrsid2245682 Company Pays Attention to Whistleblower Now}
{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid2245682 Phila. Daily News}{\insrsid9982956 , Feb. 25, 1997, Domestic 
News (reporting information provided by an attorney for two whistleblowers who were in the midst of a qui tam suit at the time of the article).  In addition, if one considers qui tam lawsuits as a whole (meaning lawsuits against all companies, not just th
ose in the pharmaceutical industry) between the 1986 Reform Act and February 1998, the Justice Department collected $2 billion from whistleblower-initiated actions.  Donna Shaw, }{\i\insrsid9982956\charrsid2245682 
Whistle-blower Finds Himself Jobless, Abandoned By Government He Tried to Help}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid2245682 Phila. Inquirer}{\insrsid9982956 , Feb. 1, 1998.}}}{\insrsid15811316 
  SmithKline Beecham Clinical Laboratories, Inc., doing business as Glaxo SmithKline,}{\cs16\super\insrsid15811316 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11034336 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\i\insrsid9982956\charrsid6172276 See}{\insrsid9982956  }{\i\insrsid9982956\charrsid12941263 Top 20 Cases}{\insrsid9982956 , }{\i\insrsid9982956\charrsid11297442 
supra}{\insrsid9982956  note 88, }{\i\insrsid9982956\charrsid14698878 at}{\insrsid9982956  }{\insrsid9982956\charrsid9524157 http://www.taf.org/top20.htm}{\insrsid9982956 
 (describing briefly the allegations and settlement figures involved in the SmithKline settlement in 1997).}}}{\insrsid15811316  }{\insrsid5379255 paid more than $325 million }{\insrsid15490676 as a settlement }{\insrsid5379255 
to the government for false claims it filed with Medicare, Medicaid, and other state health care agencies.}{\cs16\super\insrsid5379255 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11297442 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Meltzer & Brown, }{
\i\insrsid9982956\charrsid11297442 supra}{\insrsid9982956  note 127.}}}{\insrsid5379255   }{\insrsid2236310 At the time, the civil settlement was the largest ever in a whistleblower lawsuit.}{\cs16\super\insrsid2236310 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid2245682 Smith Kline Wh
istleblowers Get $42.3 Million}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid2245682 Pa. L. Wkly.}{\insrsid9982956 , Apr. 20, 1998, at 2.}}}{\insrsid2236310   }{\insrsid12608772 
Of the $325 million total, approximately $52 million was split among seven whistleblowers}{\cs16\super\insrsid6901189 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Meltzer & Brown, }{\i\insrsid9982956\charrsid15741873 supra}{\insrsid9982956 
 note 127 (stating that Robert Merena, the SmithKline whistleblower who was the subject of the article, would have to share the total qui tam reward with six other whistleblowers).}}}{\insrsid12608772  as a qui tam reward.}{\cs16\super\insrsid8151802 
\chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 The $52 million was split in uneven proportions among the seven whistleblowers, with the bulk of the reward going to the three primary qui tam relators.  Specifically, $42.3 million was granted entirely to these three main whistleblowers,
 who were forced to seek a court order before the government would grant them the full qui tam reward.  }{\i\insrsid9982956\charrsid8151802 See}{\insrsid9982956  }{\i\insrsid9982956\charrsid2245682 Smith Kline Wh}{\i\insrsid9982956 
istleblowers Get $42.3 Million,}{\i\insrsid9982956\charrsid2245682  supra }{\insrsid9982956 note 130}{\insrsid9982956\charrsid8200247 ;}{\insrsid9982956\charrsid1335726  }{\insrsid9982956\charrsid8200247 Janet Elliott,}{\i\insrsid9982956  }{
\i\insrsid9982956\charrsid2245682 Qui Tam Award Could Spark Backlash}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid2245682 Tex. Law.}{\insrsid9982956 , Apr. 20, 1998, at 1.}}}{\insrsid8151802   }{\insrsid6895474 As 
in the TAP case, the government alleged that SmithKline gave doctors kickbacks and improperly billed the government, although in this case SmithKline was directly seeking reimbursement for laboratory tests}{\insrsid10095442 , not drugs}{\insrsid6895474 .}
{\cs16\super\insrsid6895474 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid6895474 See}{\insrsid9982956  }{\i\insrsid9982956\charrsid2245682 Smith Kline Whistleblowers Get $42.3 Million}{\insrsid9982956 , }{\i\insrsid9982956\charrsid6895474 supra}{\insrsid9982956  note 130.  }}}{\insrsid6895474 
  Also, even after SmithKline made the settlement with the government, the company still \'93denied the allegations, saying the violations were unintentional and the result of ambiguities in regulations and guidelines.\'94}{\cs16\super\insrsid6895474 
\chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid6895474 
Id.}}}{\insrsid6895474   SmithKline\rquote s claim of confusion is very similar to the defensive stance that TAP\rquote s president adopted after his company\rquote s settlement.}{\insrsid2300998 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid12789866 {\insrsid6895474 \tab }{\insrsid1376414 While the magnitude of SmithKline\rquote s se}{\insrsid4067910 
ttlement merely heralded a future concern}{\insrsid1376414  for the pharmaceutical industry (whereas health care providers had faced the brunt of the whistleblower assault prior to 1997),}{\cs16\super\insrsid10312337 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5399889 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 For brief descriptions of the twenty largest FCA settlements (including those involving pharmaceutical companies as well as health care providers) since passage of the 1986 Reform Act and the circumstances surrounding the related FCA charges, }{
\i\insrsid9982956\charrsid2245682 see}{\insrsid9982956  }{\i\insrsid9982956\charrsid12941263 Top 20 Cases}{\insrsid9982956 , }{\i\insrsid9982956\charrsid11297442 supra}{\insrsid9982956  note 88, }{\i\insrsid9982956\charrsid14698878 at}{\insrsid9982956  }{
\insrsid9982956\charrsid9524157 http://www.taf.org/top20.htm}{\insrsid9982956 .}}}{\insrsid1376414  the TAP settlement in October 2001 }{\insrsid10312337 actually }{\insrsid9636965 signaled the beginning of a wave}{\insrsid1376414 
 of whistleblower lawsuits targeting pharmaceutical manufacturers.}{\cs16\super\insrsid9636965 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1644315 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  From 2001 to November 2003, \'93[s]ix pharmaceutical companies\'85paid a total of $1.6 billion\'85to settle seven whistleblower lawsuit
s alleging marketing, Medicare and Medicaid fraud\'85.\'94  }{\i\insrsid9982956\charrsid9636965 Drug Companies: Have Paid $1.6B to Settle Whistleblower Suits}{\insrsid9982956 , }{\scaps\insrsid9982956 Am}{\scaps\insrsid9982956\charrsid7013722 
. Health Line}{\insrsid9982956 , Nov. 6, 2003, Inside the Industry (referring to a statement issued by the organization Taxpayers Against Fraud).  All of these lawsuits were filed under the FCA, and the government intervened in all of them as well.  }}}{
\insrsid9636965  }{\insrsid1376414  The first instance of this }{\insrsid8786995 post-TAP }{\insrsid1376414 wave of litigation occurred when }{\insrsid6569180 AstraZeneca PLC, a London-base
d pharmaceutical manufacturer, agreed to pay $355 million and pleaded guilty to crimin}{\insrsid1405039 al conspiracy in June 2003.}{\cs16\super\insrsid1405039 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Bruce Japsen, }{\i\insrsid9982956\charrsid7013722 Drug Giant}{
\i\insrsid9982956  Guilty in Medicare Sales Fraud:}{\i\insrsid9982956\charrsid7013722  AstraZeneca to Pay $355 Million Fine}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid7013722 Chi. Trib.}{\insrsid9982956 , June 21, 2003, at C1.}}}{\insrsid1405039 
  }{\insrsid10312337 This amount included $266 million under the FCA alone.}{\cs16\super\insrsid10312337 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10312337 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid12941263 Top 20 Cases}{\insrsid9982956 , }{\i\insrsid9982956\charrsid11297442 supra}{\insrsid9982956  note 88, }{
\i\insrsid9982956\charrsid14698878 at}{\insrsid9982956  }{\insrsid9982956\charrsid9524157 http://www.taf.org/top20.htm}{\insrsid9982956  (describing briefly the allegations and settlement figures involved in the AstraZeneca settlement).}}}{
\insrsid10312337   }{\insrsid13369982 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13369982 {\insrsid1405039 The }{\insrsid4067910 government\rquote s case against AstraZeneca (which was initiated against Zeneca Grou
p PLC, a corporation that merged into AstraZeneca in 1999)}{\cs16\super\insrsid4067910 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Fred Biddle, }{\i\insrsid9982956\charrsid7013722 AstraZeneca Guilty of Felony}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid7013722 News J.}{\insrsid9982956 
 (Wilmington, DE), June 21, 2003, at 12A (explaining that Zeneca merged with Astra in 1999).}}}{\insrsid4067910  was r}{\insrsid12789866 ooted in }{\insrsid4067910 incriminating documents }{\insrsid12789866 disclosed }{\insrsid4067910 by Doug}{
\insrsid16266131 las}{\insrsid4067910  Durand, }{\insrsid4342347 who was also }{\insrsid4067910 the primary whistleblower in the TAP Pharmaceuticals case.}{\cs16\super\insrsid4067910 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Japsen, }{\i\insrsid9982956\charrsid4067910 supra}{\insrsid9982956 
 note 137.}}}{\insrsid4067910   }{\insrsid12789866 While investigating the alleged fraudulent actions of T
AP, Durand also discovered letters sent back-and-forth between TAP and Zeneca that accused each other of using illegal marketing tactics to sell their competing prostate cancer drugs, Lupron (the TAP drug) and Zoladex (the Zeneca product).}{
\cs16\super\insrsid4342347 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid4342347 See id.}}}{\insrsid12789866   }{\insrsid4342347 The government\rquote 
s ensuing investigation led to charges against AstraZeneca very similar to those made against TAP.  Federal prosecutors charged that Zeneca gave free samples of Zoladex to }{\insrsid10888190 an estimated 400 }{\insrsid4342347 
physicians and encouraged the doctors to bill Medicare for the drugs, and they claimed that Zeneca bribed doctors with kickbacks, such as \'93educational grants.\'94}{\cs16\super\insrsid4342347 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid1322044 See id.}}}{\insrsid4342347   }{
\insrsid1322044 Unlike in the TAP case, however, AstraZeneca took \'93responsibility for any improper sampling conduct that took place in the mid-1990s\'94 after it settled the charges and assured the public tha}{\insrsid15026109 t it had \'93
taken steps within our}{\insrsid1322044  new company }{\insrsid15026109 [AstraZeneca] }{\insrsid1322044 to prevent such activities from happening again.\'94}{\cs16\super\insrsid1322044 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid15026109 Id.}{\insrsid9982956 
 (quoting a public statement released by AstraZeneca after the settlement).}}}{\insrsid1322044   }{\insrsid15026109 Durand, it should be noted, received an additional $47.5 million qui tam rewar}{\insrsid7537382 d for his lawsuit against Astra}{
\insrsid15026109 Zeneca, raising his total reward to approximately $126 million for his whistleblowing efforts.}{\cs16\super\insrsid15026109 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid15026109 Id.}{\insrsid9982956\charrsid15026109 (}{\insrsid9982956 
reporting that Durand received $47.5 million for his role in the AstraZeneca case); }{\i\insrsid9982956\charrsid15026109 see also}{\insrsid9982956  }{\insrsid9982956\charrsid3435371 Weinberg, }{\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956 
 note 80 (stating that the total qui tam reward to Durand was $126 million). }}}{\insrsid6895474 
\par }{\insrsid7175697 In May 2004, Pfizer paid $430 million, $152 million of which was under the False Claims Act,}{\cs16\super\insrsid7175697 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5399889 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid12941263 Top 20 Cases}{
\insrsid9982956 , }{\i\insrsid9982956\charrsid11297442 supra}{\insrsid9982956  note 88, }{\i\insrsid9982956\charrsid14698878 at}{\insrsid9982956  }{\insrsid9982956\charrsid9524157 http://www.taf.org/top20.htm}{\insrsid9982956 
