November 17, 2012

The Acting U.S. Attorney for the Northern District of Illinois announced on November 15, 2012 the filing of a civil fraud lawsuit against a Chicago psychiatrist, alleging that the psychiatrist received illegal kickbacks from pharmaceutical companies for prescribing anti-psychotic drugs and had submitted at least 140,000 false claims with Medicare and Medicaid for anti-psychotic medications that he had prescribed for mentally ill nursing home patients. In addition, the federal fraud lawsuit alleges that the psychiatrist submitted at least 50,000 claims with Medicare and Medicaid that falsely stated that he had provided patients with “pharmacologic management” in more than 30 local nursing homes and long-term care facilities.

The federal fraud lawsuit was filed under the False Claims Act, seeking treble damages and a civil penalty between $5,500 and $11,000 for each false claim submitted.

The Federal Fraud Lawsuit’s Allegations

The defendant psychiatrist had been practicing psychiatry in the Chicago area since 1973. The lawsuit alleges that the psychiatrist prescribed anti-psychotic drugs to his nursing home patients who were receiving public assistance, which resulted in the pharmacies submitting claims to Medicaid and to Medicare (beginning in 2006) for payment. The psychiatrist also allegedly billed Medicaid and Medicare for the “pharmacologic management of his patients,” whom he evidently did not properly evaluate in order to properly manage their medications but instead based his prescriptions on kickbacks that he received from the drug companies, according to the lawsuit.

The kickback allegations involve the psychiatrist’s prescriptions for the brand-name medication Clozaril, which is clozapine and was manufactured by the large pharmaceutical company, Novartis. Clozapine is sometimes used to treat schizophrenia but is rarely used for elderly patients because of the numerous and dangerous side effects. Those side effects include a potentially deadly decrease in white blood cells, seizures, inflammation of the heart muscle, and increased mortality in elderly patients. Nonetheless, the psychiatrist often had more than 1,000 of his nursing home patients on Clozaril at any given time and was the largest prescriber of Clozaril for Medicaid recipients in the United States prior to 2003, according to the federal lawsuit.

Novartis allegedly paid the psychiatrist kickbacks for many years for his prescribing Clozaril. Novartis’ patent for Clozaril expired in 1998 and its payments to the psychiatrist ended in 2003, according to the federal lawsuit.

One month after the payments from Novartis ended, the psychiatrist agreed to switch his patients to the generic form of clozapine that was manufactured by IVAX Pharmaceuticals, Inc. (“IVAX”) after IVAX agreed to pay the psychiatrist $50,000 under a one-year “consulting agreement,” as well as providing the psychiatrist with other substantial benefits for his agreement to prescribe the generic clozapine manufactured by IVAX. Soon, the psychiatrist became the largest prescriber of generic clozapine in the United States and more than half of his patients were being prescribed the generic clozapine (at the time, the national average for schizophrenia patients who were prescribed anti-psychotics who received clozapine was 4%).

When IVAX became a subsidiary of the Israeli pharmaceutical company, Teva Pharmaceuticals Industries, Ltd. (“Teva”), in January, 2006, the psychiatrist allegedly sought and obtained an agreement from Teva to pay for numerous trip expenses and entertainment expenses for the psychiatrist as well as hiring an associate of the psychiatrist and paying the psychiatrist in excess of $100,000 from 2007 to 2009, for annual “speaker agreements.”


If the allegations of the federal civil fraud lawsuit are proven to be true, then one must wonder how many other medical providers who have prescription privileges arrange for and receive illegal kickbacks from drug companies, and how much the fraud is costing the American public, who pays for the fraud when Medicare and/or Medicaid pay false claims. Who else may be paying the price for drug company kickbacks? The poor patients who may be taking certain medications, some causing serious side effects, solely because their doctors are receiving illegal payments and/or other benefits from drug companies.

If you are aware of potentially fraudulent claims having been submitted to Medicare and/or Medicaid, you may be entitled to share in a portion of any recovery received as a result of your efforts under the provisions of the False Claims Act.

Click here to visit our website or telephone us toll-free 800-295-3959 to be connected with False Claims Act lawyers in your local area who may be willing to investigate and evaluate your information regarding a potential False Claims Act claim and assist you in bringing such a claim, if appropriate.

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