 (stating the amount of Pfizer\rquote s payment that was used specifically to settle the False Claims Act charges).}}}{\insrsid7175697  }{\insrsid1588979 to settle \'93criminal and civil charges that it paid doctors to prescribe i
ts epilepsy drug, Neurontin, to patients with ailments that the drug was not federally approved to treat.\'94}{\cs16\super\insrsid1588979 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Gardiner Harris, }{\i\insrsid9982956\charrsid7013722 Pfizer to Pay $430 Million Over Promoting Drug to Doctors}{\insrsid9982956 , }{
\scaps\insrsid9982956\charrsid7013722 N.Y. Times}{\insrsid9982956 , May 14, 2004, at C1.}}}{\insrsid1588979   }{\insrsid7886988 The qui tam relator in the case, David Franklin, received a reward of $26.6 million.}{\cs16\super\insrsid9439576 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1335726 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Julie Schmitt, }{
\i\insrsid9982956\charrsid7013722 Whistle-blower Started Scrutiny}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid7013722 USA Today}{\insrsid9982956 , Aug. 17, 2004, }{\insrsid9982956\charrsid1335726 http://www.usatoday.com/}{\insrsid9982956 
\par money/industries/health/drugs/2004-08-17-whistle_x.htm.}}}{\insrsid9439576   }{\insrsid7358480 Franklin was an adviser for Warner-Lambert, a company purchased by Pfizer in 2000}{\insrsid8733966  that had conducted the questionable marketing of Neurontin.}
{\cs16\super\insrsid8733966 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Harris, }
{\i\insrsid9982956\charrsid8733966 supra}{\insrsid9982956  note 146.}}}{\insrsid8733966   }{\insrsid3416959 
Franklin resigned his position at Warner-Lambert in 1996 after only four months with the company due to his disagreement with the ways Warner-Lambert was marketing }{\insrsid5526710 Neurontin to physicians.}{\cs16\super\insrsid5526710 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Shmitt, }{\i\insrsid9982956\charrsid5526710 supra}{
\insrsid9982956  note 147.}}}{\insrsid5599072   }{\insrsid4223291 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5199619 {\insrsid5599072 T}{\insrsid5526710 he complaints raised by Franklin and later the government }{\insrsid5599072 
about the marketing of Neurontin from 1995 through 2000 }{\insrsid10622937 again }{\insrsid5599072 included}{\insrsid5526710  }{\insrsid10622937 accusations that the company gave illegal gifts to doctors,}{\cs16\super\insrsid10622937 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid7013722 See id.}{
\insrsid9982956  (stating that prosecutors accused Warner-Lambert of paying doctors more than $250,000 and treating them to fancy dinners to persuade them to prescribe Neurontin for unapproved uses).}}}{\insrsid10622937 
 but the main complaint was that Warner-Lambert encouraged physicians to prescribe Neurontin for uses that were unapproved}{\insrsid4223291  }{\insrsid10622937 by the FDA}{\insrsid5199619  (or \'93off-label uses\'94)}{\insrsid10622937 
, including the treatment o}{\insrsid8328310 f bipolar disorder, Lou Gehrig\rquote s}{\insrsid10622937  disease, and attention deficit disorder, among other things.}{\cs16\super\insrsid10622937 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Harris, }{\i\insrsid9982956\charrsid7013722 supra}{\insrsid9982956 
 note 146 (reporting that Warner-Lambert also promoted Neurontin to treat restless leg syndrome and drug and alcohol withdrawal seizures).}}}{\insrsid10622937   }{\insrsid11101373 This marketing was targeted by the government because, \'93
[a]lthough doctors are free to prescribe any federally approved drug for whatever use they choose, pharmaceutical companies are not allowed to promote drugs for nonapproved purposes.\'94}{\cs16\super\insrsid11101373 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid11101373 Id.}}}{\insrsid11101373 
  The prescription of Neurontin for unapproved uses was quite extensive; according to surveys conducted around the time of the May 2004 settlement, \'93[n]early 90 percent of the drug\rquote 
s sales continue[d] to be for ailments for which the drug [was] not an approved treatment\'85.\'94}{\cs16\super\insrsid11101373 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid11101373 Id.}}}{\insrsid11101373   }{\insrsid13441683 This marketing behav
ior fell under the FCA because it encouraged physicians to prescribe Neurontin to patients who should not have been given the drug and who qualified for Medicaid.}{\cs16\super\insrsid13441683 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid13441683 Id.}}}{\insrsid13441683 
  The Pfizer/Warner-Lambert case thus illustrates how the FCA can restrict the activities of pharmaceutical companies who have not engaged in the typical improper billing schemes for which TAP and other companies have been punished.}{\insrsid10095442 
  In fact, ma}{\insrsid14877987 ny in the industry believe that }{\insrsid16650302 the }{\insrsid14877987 marketing of drugs for off-label uses will be the next great catalyst for whistleblower suits against pharmaceutical companies.}{
\cs16\super\insrsid14877987 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 Speakers at a conference of pharmaceutical executives in July 2004 warned that litigation resulting from the marketing of off-label uses was imminent: \'93
Prosecutors and regulators are circling, the executives were told.  Would-be whistle-blowers are collecting promotional materials, saving e-mails, taping phone calls \endash  in the hope of sharing in a jackpot settlement.\'94 }{
\b\insrsid9982956\charrsid3435371  }{\insrsid9982956\charrsid3435371 Daren Fonda & Barbara Kiviat, }{\i\insrsid9982956\charrsid3435371 
Curbing the Drug Marketers; How a Clampdown on Pitching Drugs for Unapproved Uses is Changing the Way Big Pharma Operates}{\insrsid9982956\charrsid3435371 , }{\scaps\insrsid9982956\charrsid3435371 Time}{\insrsid9982956\charrsid3435371 
, July 5, 2004, at 40}{\insrsid9982956 , 40}{\insrsid9982956\charrsid3435371 .}}}{\insrsid15026109 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13369982 {\insrsid10386885 Only two months}{\insrsid286986  later, Schering-Plough paid the government $345 million, including $293 mi}{
\insrsid6950067 llion under the FCA}{\insrsid286986 , for its fr}{\insrsid9185481 audulent pricing of Claritin, the company\rquote s popular}{\insrsid286986  allergy drug.}{\cs16\super\insrsid6950067 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1644315 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid12941263 Top 20 Cases}{
\insrsid9982956 , }{\i\insrsid9982956\charrsid11297442 supra}{\insrsid9982956  note 88, }{\i\insrsid9982956\charrsid14698878 at}{\insrsid9982956  }{\insrsid9982956\charrsid9524157 http://www.taf.org/top20.htm}{\insrsid9982956 
 (stating that Schering-Plough paid $52.5 million in criminal fines, $117 million for state FCA claims, and $176 million for federal FCA claims).  Schering-Plough paid the criminal fine \'93for paying a kickback to a customer in exchan
ge for the preferred treatment of Claritin\'94 and hence violating the Anti-Kickback Act.  }{\i\insrsid9982956\charrsid16583671 Schering-Plough to Pay $345 Million to Resolve Criminal and Civil Liabilities for Illegal Marketing of Claritin}{
\insrsid9982956\charrsid16583671 , Department of Justice Documents, July 30, 2004, Justice Department Press Releases.}}}{\insrsid286986   }{\insrsid3546657 The qui tam relators, three former employees of ITG,}{\insrsid5199619 
 Inc., a subsidiary of Schering-}{\insrsid3546657 Plough, received }{\insrsid3044473 a total reward of }{\insrsid3546657 approximately $32 million.}{\cs16\super\insrsid3546657 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid16583671 
Schering-Plough to Pay $345 Million}{\insrsid9982956\charrsid16583671 , }{\i\insrsid9982956\charrsid16583671 supra}{\insrsid9982956  note 156}{\insrsid9982956\charrsid16583671 .}}}{\insrsid3546657   }{\insrsid3044473 Perhaps even more significantly, S}{
\insrsid4655315 chering-Plough\rquote s }{\insrsid15213418 sales division }{\insrsid3044473 was also excluded from \'93participation in all federal health care programs for at least five years\'94 due to its criminal plea.}{\cs16\super\insrsid3044473 
\chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid3044473 
Id.}}}{\insrsid3044473   Schering-Plough\rquote s illegal conduct was similar to that alleged against TAP \endash  Schering-Plough }{\insrsid4655315 allegedly }{\insrsid3044473 gave kickbacks to }{\insrsid4655315 several }{\insrsid3044473 HMOs}{
\insrsid4655315 , thus discounting}{\insrsid12923291  the price of Claritin for these customers, without }{\insrsid4655315 paying rebates to Medicaid or revising its \'93best price\'94 charged to Medicaid.}{\cs16\super\insrsid4655315 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8200247 See id.}{
\insrsid9982956 ; Daniel Dunaief, }{\i\insrsid9982956\charrsid8200247 Whistleblowers\rquote  Payday: Schering Plough Execs Divvy Up $31M for Unearthing Big Fraud,}{\insrsid9982956  }{\scaps\insrsid9982956\charrsid3476565 Daily News}{\insrsid9982956 
 (New York), July 31, 2004, at 13.}}}{\insrsid4655315   Once again, Schering-Plough\rquote s marketing tactics were used to discourage its customers from making Allegra}{\insrsid9466891  (}{\insrsid4655315 a less-}{\insrsid9466891 
expensive allergy drug and the main competitor of Claritin)}{\insrsid4655315  their preferred drug.}{\cs16\super\insrsid4655315 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid4655315 See}{\insrsid9982956\charrsid16583671  }{\i\insrsid9982956\charrsid16583671 Sch
ering-Plough to Pay $345 Million}{\insrsid9982956\charrsid16583671 , }{\i\insrsid9982956\charrsid16583671 supra}{\insrsid9982956  note 156}{\insrsid9982956\charrsid16583671 .}}}{\insrsid13441683 
\par }{\insrsid16084317 Just recently, in October 2005, Serono, S.A., a Swiss corporation with subsidiaries in the United States, agreed to pay $704 million (with $567 million of the payment attributable to FCA claims) }{\insrsid527844 to settle civil 
and criminal charges related to its marketing of Serostim, a human growth hormone drug}{\insrsid15213418  used to treat AIDS patients}{\insrsid527844 .}{\cs16\super\insrsid527844 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid8200247 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid12941263 Top 20 Cases}{
\insrsid9982956 , }{\i\insrsid9982956\charrsid11297442 supra}{\insrsid9982956  note 88, }{\i\insrsid9982956\charrsid14698878 at}{\insrsid9982956  }{\insrsid9982956\charrsid9524157 http://www.taf.org/top20.htm}{\insrsid9982956 .  Serostim is \'93
used to treat AIDS wasting, a condition involving profound involuntary weight loss in AIDS patients.\'94  }{\i\insrsid9982956\charrsid15213418 Serono Labs Pleads Guilty
 to the Illegal Marketing of AIDS Drug, Reports U.S. Attorney; Company to Pay $136.9 Million Criminal Fine As Part of $704 Million Global Settlement}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid7013722 PR Newswire US}{\insrsid9982956 
, Dec. 15, 2005.}}}{\insrsid527844   }{\insrsid874287 The FCA portion of the settlement was the largest to date by a pharmaceutical manufacturer, }{\insrsid16073140 eclipsing even the $559 million paid by TAP.}{\cs16\super\insrsid16073140 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11034336 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid8200247 See}{\insrsid9982956  }{\i\insrsid9982956\charrsid12941263 Top 20 Cases}{\insrsid9982956 , }{\i\insrsid9982956\charrsid11297442 supra}{\insrsid9982956  note 88, }{\i\insrsid9982956\charrsid14698878 at}{\insrsid9982956  }{
\insrsid9982956\charrsid9524157 http://www.taf.org/top20.htm}{\insrsid9982956  (listing
 two settlements made by HCA, a for-profit hospital chain, as the only two FCA settlements made by a company within the health care industry that were larger than the Serono settlement).}}}{\insrsid16073140   }{\insrsid14292643 
Five whistleblowers split $51.9 million, which was equal to 17% of the FCA settlement.}{\cs16\super\insrsid14292643 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956 Health Care Fraud:}{\i\insrsid9982956\charrsid14292643  Judge Approves $704M Serono Settlement; Company 
Bribed Doctors to Push Drug; Pleads Guilty to Criminal Conspiracy}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid7013722 Patriot Ledger}{\insrsid9982956  (Quincy, MA), Dec. 16, 2005, at 15.}}}{\insrsid14292643   }{\insrsid13839778 
In order to compensate for a shrinking demand for Serostim,}{\cs16\super\insrsid5439502 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Serostim came to market at about the time as the \'93AIDS cocktail,\'94 a combination of drugs that slows the progress of the AIDS syndrome, b
egan to curtail the problem of AIDS wasting, the condition that Serostim was intended to combat.  The demand for Serostim thus declined dramatically soon after its release.  }{\i\insrsid9982956\charrsid16583671 
Serono to Pay $704 Million for the Illegal Marketing of AIDS Drug}{\insrsid9982956\charrsid16583671 , Department of Justice Documents, Oct. 17, 2005, Justice Department Press Releases.}}}{\insrsid13839778  Serono Labs, a subsidiary of Serono, }{
\insrsid12452330 allegedly engaged in a number of marketing tactics, such as kickback
s to doctors, discounts to pharmacies, and the promotion of Serostim for off-label uses, to boost prescriptions of the drug; these tactics made the prescriptions ineligible for reimbursement}{\insrsid7299155 
, and hence the claims submitted for reimbursement by doctors constituted false claims}{\insrsid12452330 .}{\cs16\super\insrsid12452330 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid12452330 See id.}{\insrsid9982956 ; }{\i\insrsid9982956\charrsid12452330 Serono Labs Pleads Guilty}{\insrsid9982956 
, }{\i\insrsid9982956\charrsid12452330 supra}{\insrsid9982956  note 161.}}}{\insrsid12452330   As in other cases previously discussed, the civil settlement allowed Serono }{\insrsid13894932 not to take full}{\insrsid15097812  }{\insrsid13894932 
responsibility for all of the government\rquote s allegations.  In particular, Serono was not forced to acknowledge that it }{\insrsid16650302 had }{\insrsid13894932 marketed Serostim for off-label uses.}{\cs16\super\insrsid13894932 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Ross Kerber & Charlie Savage, }{
\i\insrsid9982956\charrsid7013722 $704M Penalty for Drug Maker}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid7013722 Boston Globe}{\insrsid9982956 , Oct. 18, 2005, at A1.}}}{\insrsid7299155   }{\insrsid4655315 
\par }{\insrsid15097812 The total amount}{\insrsid5440392 s}{\insrsid15097812 
 recovered by the government in fraud cases against the health care industry as a whole (and the pharmaceutical industry in particular) since 1996 are staggering.  According to the Department of Justice, between 1996
 and early 2005 the Medicare Trust Fund recovered over $4.5 billion from litigation and settlements in regard to health care fraud.}{\cs16\super\insrsid1802210 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid1802210 
Rising Tide of Litigation Against Pharma from Govt, States and Whistleblowers}{\i\insrsid9982956\charrsid1072030 , FDLI Told}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid7013722 Pharma Marketletter}{\insrsid9982956 , Apr. 15, 2005.}}}{
\insrsid15097812   }{\insrsid1802210 More specifically, during that same period, \'93[p]harmaceutical fraud\'85resulted in\'85over $1.6 billion in equitable relief and penalties.\'94}{\cs16\super\insrsid1802210 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid1802210 Id.}}}{\insrsid1802210   }{
\insrsid7354806 In the six years prior to June 2005, investigations into drug pricing alone \'93by the U.S. Department of Justice and state attorneys general\'85yielded settlements totaling more than $2 billion.\'94}{\cs16\super\insrsid7354806 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Guy Boulton, }{
\i\insrsid9982956\charrsid7354806 Scrutiny of Drug Companies Expands}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid7354806 Milwaukee J. Sentinel}{\insrsid9982956 , July 10, 2005.}}}{\insrsid7354806  }{\insrsid3411106 
In addition, regardless of new voluntary compliance guidelines adopted }{\insrsid2779972 several years ago }{\insrsid3411106 by pharmaceutical compan}{\insrsid16650302 ies (discussed in the next section}{\insrsid2779972 
), qui tam suits against the entire health care industry appear to be increasing: \'93In fiscal year 2005, ending Sept. 30, the United States recovered $1.4 billi
on under the False Claims Act.  Of that total, $1.1 billion is associated with health care fraud, according to recent Department of Justice statistics.\'94}{\cs16\super\insrsid2779972 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Correy E. Stephenson, }{\i\insrsid9982956\charrsid7013722 
Health Care Whistleblower Suits Are on the Rise}{\insrsid9982956 , }{\scaps\insrsid9982956 Law}{\scaps\insrsid9982956\charrsid7013722 . Wkly. USA}{\insrsid9982956 , Nov. 21, 2005.}}}{\insrsid2779972   }{\insrsid1072030 
The frequency of qui tam lawsuits is also not likely to decrease in the next few years.  As of April 2005, there were \'93100 or more pending [qui tam] cases involving drugmakers, pharmacy benefit managers, doctors and hospitals.\'94}{
\cs16\super\insrsid1072030 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid1072030 Rising Tide of Litigation}{\insrsid9982956 , }{\i\insrsid9982956\charrsid1072030 supra}{\insrsid9982956  note 167 (reporting the statements of Eugene Thirolf, director of the Department of Justice civil division\rquote 
s Office of Consumer Litigation).}}}{\insrsid13894932 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15346360 {\insrsid1913332 
\par }{\b\insrsid6962686 III}{\b\insrsid10780209 .  }{\b\caps\insrsid10780209\charrsid6962686 The Effects of the Increase in False Claims Act Lawsuits}{\b\caps\insrsid13910973\charrsid6962686  on the Pharmaceutical Industry}{
\b\caps\insrsid3411106\charrsid6962686  and Consumers of Pharmaceuticals}{\b\insrsid1709653\charrsid13910973 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11666290 {\insrsid5648952 \tab }{\insrsid5984184 
The increased scrutiny the government has placed on the marketing practices of pharmaceutical companies, much of i}{\insrsid16650302 t a result of the cooperation between}{\insrsid5984184  qui tam relators }{\insrsid16650302 and the government }{
\insrsid5984184 under the FC}{\insrsid5199619 A, has impacted the way}{\insrsid2103852  that the industry plans to do business in the future}{\insrsid1931400 .  This new landscape for the pharmaceutical}{\insrsid5984184  }{\insrsid1931400 
industry in turn }{\insrsid8414405 creates}{\insrsid5984184  both positive and negative consequences for American consumers of pharma}{\insrsid10780209 ceuticals.  }{\insrsid8414405 
Manufacturers of pharmaceuticals face a new reality in which they must devote greater resources to}{\insrsid8920029 :}{\insrsid8414405  }{\insrsid8920029 (1) }{\insrsid8414405 educ}{\insrsid8920029 
ating their employees about complicated federal and state regulations on product sales and drug price reporting; (2) establishing internal compliance programs that monitor the marketing strategies utilized by all of their employe
es, including their subsidiaries\rquote  employees; and (3) ensuring that competing pharmaceutical companies are also complying with statutory and voluntary marketing rules to avoid losing market share to less compliant companies.  }{\insrsid10558839 
For many ph}{\insrsid5460204 armaceutical firms, the costs of paying for previous FCA settlements must also be added to the}{\insrsid16259027 se new expenses, while these same }{\insrsid16649993 companies attempt to determine }{\insrsid16259027 
how to improve their tarnished image with public investors.}{\insrsid5460204  }{\insrsid10558839  }{\insrsid16650302 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16650302 {\insrsid13906160 All of these additional expenditures have obvious consequences for the public. The}{\insrsid15998524 
 costs of these new or strengthened}{\insrsid13906160  compliance procedures will be passed onto consumers in the form of higher drug prices and could potentially decrease the amount of money that the industry can devote to research, leading to few
er new drugs being available to consumers.  National spending on drugs doubled between 1998 and 2004, with spending reaching $30.6 billion in 2004.}{\cs16\super\insrsid13906160 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Boulton, }{\i\insrsid9982956\charrsid13906160 supra}{
\insrsid9982956  note 169.  }}}{\insrsid13906160   }{\insrsid15998524 Keeping in mind the extent of the public\rquote s dependence on access}{\insrsid16650302  to}{\insrsid15998524  pharmaceuticals, it is worth debating w
hether the elimination of the types of fraud allegedly being committed by the pharmaceutical industry is worth the resulting increase in drug prices paid by consumers.}{\insrsid1709653 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11666290 {\insrsid16070021 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11615729 {\b\insrsid11615729 A}{\b\insrsid8681803\charrsid8681803 .  The PhRMA Code
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11666290 {\insrsid15998524 \tab }{\insrsid739616 The most prominent example of pharmaceutical companies\rquote  }{\insrsid16649993 new approac
h to marketing }{\insrsid739616 is the commitment by the largest firms in the industry t}{\insrsid15159243 o voluntarily follow the PhRMA C}{\insrsid739616 ode.  }{\insrsid14624151 The Pharmaceutical Research and Manufacturers of America (\'93PhRMA}{
\insrsid5199619 \'94}{\insrsid14624151 ) is an industry group whose members include the largest pharmaceutical research and biotechnology companies.}{\cs16\super\insrsid14624151 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid14624151 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid14624151 See}{
\insrsid9982956  }{\i\insrsid9982956\charrsid6951217 About PhRMA}{\insrsid9982956 , PhRMA, }{\i\insrsid9982956\charrsid1669105 at}{\insrsid9982956  }{\insrsid9982956\charrsid1669105 http://www.phrma.org/about_phrma}{\insrsid9982956  (Apr. 6, 2006).}}}{
\insrsid14624151   PhRMA\rquote s stated objective is \'93to conduct effective advocacy for public policies that encourage discovery of important new medicines for patients by pharmaceutical/biotechnology research companies.\'94}{
\cs16\super\insrsid14624151 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid14624151 Id.}}}{\insrsid12996412   In July 2002, PhRMA adopted the }{\i\insrsid15229347\charrsid16650302 PhRMA Code on Interactions}{\i\insrsid16650302\charrsid16650302  with Healthcare Professionals}{\insrsid16650302 ,}{
\insrsid15229347  an updated set of ethical guidelines for PhRMA\rquote s member companies to follow when engaged in the marketing of their products to customers in the health care industry.}{\cs16\super\insrsid15229347 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid15229347 
PhRMA Code on Interactions with Healthcare Professionals}{\insrsid9982956 , PhRMA (2004), }{\i\insrsid9982956\charrsid15229347 available at}{\insrsid9982956  }{\insrsid9982956\charrsid15346548 http://www.phrma.org/files/PhRMA%20Code.pdf}{\insrsid9982956 
 (stating also that the Code was enacted in 2002 and revised in 2004). }}}{\insrsid15229347   }{\insrsid7831044 Compliance with the PhRMA Code is not required }{\insrsid4285352 of member companies.  I}{\insrsid5905545 
n response to critics of the value of a voluntary code, }{\insrsid9205321 PhRMA has \'93point[ed] out that a mandatory code would probably be illegal.\'94}{\cs16\super\insrsid9205321 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Milton Liebman, }{\i\insrsid9982956\charrsid9205321 
Drawing a Line Between Education and Promotion: New Regulations Are Reshaping the Way Pharma Companies Work with the Medical Profession, and Adding a New Level of Complexity to this Fast-Growing Educational Eff}{\i\insrsid9982956 ort}{\insrsid9982956 , }{
\scaps\insrsid9982956\charrsid13376051 Med. Marketing & Media}{\insrsid9982956 , Aug. 1, 2003, at 44.}}}{\insrsid9205321   }{\insrsid15159243 The early endorsement of the Code by fifteen of the country\rquote s largest pharmace
utical companies, however, has led much of the industry to vow compliance with the Code\rquote s rules, although the speed with which the rules have been phased into the companies\rquote  operations has varied.}{\cs16\super\insrsid15159243 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid15159243 See id.
}{\insrsid9982956   TAP Pharmaceuticals was one of the first companies to adopt the Code in June 2002, only a matter of months after it completed its FCA settlement with the government.  }{\i\insrsid9982956\charrsid6640230 
TAP Pharmaceutical Products Among First to Adopt PhRMA Marketing Code of Ethics}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid13376051 PR Newswire}{\insrsid9982956 , June 13, 2002.}}}{\insrsid15998524 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid12875837 {\insrsid15159243 \tab }{\insrsid7933945 The}{\insrsid5440392  PhRMA Code includes}{\insrsid12875837  primarily guidance on how pharmac
eutical companies can prevent their employees from vio}{\insrsid5440392 lating the Anti-Kickback Act}{\insrsid12875837 , the law that has led to a number of criminal fines against P}{\insrsid746330 hRMA member companies and that}{\insrsid12875837 
 has also been }{\insrsid746330 responsible for many of the false claims charges against these same
 companies.  Apparent kickbacks to doctors and health care providers are among the most visible illegal actions that pharmaceutical companies commit, but the rules surrounding what constitutes a kickback or bribe have been the greatest source of confusion
 for the industry.}{\cs16\super\insrsid746330 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{
\insrsid9982956  For example, see the description of the TAP settlement and subsequent criminal trial in Section II.A }{\i\insrsid9982956 supra}{\insrsid9982956 .}}}{\insrsid746330   }{\insrsid10516504 
The PhRMA Code attempts to eliminate this confusion by establishing several specific standards for drug marketing.  }{\insrsid859305 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid859305 {\insrsid9073679 The PhRMA }{\insrsid5440392 Code }{\insrsid9073679 provides a list of }{\insrsid12083823 
rules for compliant companies to follow,}{\cs16\super\insrsid12083823 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid12083823 See}{\insrsid9982956  }{\i\insrsid9982956\charrsid8397539 PhRMA Code}{\insrsid9982956 , }{\i\insrsid9982956\charrsid8397539 supra}{\insrsid9982956 
 note 175, at 2-21.}}}{\insrsid12083823  followed by a number of specific examples of these rules in practice.}{\cs16\super\insrsid12083823 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid12083823 See id.}{\insrsid9982956  at 22-53.}}}{\insrsid12083823   }{\insrsid8397539 
The Code requires that informational presentations by industry representatives to customers involve \'93no entertainment/recreational events\'94 and provide only \'93modest\'94 meals for those people attending.}{\cs16\super\insrsid8397539 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid12083823 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid6951217 Id.}{\insrsid9982956  at 7.}}}{\insrsid8397539   }{\insrsid7167417 Companies may not pay for health care professionals\rquote 
 costs of travel, lodging, or other personal expenses for attending educational conferences in which the companies take part.}{\cs16\super\insrsid7167417 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid7167417 See id.}{\insrsid9982956  at 9.
}}}{\insrsid7167417   }{\insrsid859305 The Code promotes restrictions on the \'93educational grants\'94 tha}{\insrsid9711430 t the government has }{\insrsid2827738 repeatedly }{\insrsid859305 called into question: \'93
Financial assistance for scholarships or other educational funds to permit medical students\'85and other healthcare professionals in training to attend carefully selected educational conf}{\insrsid853625 erences may be offered so long }{\insrsid859305 a}{
\insrsid853625 s}{\insrsid859305  the selection of individuals who will receive the funds is made by the academic or training institution.\'94}{\cs16\super\insrsid859305 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid859305 Id.}{\insrsid9982956  at 15.}}}{
\insrsid859305   }{\insrsid853625 Items less than one hundred dollars that are \'93primarily for the benefit of patients may be offered to healthcare professionals,\'94 while items of \'93minimal value,\'94 such as pe
ns or notepads (which may have company or product logos on them) may be offered to healthcare professionals.}{\cs16\super\insrsid853625 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid853625 Id.}{\insrsid9982956  at 17.}}}{\insrsid853625 
  No items, grants, or scholarships, however, may be provided to a health care professional \'93in exchange for prescribing products or for a commitment to continue prescribing products.\'94}{\cs16\super\insrsid9073679 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid9073679 Id.}{\insrsid9982956  at 19.}}}
{\insrsid853625  }{\insrsid9073679  To discourage companies from reading this last restriction in a narrow and self-serving fashion, the Code provides a general warning:}{\insrsid853625  }{\insrsid9073679 \'93
Nothing should be offered or provided in a manner or on conditions that would interfere with the independence of a healthcare professional\rquote s prescribing practices.\'94}{\cs16\super\insrsid9073679 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid9073679 Id.}}}{\insrsid15159243 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid8878066 {\insrsid12083823 \tab }{\insrsid5442947 The PhRMA Code\rquote 
s provisions serve several useful purposes, depending on the degree to which member companies choose to comply with them.  }{\insrsid8328533 First and foremost, they establish relatively firm guidelines }{\insrsid3155531 
to which PhRMA members can commit themselves }{\insrsid1667102 and reduce the conduct that leads to prosecution under the Anti-Kickback statute and FCA}{\insrsid8328533 .  }{\insrsid8878066 
The Office of the Inspector General (OIG), the division of the Department of Health and Human Services that is charged with overseeing the Medicare program,}{\cs16\super\insrsid8878066 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1669105 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid8878066 See}{
\insrsid9982956  }{\i\insrsid9982956\charrsid1669105 supra}{\insrsid9982956  note 113.}}}{\insrsid8878066  has given qualified approval to the Code.  OIG has confirmed that pharmaceutical companies\rquote  compliance with the Code \'93
will substantially reduce the risk of fraud and abuse and help demonstrate a good faith effort to comply with the applicable federal health care program requirements.\'94}{\cs16\super\insrsid8878066 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6881948 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid14295554 
OIG Compliance Program Guidance for Pharmaceutical Manufacturers}{\insrsid9982956 , 68 Fed. Reg. 23,731, 23,737 (May 5, 2003), }{\i\insrsid9982956\charrsid1669105 available at}{\insrsid9982956  }{\insrsid9982956\charrsid10562452 
http://oig.hhs.gov/authorities/docs/03/050503FRCPGPharmac.pdf}{\insrsid9982956 .}}}{\insrsid8878066   }{\insrsid10562452 OIG added, however, that Code compliance \'93will not protect a manufacturer as a matter of law under the anti-kickback statute\'85
\'94}{\cs16\super\insrsid10562452 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid10562452 Id.}}}{\insrsid10562452   }{\insrsid14904863 While adherence to the PhRM
A Code does not guarantee immunity from prosecution, these guidelines should at least reduce FCA lawsuits against the pharmaceutical industry for kickback violations.
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid356158 {\insrsid2700920 The PhRMA Code also should help to calm the competitive pressure between }{\insrsid6302567 pharmaceutical }{
\insrsid2700920 companies that leads to many of the questionable marketing tactics that the government attacks.  }{\insrsid10439536 The competition}{\insrsid14813689  }{\insrsid10439536 
between TAP and AstraZeneca to promote their respective prostate cancer treatments demonstrated how }{\insrsid15145192 companies}{\insrsid13188719 , even if they generally follow int
ernal compliance standards on marketing, will feel compelled to adopt riskier marketing tactics if a competitor\rquote s illegal (or potentially illegal) tactics have so far gone unquestioned or undetected by the government.}{\cs16\super\insrsid13188719 
\chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid356158 
See}{\insrsid9982956  }{\i\insrsid9982956\charrsid11102071 supra}{\insrsid9982956  notes 73-74 and accompanying text (discussing the competition between TAP\rquote s prostate cancer drug, Lupron, and AstraZeneca\rquote s Zoladex).}}}{\insrsid356158   }{
\insrsid13188719 PhRMA\rquote s creation of several specific standards, which have subsequently been adopted by many of the industry group members, }{\insrsid3362944 
provides companies with greater confidence that their competitors will abstain from illegal marketing strategies.  Thus a rivalry between two companies\rquote  drugs should now be less}{\insrsid8093126  likely to escalate into a \'93bidd}{\insrsid3362944 
ing war\'94 that includes progressively larger illegal kickbacks.}{\cs16\super\insrsid7744803 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1669105 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Representatives of pharmaceutical companies and industry consultants praised the PhRMA Code most of all for its ability to create \'93
a level playing field\'94 that encourages professionalism and ethical marketing strategies.  They even expressed hope that different companies in the industry would see the Code as a call to police each other, since ther
e are so many sales representatives in any one company that self-policing can be extremely difficult.  }{\i\insrsid9982956\charrsid3822442 See}{\insrsid9982956  Warren Ross, }{\i\insrsid9982956\charrsid1669105 New Rules, }{
\i\insrsid9982956\charrsid6430009 New Roles for the Sales Force: Warren Ross Talks with a Panel of Experts About How the New PhRMA Marketing Code is Upsetting the Sales Force Apple Cart}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid1669105 
Med. Marketing & Media}{\insrsid9982956 , Nov. 1, 2002, at 38.}}}{\insrsid3362944  }{\insrsid13188719  }{\insrsid8093126 In a similar regard, by making the PhRMA Code part of internal corporate policy, a pharmaceutical company can }{\insrsid7744803 
more easily head off}{\insrsid8093126  demands from physicians and health care providers for kickbacks;}{\insrsid7744803 
 although infrequently acknowledged, these recipients of kickbacks also deserve a significant share of the blame for illegal marketing practices.}{\cs16\super\insrsid7744803 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid3822442 See generally id.}{
\insrsid9982956  (recounting the frustration voiced by the panel of pharmaceutical company employees with demands traditionally made by some physicians for social and entertainment expenses before they would consider prescribing a company\rquote s drug).}
}}{\insrsid10092797 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15691957 {\insrsid10092797 Lastly, the PhRMA Code\rquote s value as a positive p}{\insrsid8328533 ublicity }{\insrsid10092797 tool for 
the pharmaceutical industry should not be underestimated.  }{\insrsid2457358 The illegal kickbacks that the Code attempts to combat are among the easiest violations for the general public to }{\insrsid153166 understand, whereas manipulation of a drug
\rquote s average wholesale price is not a crime that most of the public has time to fully ascertain. }{\insrsid2457358  }{\insrsid153166 
The Code demonstrates to the public and to the government that the industry is taking action to address the problem of kickbacks, and this step could gradually win back the public\rquote s confidence in pharm
aceutical companies.  In addition, if the government and qui tam relators continue to initiate actions against the pharmaceutical industry for \'93kickbacks\'94 that are not forbidden by th}{\insrsid12679762 
e Code, even after OIG has given qualified approval to the Code}{\insrsid153166 , the industry may finally be able to pressure the government into clarifying its anti-kickback law}{\insrsid15691957 
s.  Alternatively, further FCA actions against PhRMA members for what appear to be only minor transgressions could sour the American public against the FCA and lead to reform of the Act.
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid7039352 {\insrsid7039352 
Much of the criticism of the PhRMA Code, outside of the charge that the Code is ineffective because it is voluntary, stems from the fact that the Code \'93has no provisions for any kind of monitoring, proactive or reactive; there is no com
plaints procedure for alleged breaches; and there are no sanctions for companies that violate the code.\'94}{\cs16\super\insrsid7039352 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid7039352 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Joel Lexchin, Commentary, }{
\i\insrsid9982956\charrsid8351382 Voluntary Self-Regulatory Codes: What Should We Expect?}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid8351382 Amer. J. of Bioethics}{\insrsid9982956 , 2003, at 49.}}}{\insrsid7039352 
  This line of criticism, however, overlooks the reality that the PhRMA }{\insrsid6435461 Code }{\insrsid7039352 is only one piece of any PhRMA member\rquote s compliance procedures; monitoring 
and complaints procedures are part of any standard internal compliance program.  In addition, while PhRMA la}{\insrsid13584197 cks the ability to sanction non}{\insrsid7039352 compliant members, the government\rquote 
s prosecutorial authority clearly fills this gap, as illustrated by the numerous FCA actions desc}{\insrsid12679762 ribed previously in this paper}{\insrsid7039352 .}{\insrsid13584197   }{\insrsid6301155 
Even excluding federal or state government sanctions, a company still faces consequences if }{\insrsid6435461 it }{\insrsid6301155 formally adopts the Code: \'93Meaningful adoption means incorporation of the Code into written company policy; reflec
tion of it in training materials and other internal communications; periodic auditing of compliance; and, as necessary, discipline and other appropriate responses to noncompliance.\'94}{\cs16\super\insrsid6301155 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Richard M. Cooper, }{\i\insrsid9982956\charrsid6301155 
Creating Private-Sector Standards of Conduct}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid4080633 Bus. Crimes Law Rep.}{\insrsid9982956 , May 16, 2003, at 1.}}}{\insrsid6301155   }{\insrsid9134423 
The inclusion of the PhRMA Code in internal compliance programs will be discussed in the next subsection.}{\insrsid7039352 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11615729 {\b\insrsid11615729 B}{\b\insrsid15691957\charrsid3806332 .  Internal Compliance Programs
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid7039352 {\insrsid15691957 \tab }{\insrsid3486683 Adherence to the PhRMA Code is only one of the tasks to which pharmaceutical companies\rquote 
 internal compliance programs have b}{\insrsid15232783 een assigned since the barrage of FCA settlements}{\insrsid3486683  began in 2002.  }{\insrsid7619535 
The government has also ordered the industry to adopt more stringent compliance procedures, threatening sanctions for companies who fail to do so.}{\insrsid15743637 
\par }{\insrsid7619535 \tab In April 2003, OIG issued the \'93OIG Compliance Program Guidance for Pharmaceutical Manufacturers.\'94}{\cs16\super\insrsid7619535 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid6627671 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid7619535 
See OIG Compliance Program Guidance}{\insrsid9982956 , }{\i\insrsid9982956\charrsid7619535 supra}{\insrsid9982956  note 188, at 23,731.}}}{\insrsid7619535   }{\insrsid3542798 OIG stresses that this document (\'93OIG Guidance\'94
) is not itself a compliance program; it is rather \'93a set of guidelines that pharmaceutical manufacturers should consider when developing and implementing a compliance program or evaluating an existing one.\'94}{\cs16\super\insrsid3542798 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid3542798 Id.}}}{
\insrsid3542798   }{\insrsid3153487 Hence implementing the recommendations of OIG Guidance is also not mandatory.}{\cs16\super\insrsid3153487 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid3153487 See id.}{\insrsid9982956  (\'93
The contents of this guidance should not be viewed as mandatory or as an exclusive discussion of the advisable elements of a compliance program.\'94).}}}{\insrsid3153487   OIG Guidance recommends the adoption of seven elements that are \'93
fundamental to an effective compliance program.\'94  These elements are:
\par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid3153487 {\insrsid3153487 (1) Implementing written policies and procedures;
\par (2) Designating a compliance officer and compliance committee;
\par (3) Conducting effective training and education;
\par (4) Developing effective lines of communication;
\par (5) Conducting internal monitoring and auditing;
\par (6) Enforcing standards through well-publicized disciplinary guidelines; and
\par (7) Responding promptly to detected problems and undertaking corrective action.}{\cs16\super\insrsid3153487 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid3153487 Id.}}}{\insrsid3153487 
\par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid3153487 {\insrsid3153487 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid7039352 {\insrsid2035933 OIG states, however, that these elements were already \'93widely recognized as fundamental\'94 to any compliance program.}{
\cs16\super\insrsid15418986 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid9399075 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{
\insrsid9982956  }{\i\insrsid9982956\charrsid15418986 Id.}}}{\insrsid2035933   }{\insrsid15418986 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15418986 {\insrsid3542798 OIG Guidance }{\insrsid2035933 also }{\insrsid3542798 identifies \'93
three major potential risk areas for pharmaceutical manufacturers: (1) Integrity of data used by state and federal governments to establish payment; (2) kickbacks and other illegal remuneration; and (3) compliance with laws regulating drug samples.\'94}{
\cs16\super\insrsid3542798 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid3542798 Id.}{\insrsid9982956  at 23,732.}}}{\insrsid3542798   }{\insrsid2035933 The recommendations put forth by OIG Guidance on how to prevent violations in these areas by a pharmaceutical company, however, are primarily }{
\insrsid15418986 broad warnings to avoid practices that have led to FCA charges against companies in the past.  For instance, 
OIG Guidance advises that companies may avoid prosecution for kickbacks in the form of discounts to health care providers by familiarizing their sales and marketing employees with the safe harbors under the Anti-Kickback Act.}{\cs16\super\insrsid15418986 
\chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid2519950 
Id.}{\insrsid9982956  at 23,735.}}}{\insrsid15418986   This recommendation avoids providing a detailed }{\insrsid12323738 
interpretation of how to fall within these safe harbors, maintaining the confusion that pharmaceutical companies have complained has led to alleged violations in the first place.  }{\insrsid7619535 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15418986 {\insrsid12323738 OIG Guidance does provide a few pieces of substantive advice that }{\insrsid2519950 
companies can use to reform their internal compliance programs.  Addressing educational grants, OIG Guidance recommends that \'93[t]o reduce the risks that a grant program is used improperly to induce or reward product purchases or to market produc
t inappropriately, manufacturers should separate their grant making functions from their sales and marketing functions.\'94}{\cs16\super\insrsid2519950 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid2519950 Id.}{\insrsid9982956 
 at 23,735.}}}{\insrsid2519950   To avoid prosecution for \'93marketing the spread,\'94 a practice of which TAP was accused, }{\insrsid7496379 OIG states that a company should forbid sales representatives from \'93
promoting the spread as a reason to purchase the product or guaranteeing a certain profit or spread in exchange for the purchase of a product.\'94}{\cs16\super\insrsid7496379 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956 Id. }{\insrsid9982956 at 23,737; }{
\i\insrsid9982956\charrsid2827738 see also supra}{\insrsid9982956  notes 82-85 and accompanying text.}}}{\insrsid9594723   OIG also warn}{\insrsid7496379 s that by granting sales employees \'93extraordinary  expense accounts\'94 and com
pensating them with \'93extraordinary incentive bonuses,\'94 a pharmaceutical manufacturer could create an inference that the \'93manufacturer intentionally motivated the sales force to induce sales through lavish entertainment or other remuneration.\'94}
{\cs16\super\insrsid7496379 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid7619535 OIG Compliance Program Guidance}{\insrsid9982956 , }{\i\insrsid9982956\charrsid7619535 supra}{\insrsid9982956  note 188, at 23,739.}}}{\insrsid7496379   }{\insrsid12323738 
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid725130 {\insrsid725130 OIG Guidance thus has only minor value to pharmaceutical companies looking for }{\insrsid3749052 original, }{
\insrsid725130 substantive guidance on how to structure a new or existing compliance program.  The document\rquote s greatest value lies in its approving statements toward the PhRMA Code, yet even in
 this regard, OIG Guidance equivocates so greatly that it is difficult to determine how safe any company will be from litigation if it conforms to the Code}{\insrsid15602725 .  As stated previously, compliance with \'93the minimum PhRMA Code standards,
\'94}{\cs16\super\insrsid14770415 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid14770415 Id.}}}{\insrsid15602725  while recommended by OIG Guidance, will not }{\insrsid14770415 always insulate}{\insrsid15602725  a company from Anti-Kickback charges.}{\cs16\super\insrsid14770415 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid14770415 Id.}{\insrsid9982956 
 at 23,737.}}}{\insrsid15602725   This language has been criticized for its ambiguity}{\insrsid725130 :
\par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid15602725 {\insrsid725130 Thus, pharmaceutical manufacturers are expected to train their employees and other agents on the Code, with no basis for confi
dence that the government will view compliance with the Code as even presu}{\insrsid15602725 mptively adequate with respect }{\insrsid725130 t}{\insrsid15602725 o}{\insrsid725130 
 its subject matter.  OIG also fails even to address the aspects of the Code that arguably go beyond the requirements of law.  By}{\insrsid15602725  characterizing the Code as stating \lquote minimum standards,\rquote 
 OIG arguably expands the scope of legal prohibitions without any discussion of whether such expansion can be justified, and without any apparent recognition that such expansion discourages the private sector from settin
g higher standards than the obvious statutory minimum.}{\cs16\super\insrsid14770415 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Cooper, }{\i\insrsid9982956\charrsid11629549 supra}{\insrsid9982956  note 194.}}}{\insrsid725130 
\par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid14770415 {\insrsid15227091 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid7039352 {\insrsid16649993 
OIG intentionally produced a guidance document that is not too specific, with the hope that it would provide assistance to pharmaceutical companies with a variety of pre-established compliance programs.}{\cs16\super\insrsid16649993 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16649993 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid7619535 
See OIG Compliance Program Guidance}{\insrsid9982956 , }{\i\insrsid9982956\charrsid7619535 supra}{\insrsid9982956  note 188, at 23,732.}}}{\insrsid16649993   Unfortunately, partly as a result of OIG\rquote s}{\insrsid14824989 
 commitment to broadly defining its recommendations}{\insrsid16649993 ,}{\insrsid14880588  }{\insrsid3749052 pharma}{\insrsid14880588 ceutical companies still cannot be certain that they have}{\insrsid3749052  properly tailor}{\insrsid14880588 ed}{
\insrsid3749052  their compliance programs to satisfy OIG.
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid9399075 {\insrsid16649993 \tab }{\insrsid9399075 One of the benefits of the agg
ressive FCA prosecution of pharmaceutical companies by the Department of Justice and OIG is the compliance guidance that it has spawned.  As part of a }{\insrsid3674745 negotiated }{\insrsid9399075 
settlement with the government on FCA and Anti-Kickback charges, it is typical for a corporation to enter into}{\insrsid2827738  a \'93corporate integrity agreement}{\insrsid9399075 .\'94}{\cs16\super\insrsid9399075 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Henderson & Cassady, }{\i\insrsid9982956\charrsid9399075 supra}{
\insrsid9982956  note 72, at 133.}}}{\insrsid9399075   }{\insrsid1650756 These agreements are \'93publicly available for companies to review,\'94 and they \'93
show the elements of monitoring and ongoing compliance activities that the government believes will be }{\insrsid15945465 e}{\insrsid1650756 ffective to keep the particular pharmaceutical manufacturer\'85
from violating the applicable laws, rules, and regulations.\'94}{\cs16\super\insrsid1650756 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid1650756 Id.}}}{\insrsid1650756   }{\insrsid3749052 
\par }{\insrsid14816094 \tab One such corporate integrity agreement was formed between Bayer Corporation and the government as part of a settlement in 2001.  Bayer paid $14 million 
to settle claims under the FCA, initiated in a qui tam lawsuit, that Bayer encouraged doctors to buy its products, rather than }{\insrsid536856 those of }{\insrsid14816094 competitors, by \'93marketing t}{\insrsid536856 he spread,\'94
 much as TAP allegedly did}{\insrsid14816094 .}{\cs16\super\insrsid14816094 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {
\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid15339915 Medicaid Issues: Hearing Before the Senate Finance Comm.}{\insrsid9982956 , }{\i\insrsid9982956\charrsid14816094 supra}{\insrsid9982956 
 note 126 (statement of Thomas J. Coleman, Senior Counsel, Deputy Atto
rney General, Department of Justice).  Illustrating that adherence to a corporate integrity agreement will not protect a pharmaceutical manufacturer from FCA liability for acts committed prior to institution of the agreement, Bayer was forced to pay $257.
2 million in 2003 to settle FCA claims for unrelated false claims.  }{\i\insrsid9982956\charrsid1919319 See}{\insrsid9982956  }{\i\insrsid9982956 i}{\i\insrsid9982956\charrsid1919319 d.}}}{\insrsid14816094   }{\insrsid536856 Bayer\rquote 
s requisite integrity agreement committed the
 corporation to forming an internal compliance program involving many of the elements later outlined by OIG Guidance.  Institution of these elements, however, was mandatory, and Bayer was required to report any alterations of its program to OIG.}{
\cs16\super\insrsid536856 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid12849647 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{
\insrsid9982956  Francis J. Serbaroli, }{\i\insrsid9982956\charrsid12849647 Feds Targeting Big Pharmaceutical Companies}{\insrsid9982956 , }{\scaps\insrsid9982956\charrsid12849647 N.Y. Law J.}{\insrsid9982956 , Mar. 30, 2001, Health Law, at 3.}}}{
\insrsid536856   Bayer was subject to fines and penalties, along with potential debarment from federal health care programs, for \'93material breach or noncompliance\'94 with the agreement.}{\cs16\super\insrsid536856 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid16263898 Id.}}}{\insrsid16263898 
  The agreement ordered Bayer to create a compliance committee and appoint an internal compliance officer, as well as establish a code of conduct and }{\insrsid6435461 internal reporting procedures in}{\insrsid16263898 
 which its employees had to be educated, particularly for the purpose of ensuring that its drug prices would henceforth be accurately reported to federal health care programs.}{\cs16\super\insrsid16263898 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid16263898 See id.}}}{\insrsid16263898 
  All of these elements of a compliance program were later recommended by OIG Guidance.}{\cs16\super\insrsid16263898 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid16263898 See generally}{\insrsid9982956  }{\i\insrsid9982956\charrsid7619535 OIG Compliance Program Guidance}{
\insrsid9982956 , }{\i\insrsid9982956\charrsid7619535 supra}{\insrsid9982956  note 188.}}}{\insrsid16263898 
  More specifically, the agreement obligated Bayer to provide specific numbers of hours of training to its employees on how to comply with federal regulations, and it forbade Bayer from hiring or continuing to employ anyone who }{\insrsid14746312 
was currently subject to sanctions under a federal health care program.}{\cs16\super\insrsid14746312 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid14746312 See}{\insrsid9982956  Serbaroli, }{\i\insrsid9982956\charrsid14746312 supra}{\insrsid9982956  note 212.}}}{
\insrsid14746312   }{\insrsid14816094 
\par }{\insrsid14746312 \tab Although corporate integrity agreements do not necessarily clarify the aspects of the FCA and Anti-}{\insrsid2105117 Kickback Act that have frustrated}{\insrsid14746312 
 the pharmaceutical industry over the last decade, they at least provide a more concrete example of the type of compliance program that OIG and the Department of Justice are seeking from pharmaceutical companies.
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid7039352 {\insrsid12149492 
\par }{\b\insrsid8345512\charrsid8345512 C.  Broader Ramifications of Increased False Claims Act Litigation
\par }{\insrsid8345512 \tab }{\insrsid2105117 The strengthening of pharmaceutical compliance programs, discussed in the previous two subsections, promises to simultaneously alleviate and expand the costs of drugs for Americans who qualify for federal health c
are programs.  The wisdom of the government\rquote s increased scrutiny of pharmaceutical companies\rquote  sales tactics will depend upon whether the cost savings from FCA prosecutions and}{\insrsid13852250  compliance agreements outweigh}{
\insrsid2105117  the }{\insrsid3439658 resultant }{\insrsid13852250 higher}{\insrsid2105117  drug}{\insrsid13852250  prices}{\insrsid3439658  charged to health care programs and other consumers.
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid14365967 {\insrsid3439658 \tab }{\insrsid16583637 While estimates in regard to fraud are inherently difficult to verify}{\insrsid13636913 
, one source estimates that \'93fraud and abuse costs the health care system as much as 10% of the more than $1 trillion spent on health care each year.\'94}{\cs16\super\insrsid13636913 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid13636913 Fraud and Abuse}{
\insrsid9982956 , 2-8 Treatise on Health Care Law (MB) \'a7 8.27 (2005) (citing Keynote address of Dara Corrigan, Acting Inspector General, at HCCA Fraud and Compliance Forum, September 2003).}}}{\insrsid13636913   }{\insrsid5051852 
Governmental reports have also concluded that \'93the Medicare program is paying hundreds of millions of dollars too much for prescription drugs,\'94 as a result simply of manipulation of drugs\rquote  average wholesale price.}{\cs16\super\insrsid5051852 
\chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Boulton, }{
\i\insrsid9982956\charrsid5051852 supra}{\insrsid9982956  note 169 (referring to statistics provided by three separate inspector general reports prepared for Senate Finance Committee hearings).}}}{\insrsid5051852   To the extent that }{\insrsid16583637 
fraud is committed by pharmaceutical manufacturers, the Department of Justice and OIG clearly have a duty to prosecute these companies to recover the taxpayer dollars they have illegally obtained.  }{\insrsid1210610 
At least prior to the barrage of lawsuits in 2001, there was evidence to suggest that expanded enforcement efforts were having a positive effect: \'93
In 1998, Medicare costs rose only by 1.5%, the lowest growth rate in the history of the program.  During the first six months of FY 1999, the cost of the Medicare program actually dropped $2.6 billion.\'94}{\cs16\super\insrsid12415002 \chftn {\footnote 
\pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Jost & Davies, }{\i\insrsid9982956\charrsid12415002 
supra}{\insrsid9982956  note 111, at 257.}}}{\insrsid1210610   }{\insrsid9002761 If such trends continue}{\insrsid10053380  and are truly a result of enforcement efforts}{\insrsid9002761 
, then prosecution of fraud will allow the government to fund federal health care programs at lower costs to taxpayers.  Yet the ability to sustain these reductions i
n costs will depend upon whether prosecutors and qui tam relators target the most appropriate defendants under the FCA, meaning those pha}{\insrsid10828393 rmaceutical companies actual}{\insrsid9002761 
ly responsible for committing serious fraud against the government}{\insrsid10053380 .}{\insrsid9002761   }{\insrsid2105117 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid9002761 {\insrsid5051852 \tab }{\insrsid7148248 Although OIG has obv
ious incentives to reduce the immediate costs of Medicare and Medicaid, the government must also consider the impact that its enforcement efforts have upon the strength of the pharmaceutical industry.  }{\insrsid2572651 
Spending on prescription drugs more than dou}{\insrsid13852250 bled between 1998 and 2004, but Medicaid alone now comprises}{\insrsid2572651  roughly 15% of the U.S. market for prescription drugs.}{\cs16\super\insrsid2572651 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Boulton, }{\i\insrsid9982956\charrsid2572651 supra}{
\insrsid9982956  note 169.}}}{\insrsid2572651   }{\insrsid6890733 The growing prominence of the government as a consumer of prescription drugs means that pharmaceutical companies will submit an increasing number of
 claims to federal health care programs for reimbursement.  }{\insrsid5733444 As a consequence, the pharmaceutical industry will be even mo}{\insrsid7432525 re susceptible to FCA liability. }{\insrsid12928521  By having to devote more of their}{
\insrsid7432525  assets to litigation costs and prevention, pharmaceutical companies are less capable of funding research and development on}{\insrsid6435461  newer drugs, while}{\insrsid7432525  facing increa}{\insrsid7241292 
sed scrutiny and litigation initiated by the government}{\insrsid7432525 : \'93R}{\insrsid5733444 ising costs of risk management and threats of litigation could cause the removal of medically-necessary but risky medicines\'85.\'94}{
\cs16\super\insrsid5733444 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid5733444 Rising Tide of Litigation Against Pharma}{\insrsid9982956 , }{\i\insrsid9982956\charrsid5733444 supra}{\insrsid9982956  note 167. }}}{\insrsid5733444   }{\insrsid12928521 
The costs of litigation and compliance programs will also be passed on}{\insrsid858490  }{\insrsid12928521 to consumers, including the government, in the form of higher drug prices.  If these costs result from unwarranted lawsuits against pharmace}{
\insrsid13852250 utical companies, rather than lawsuits used to}{\insrsid12928521  recover funds acquired through }{\i\insrsid12928521\charrsid13852250 actual}{\insrsid12928521  fraud, the industry could ultimately be paralyzed.}{\insrsid5051852 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16583637 {\insrsid16583637 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid7039352 {\b\caps\insrsid15232783\charrsid15232783 IV.  Proposals for Reform}{\b\caps\insrsid11537402  oF THE False claims act}{\b\caps\insrsid3018098 
 AND Government Enforcement efforts}{\b\caps\insrsid15232783\charrsid15232783 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15743637 {\insrsid2449394 \tab }{\insrsid6126309 The increasing frequency of}{\insrsid11537402  FCA lawsuits against }{\insrsid6126309 the phar
maceutical industry by qui tam relators has understandably been greeted with differing reactions by the government, the American public, and the pharmaceutical industry.  }{\insrsid5853590 
Federal prosecutors and much of the public, who harbor mistrust of the pharmaceutical industry, }{\insrsid15936289 have }{\insrsid5853590 celebrate}{\insrsid15936289 d}{\insrsid5853590  FCA settlements with pharmaceu}{\insrsid10102753 
tical companies, viewing these settlements as the }{\insrsid13852250 recovery}{\insrsid15936289  of funds improperly taken from the federal government.  }{\insrsid2643234 The pharmaceutical industry, while confessing to having committed some infractions o
f the }{\insrsid11173552 FCA, has voiced frustration with the government\rquote 
s enforcement efforts.  The industry characterizes many of the FCA charges as, at best, overly aggressive prosecution for a combination of minor or unintentional violations and, at worst, a form of extortion due to the government\rquote 
s superior bargaining position.
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid8810796 {\insrsid11173552 \tab  }{\insrsid6430297 
Assuming that its goal is the minimization of health care fraud and abuse by the pharmaceutical industry, rather than merely}{\insrsid15014445  the enrichment}{\insrsid6430297  of government coffers, the government must take steps 
to legitimize future FCA settlements with pharmaceutical companies.  }{\insrsid8810796 
Proper reform could enable the Department of Justice to demonstrate that it is only engaged in the business of prosecuting fraudulent practices that have led to the theft of federal asset
s, as opposed to searching for potential large settlements regardless of the defendant companies\rquote  culpability. }{\insrsid1727953  }{\insrsid8810796 
By depriving companies of excuses for their decisions to settle FCA claims, the government will be able to foster greater cooperation with the industry for the purpose of reducing health care fraud.  }{\insrsid6430297 
With this goal in mind, this section proposes a number of refor}{\insrsid3018098 ms that Congress and OIG}{\insrsid6430297  should consider adopting.}{\insrsid6881948 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15743637 {\insrsid15227580 
\par }{\insrsid7240249 
\par 
\par }{\b\insrsid15227580\charrsid15227580 (1) }{\b\insrsid1794931 Set Caps on Qui Tam Rewards
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid12520193 {\b\insrsid1794931 \tab }{\insrsid12520193 The 1986 False Claims Reform Act corrected many of
 the overly restrictive qui tam provisions that characterized the 1943 Act.  }{\insrsid3951401 Whistleblowers allow the government to unearth fraud that would otherwise go undetected and assume the}{\insrsid13389924  burden of the early stages of}{
\insrsid3951401  false claims investigation}{\insrsid13389924 s}{\insrsid3951401 .  In order to encourage these whistleblowers to come forward with useful information, it was necessary to rewrite the provisions of the 1943 Act that }{\insrsid16327296 
barred qui tam relators from bringing suit with crucial but not \'93original\'94 information and required these relators to assume the costs of prosecuting on behalf of the government without any guaranteed compensation for their effort.}{
\insrsid1794931\charrsid13443192 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13389924 {\b\insrsid12520193 \tab }{\insrsid12520193 There is no reason, however, that the }{\insrsid1341950 current }{\insrsid12520193 
qui tam provisions cannot continue to serve their }{\insrsid3951401 useful }{\insrsid12520193 purpose with a reasonable, absolute cap on qui tam rewards}{\insrsid1341950  in place}{\insrsid1318289 , at least in cases in which the government intervenes}{
\insrsid12520193 .  }{\insrsid1527605 While this paper does not suggest a particular figure at which this cap should be set, }{\insrsid16413075 simply }{\insrsid1527605 contemplating the ramifications of setting a cap}{\insrsid5783743 , adjusted regularl}
{\insrsid13201277 y for inflation,}{\insrsid1527605  at five million dollars, for example, reveals }{\insrsid16413075 the viability of an absolute cap.  }{\insrsid1341950 
First, it is highly unlikely that an executive of a pharmaceutical company or health care provider for whom five million dollars}{\insrsid13201277  would}{\insrsid1341950  not}{\insrsid13201277  be an exorbitant amount of money}{\insrsid1341950  w
ould initiate a qui tam lawsuit against his or her corporation.  As the previous FCA lawsuits discussed herein have shown, qui tam relators often come from the ranks of lower-le}{\insrsid13201277 vel executives and employees.  Second, t}{\insrsid1341950 
he }{\insrsid13201277 lower-level executive with access to information useful to an FCA claim who earns a salary in the realm of $200,000 a year }{\insrsid12145332 would be }{\insrsid14754149 
equally compensated for a number of years by a five-million-dollar qui tam reward, even accounting for taxes and legal fees.}{\cs16\super\insrsid13389924 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 Durand, the primary whistleblower in the TAP Pharmaceuticals case and, for a brief period of time, a TAP sales executive, received a salary of $140,000 in 1995, along with a potential $50,000 annual bonus.  }{\insrsid9982956\charrsid3435371 
Haddad & Barrett, }{\i\insrsid9982956\charrsid3435371 supra}{\insrsid9982956  note 73, at 128}{\insrsid9982956\charrsid3435371 .}}}{\insrsid14754149   Admittedly, many qui tam relators
 no longer feel comfortable working at a corporation against which they have filed a qui tam lawsuit, in spite of the whistleblower protections afforded by the FCA.}{\cs16\super\insrsid14754149 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid14754149 See}{\i\insrsid9982956  supra}
{\insrsid9982956  Section I.B (discussing the whistleblower protections created by the 1986 Reform Act, codified as amended at 31 U.S.C. \'a7 3730(h)).}}}{\insrsid14754149   In addition, many potential whistleblowers fear they will have difficulty }{
\insrsid12200270 finding }{\insrsid11735630 a job }{\insrsid12200270 anywhere in an industry once they have \'93tattled\'94 on a former employer.  }{\insrsid14054053 
The purpose of qui tam rewards, however, is not to provide individuals who possess inside information with an opportunity to achieve early retirement.  Their purpose is to create a suff
icient incentive to entice whistleblowers to provide information of genuine fraud that the whistleblowers have been unable to rectify by means of the}{\insrsid471398 ir own employment status.  A reward}{\insrsid14054053  equal to a number of years\rquote 
 }{\insrsid471398 worth of }{\insrsid14054053 salary should be a sufficient ince}{\insrsid471398 ntive (in most cases) to accomplish}{\insrsid14054053  this objective.}{\insrsid4291741   Third, as was}{\insrsid5783743 
 noted previously, there is precedent for placing }{\insrsid15826344 much lower }{\insrsid5783743 caps on }{\insrsid15826344 whistleblower rewards under other statutes}{\insrsid5783743 .}{\cs16\super\insrsid15826344 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid15826344 See}{\insrsid9982956  }{
\i\insrsid9982956\charrsid10161843 supra}{\insrsid9982956  note 108 and accompanying text.}}}{\insrsid5783743  }{\insrsid16135640  }{\insrsid1794931 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid14054053 {\insrsid14054053 \tab }{\insrsid5783743 An absolute cap would provide a number of benefits without compromising the efficacy of the FCA
\rquote s qui tam provisions.  }{\insrsid10778196 By having to share less of a}{\insrsid9777155 ny}{\insrsid10778196 
 settlement or court-ordered damages with whistleblowers, who frequently cannot succeed in a qui tam lawsuit without government intervention, the government will be able to }{\insrsid9777155 return 
a higher percentage of these funds to the federal health care programs which were allegedly wronged in the first place.  }{\insrsid10161843 
In addition, by no longer offering the potential for outrageously large rewards, like the $78 million received by the whistleblower in the TAP case,}{\cs16\super\insrsid10161843 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid10161843 See}{\insrsid9982956  }{
\i\insrsid9982956\charrsid10161843 supra}{\insrsid9982956  note 90 and accompanying text.}}}{\insrsid10161843  the government will add legitimacy to the }{\insrsid16409387 settlements it reac}{\insrsid13182656 
hes in qui tam cases in which federal prosecutors have intervened}{\insrsid16409387 .  }{\insrsid32197 Although rewards capped only by a percentage of the amount recovered by the government have the potential to att
ract a greater number of qui tam claims, they also have the potential to attract more spurious cha}{\insrsid12849832 rges of fraud by whistleblowers: 
\par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid12849832 {\insrsid12849832 When it comes to a private bounty system\'85success should not be measured by volume alone; instead, a successful system must g
enerate primarily meritorious suits, and weed out frivolous ones.  To achieve this goal, the incentives must be generous enough to induce participation by insiders, yet not so tempting as to engender meritless suits.}{\cs16\super\insrsid12849832 \chftn 
{\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Joan H. Krause, }{
\i\insrsid9982956\charrsid12849832 Regulating, Guiding, and Enforcing Health Care Fraud}{\insrsid9982956 , 60 }{\scaps\insrsid9982956\charrsid12849832 N.Y.U Ann. Surv. Am. L.}{\insrsid9982956  241, 281 (2004).}}}{\insrsid12849832 
\par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid12849832 {\insrsid12849832 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid14054053 {\insrsid10176892 Pharmaceutical employees who are angr
y at their employers for unrelated reasons, or those who anticipate their imminent departure from their jobs, might be willing to provide the government with falsified information to create an FCA claim, simply because the expected value of a qui tam rewa
rd is so high.  Since the government often relies so much upon the information disclosed by whistleblowers, and because FCA cases so rarely make it to trial,}{\insrsid1277337  }{\insrsid10176892 there exists at least}{\insrsid11735630  a}{\insrsid1277337 
 reasonable}{\insrsid10176892  chance that inaccurate accusations will }{\insrsid1277337 never }{\insrsid10176892 be discovered.  }{\insrsid1318289 Even in cases in which the qui tam relators\rquote  }{\insrsid10176892 initial }{\insrsid1318289 inten}{
\insrsid10176892 tions are}{\insrsid1318289  to accurately report fraud, the possibility of further boosting the total settlement figure may lead }{\insrsid10556685 the qui tam relator }{\insrsid1318289 to }{\insrsid10556685 assert }{\insrsid1318289 
overzealous claims; the revelations made during the trial of TAP employees on criminal charges }{\insrsid9397378 seem}{\insrsid1318289  to confirm this risk.}{\cs16\super\insrsid1318289 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid1318289 See}{\insrsid9982956  }{
\i\insrsid9982956\charrsid9397378 supra}{\insrsid9982956  notes 97-101 and accompanying text.}}}{\insrsid1318289   }{\insrsid14054053 
\par }{\insrsid1277337 \tab Based on this type of cost-benefit analysis, Congress should consider amending the FCA to cap qui tam rewards at a reasonable, absolute level.}{\cs16\super\insrsid4161062 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid7954920 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956 
 Alternatively, one commentator has proposed a more radical revision of the qui tam reward provisions: \'93It is worth exploring whether a revised bounty system could decrease the numbers of frivolous FCA cases without sacrificing meritorious ones 
\endash  perhaps along the lines of the Medicare Beneficiary Incentive Program, under which beneficiaries are eligible for 10% or up to $1,000 of funds recovered as a result of their \lquote tips\rquote  about fraud.\'94  Krause, }{
\i\insrsid9982956\charrsid7954920 supra}{\insrsid9982956  note 226, at 281-82.  The commentator adds that this alternative reward system could remedy the problem of unequal rewards between those relators who are fortunate enoug
h to have the government intervene in their lawsuits (and hence earn the chance to receive an enormous reward) and those relators whose cases do not induce government involvement (and hence frequently earn nothing).  }{\i\insrsid9982956\charrsid7954920 
See id.}{\insrsid9982956  at 281.}}}{\insrsid7407401   }{\insrsid1277337 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15743637 {\insrsid10095467\charrsid12520193 
\par }{\b\insrsid11095074  (2}{\b\insrsid4194369 ) Limit Applicability of Debarment Measures}{\b\insrsid15227580\charrsid15227580 
\par }{\insrsid4194369 \tab }{\insrsid1775816 The aspect of many FCA settlements that perhaps most detracts from their legitimacy is the threat of debarment.}{\cs16\super\insrsid16415662 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956 See supra}{\insrsid9982956\charrsid794594  }{
\insrsid9982956 Section II.B.2.}}}{\insrsid1775816   }{\insrsid14953713 Entering any settlement negotiations on FCA charges, a pharmaceutical company knows that if it allows the charges to proceed to trial an
d it is convicted of submitting even one false claim to the government, the company could be excluded from all federal health care programs.}{\cs16\super\insrsid14953713 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Raegan A. McClain, }{\i\insrsid9982956\charrsid14953713 
The Government, the Legislature and the Judiciary \endash  Working Towards Remedying the Problems with the Civil False Claims Act: Where Do We Go From Here?}{\insrsid9982956 , 10 }{\scaps\insrsid9982956 Ann.}{\scaps\insrsid9982956\charrsid14953713 
 Health L.}{\insrsid9982956  191, 241 (2001).  }}}{\insrsid14953713   }{\insrsid14837197 Since Medicare and Medicaid are such large customers for the pharmaceutical industry, t}{\insrsid13253284 he}{\insrsid14837197  company is left }{\insrsid13389924 
with }{\insrsid14837197 no option but to pay a huge settlement, unless the company is absolutely certain of its innocence on all charges.  The extent of the company\rquote s guilt thus remains a mystery in almost all cases.
\par }\pard \ql \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16014373 {\insrsid14837197 At the same time, OIG must retain the ability to exclude noncompl
iant companies from the health care programs it oversees.  Removing debarment as an option for OIG would allow }{\insrsid6975590 pharmaceutical companies who have repeatedly}{\insrsid16014373  and blatantly}{\insrsid6975590 
 violated federal regulations and committed fraud against Medicare and Medicaid to continue to sell their products to those same programs.  }{\insrsid16014373 Absent the threat of debarment, a }{\insrsid6975590 pharmaceutical man}{\insrsid16014373 
ufacturer}{\insrsid6975590  might deem the improved market share it would gain through illegal sales tactics to be worth the potential cost of legal fees and court-ordered damages.}{\insrsid16014373\charrsid16014373  }{\insrsid16014373 
The Department of Justice could also be overwhelmed by the investigation and litigation costs it would face under such a system.}{\insrsid4194369 
\par }{\insrsid16014373 These conflicting considerations suggest that the best option for Congress is to limit the applicability of }{\insrsid1272268 permissive }{\insrsid7631625 debarment so}{\insrsid16014373  that}{\insrsid7631625  minor fraud will}{
\insrsid16014373  not be excessively punished.  One commentator has presented a number of ways in wh}{\insrsid7631625 ich this reform could be enacted}{\insrsid16014373 :
\par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid5248719 {\insrsid1272268 [T]he law could require that permissive exclusion only applies if the violator is found guilty of a c
ertain percentage of the claims in issue as compared with all the claims submitted in a give}{\insrsid11735630 n}{\insrsid1272268 
 year.  Alternatively, the law could require a set monetary threshold above which permissive exclusion would be applicable.  Similarly, the law could require a fin
ding of two separate civil judgments against an individual or entity before that individual or entity could be permissively excluded from the program.  The FCA could also provide for certain safe harbors in order to protect \'93honest}{\insrsid8391366 
\'94}{\insrsid1272268  mistakes.  For example\'85the Act could prohibit suits from being brought against individuals who \'93reasonably\'94 relied on erroneous governmental advice.}{\cs16\super\insrsid5248719 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid5248719 Id.}{\insrsid9982956 
 at 241-42.}}}{\insrsid16014373 
\par }\pard \ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid5248719 {\insrsid5248719 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid9989517 {\insrsid7631625 
The creation of any or all of these amendments would help to create a fairer bargaining scenario between the government and pharmaceutical companies who are FCA defendants.}{\cs16\super\insrsid9840783 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  An additional option for reform would be to permit \'93
an informal means of expedited appeal\'94 through the Department of Justice in situations in which a company \'93believes that it is being unfairly subjected to an abusive settlement demand or to the threat of unwarranted prosecution.\'94  Jost & Davies, 
}{\i\insrsid9982956\charrsid7020959 supra}{\insrsid9982956  note 111, at 316 (suggesting reforms that would lessen the burden of FCA litigation on health care providers but that are equally relevant to pharmaceutical manufacturers).}}}{\insrsid7631625 
  The manufacturers will be able to litigate the charges against them that they believe to be meritless}{\insrsid9989517  without fear of debarment on account of minor violations of the FCA.  The government}{\insrsid9840783  will }{\insrsid9989517 
continue to be able to collect damages for fraud actually }{\insrsid9840783 committed by these companies.  The government}{\insrsid9989517  will }{\insrsid9840783 also }{\insrsid9989517 
retain the right to exclude from federal health care programs those companies who have committed significant fraud against the government}{\insrsid9840783 , meaning that the Dep
artment of Justice will still be able to force many settlements with defendants and hence litigation costs will not spiral out of control}{\insrsid9989517 .  }{\insrsid11415913 
Although these revisions of debarment rules would weaken a powerful bargaining tool that the government possesses in FCA prosecutions, reform is necessary to ensure that future settlements between the Department of Justice and the pharm}{\insrsid12280686 
aceutical industry more accurately reflect the actual extent of defendants\rquote  FCA violations}{\insrsid11415913 .}{\insrsid6372884   }{\insrsid5248719 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11095074 {\insrsid5075395\charrsid5075395 
\par }{\b\insrsid1578201 (3) Ra}{\b\insrsid11684001 ise the Burden of Proof on FCA Claims that Are Contingent Upon a Finding that an Illegal Kickback Occurred }{\b\insrsid11095074\charrsid15227580 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11294465 {\insrsid11095074 \tab }{\insrsid6569187 
Qui tam relators and the government continue to initiate lawsuits against pharmaceutical manufacturers that are based on violations of the Anti-Kickback Act.}{\cs16\super\insrsid6569187 \chftn {\footnote \pard\plain 
\s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid11294465 See, e.g.}{\insrsid9982956 , }
{\i\insrsid9982956\charrsid11294465 supra}{\insrsid9982956  note 165 and accompanying text.}}}{\insrsid6569187   }{\insrsid5520285 Specifically, these cl
aims rest on the argument that physicians or health care providers were induced, by kickbacks from manufacturers, to prescribe drugs that they otherwise would not have prescribed and then submitted claims to the government for reimbursement for these pres
criptions.  }{\insrsid6372884 T}{\insrsid11294465 he ability of qui tam relators to effectively sue a company for violations of a criminal statute with no private right of action is certainly troubling in a constitutional sense}{\insrsid6372884 .}{
\cs16\super\insrsid11294465 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956 See}{\insrsid9982956  Salcido, }{\i\insrsid9982956\charrsid7020959 supra}{\insrsid9982956  note 58, at 106-08.  }}}{\insrsid11294465  }{\insrsid6372884  T}{\insrsid11294465 he greater practical problem}{\insrsid6372884 , however,}{
\insrsid11294465  is that plaintiffs can prevail on FCA claims which hinge on a }{\insrsid11735630 finding that a kickback was paid}{\insrsid11294465  without meeting the higher burden of proof }{\insrsid6372884 required by the Anti-Kickback Act.}{
\cs16\super\insrsid6372884 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{
\i\insrsid9982956\charrsid6372884 See supra}{\insrsid9982956  Section I.C.}}}{\insrsid6372884   }{\insrsid10440796 Courts have had few opportunities to address this statutory conflict, due to pharmaceutical companies\rquote  f
ear of going to trial in FCA cases, and the precedent that does exist is in disagreement.}{\cs16\super\insrsid10440796 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 
\fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  }{\i\insrsid9982956\charrsid10440796 See supra}{\insrsid9982956  note 71 and accompanying text.}}}{\insrsid10440796   }{\insrsid11095074 
\par }{\insrsid11684001 \tab Congress should consider stepping in to the vo}{\insrsid12280686 id that the courts have left by}{\insrsid11684001  rais}{\insrsid11735630 ing the burden of proof under the FCA for }{\insrsid11684001 claims that are co}{
\insrsid11735630 ntingent upon a showing that a defendant violated the}{\insrsid11684001  Anti-Kickback Act.  }{\insrsid11735630 In such situations, a}{\insrsid3437266 n FCA plaintiff}{\insrsid11684001  should have to make an initial showing that }{
\insrsid3437266 the }{\insrsid11735630 defendant violated the }{\insrsid3437266 Ant}{\insrsid11735630 i-Kickback Act }{\insrsid3437266 under}{\insrsid11684001  the \'93knowing and willful\'94 standard typical of criminal statutes}{\insrsid11735630 ; only 
then will the plaintiff be able}{\insrsid3437266  to meet its burden for showing that a false claim was submitted}{\insrsid5198796  by the defendant}{\insrsid11684001 .  }{\insrsid5520285 This reform would}{\insrsid3437266 
 prevent qui tam relators and the government from manipulating a civil statute }{\insrsid5198796 in order }{\insrsid3437266 to simplify what are effectively criminal prosecutions.}{\insrsid11684001 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11095074 {\insrsid11095074 
\par }{\b\insrsid1794931 (4}{\b\insrsid1578201 ) Provide Stronger }{\b\insrsid15227580\charrsid15227580 Guidance}{\b\insrsid1578201  to the Pharmaceutical Industry Through OIG}{\b\insrsid15227580\charrsid15227580 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid4065868 {\insrsid15227580 \tab }{\insrsid473204 To ensure greater compliance by pharmaceutical companies with federal statutes and regulations, OI}{
\insrsid3679346 G must provide these companies }{\insrsid473204 with more substantive guidance on how to comply with OIG\rquote s interpretation}{\insrsid12280686 s}{\insrsid473204  of these rules.  Thus far, OIG\rquote 
s recommendations, as embodied in OIG Guidance, have been so vague and non-committal }{\insrsid14951766 that it seems as if }{\insrsid473204 full compliance is never possible. }{\insrsid14951766  OIG\rquote s }{\insrsid3679346 current }{\insrsid14951766 
approach has the potential to stunt the growth of comp}{\insrsid3679346 anies who overly restrict }{\insrsid14951766 their marketing tactics (relat}{\insrsid3679346 
ive to their competitors) in an attempt to ensure compliance; these companies will be punished for trying to cooperate with what they mistakenly perceive to be OIG\rquote s wishes.  In short, \'93
[t]he law deters a particular form of wrongdoing most effectively when it prohibits it in clear terms,\'94 and hence OIG has a responsibility to better communicate its expectations for pharmaceutical companies\rquote  compliance programs.}{
\cs16\super\insrsid3679346 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Krause, }{
\i\insrsid9982956\charrsid3679346 supra}{\insrsid9982956  note 226, at 280.}}}{\insrsid15227580 
\par }{\insrsid3679346 \tab Most importantly, OIG needs }{\insrsid14951766 to clarify the extent to which compliance with the PhRMA Code, already adopted by many of the largest pharmaceutical companies, will suffice to satisf}{\insrsid3679346 
y compliance with federal regulations}{\insrsid14951766 :
\par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid2960767 {\insrsid2960767 OIG ought to make some effort to provide more usefu
l criteria for distinguishing unlawful from lawful arrangements so as not to chill the latter.  If it thinks the PhRMA Code inadequate, it should, in the interest of increasing voluntary compliance, suggest ways the Code can be improved, particularly beca
u
se the Code is likely to become the industry standard.  On subject matters as to which it views the Code as inadequate, it should state that conduct undertaken in good faith in compliance with the Code will be treated as at least presumptively lawful.  In
 the end, OIG is likely to achieve a much greater degree of actual prevention of the kinds of conduct the statute is directed against by using and helping to improve private codes such as PhRMA\rquote s than by inadvertently discouraging them.}{
\cs16\super\insrsid2960767 \chftn {\footnote \pard\plain \s15\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs16\super\insrsid9982956 \chftn }{\insrsid9982956  Cooper, }{
\i\insrsid9982956\charrsid2960767 supra}{\insrsid9982956  note 194.}}}{\insrsid14951766 
\par }\pard \ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid2960767 {\insrsid2376181\charrsid3212715 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5898614 {\insrsid5898614 Greater clarity from OIG would}{\insrsid3212715 
 not only allow the government to reduce the pharmaceutical marketing conduct that the government consider}{\insrsid5898614 
s unacceptable.  By gradually stripping the industry of its ability to blame settlements on confusion created by unhelpful guidance from the government, OIG\rquote s improved recommendations would}{\insrsid3212715  also }{\insrsid5898614 increase}{
\insrsid3212715  the }{\insrsid5898614 apparent fairness of future FCA settlements that the government reaches with members of the pharmaceutical industry.}{\insrsid2960767\charrsid3212715 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15743637 {\insrsid2960767\charrsid3212715 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid4065868 {\b\insrsid11615729\charrsid11615729 V.  CONCLUSION}{\b\insrsid11474941 
\par }{\insrsid3892399 \tab The recent rise in the number of qui tam lawsuits initiated against the pharmaceutical industry under the FCA }{\insrsid15743672 has revealed both the benefits and the costs of offering large rewards for whistleblowing.  }{
\insrsid10357342 By allowing }{\insrsid15743672 whistleblowers with a}{\insrsid10357342  huge}{\insrsid15743672  financial incentive }{\insrsid10357342 to be }{\insrsid15743672 coupled }{\insrsid10357342 with the bargaining pow}{\insrsid8796060 er of gove
rnment prosecutors, Congress}{\insrsid10357342  run}{\insrsid8796060 s}{\insrsid10357342  the risk of allowing the anti-fraud FCA to instead create more fraud through false charges against defendants.  Only by limiting the whistleblowers\rquote 
 financial incentives and the government\rquote s power to }{\insrsid8796060 extort large settlements will Congress}{\insrsid10357342  be ab}{\insrsid6520144 le to ensure that the FCA is serving}{\insrsid10357342  its intended purpose.}{\insrsid8796060 
  OIG likewise must take action to clarify its interpretation of federal statutes and regulations so that FCA prosecutions do not become merely a money-making endeavor for the 
government and whistleblowers, but rather help lead to a significant reduction in health care fraud.}{\insrsid12520193\charrsid3892399 
\par }\pard \ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid4065868 {\b\insrsid12520193\charrsid4065868 
\par }}