Pa. lawmakers say massive J&J Risperdal settlement proves need for state false claims law

The multi-billion dollar settlement announced early this week that resolves

Risperdal off-label marketing allegations against drugmaker Johnson & Johnson has got some in Harrisburg concerned.

After all, the Commonwealth of Pennsylvania reportedly remains the largest state in the union without a state-level false claims statute.

Two lawmakers from western Pennsylvania hope to change that through legislation that would reportedly give the state a crucial tool in fighting healthcare waste, fraud and abuse.

State Rep. Brandon Neuman, a Democrat representing Washington County, and fellow Democratic legislator Tony DeLuca of Allegheny County introduced in early June House Bill 1493, a state version of the federal False Claims Act.

The measure would allow for what the sponsors call a “unique private/public partnership with citizens who have knowledge of wrongdoings by vendors benefitting from state money.

“Pennsylvanians lose as much as $200 million a year through Medicare and Medicaid fraud and abuse,” Neuman said in a June news release announcing the bill’s introduction. “Our Pennsylvania False Claims Act legislation … would go a long way toward deterring this dishonesty.”

In a Tuesday news release, Neuman said Monday’s $2.2 billion settlement with Johnson & Johnson and its wholly-owned subsidiary, Janssen Pharmaceutica, would have “significant ramifications” for Pennsylvania.

Neuman said his bill would provide the necessary tools for the commonwealth to recover the “maximum amount possible from those who cheat or attempt to cheat the government.”

Not having a false claims law in Pennsylvania costs the state millions of dollars in lost damages, Neuman contends.

The state legislator pointed out that whistleblowers in three states will collect $167.7 million under the False Claims Act in connection with the Risperdal case, in which it was alleged that the drug manufacturers marketed the antipsychotic drug for uses not approved by the Food and Drug Administration.

Johnson & Johnson is said to have paid kickbacks to physicians and nursing homes in the case, which the U.S. Government considers the largest settlement of its kind involving one single drug company in United States history.

The bill introduced by Neuman and DeLuca, who serves as chairman of the House Insurance Committee, would increase the commonwealth’s share of recovery under a successful Medicaid fraud suit by 10 percent via a federal incentive program, Neuman stated back in June.

“More than half of the states and the District of Columbia have false claims acts,” Neuman said, “and implementing one in Pennsylvania would provide a new source of revenue while punishing those who steal taxpayer dollars.”

Neuman said healthcare fraud is not a new crime, “but we need better tools to combat it more effectively and efficiently. Our bill will provide the necessary resources to do that.”

The legislators’ proposal would allow the Pennsylvania attorney general or a whistleblower to file a civil suit against anyone committing healthcare or other fraud against the commonwealth, it would hold violators liable for triple the damages sustained by the state, and it would provide protections for whistleblowers who are fired, demoted, suspended, threatened, harassed or discriminated against for lawfully pursing a false claims case.

“Pennsylvania would realize three distinct benefits by passing this legislation,” Neuman previously stated. “First, it would deter fraud and punish wrongdoers. Secondly, it would raise significant revenues through recovered losses and other damages. Finally, it would make Pennsylvania eligible for the federal financial incentive program.”

Neuman, in pushing for a state law, pointed out that in addition to 29 states and Washington, D.C., local governments such as those in Philadelphia and Allegheny Counties have enacted a version of a false claims statute.

“We all have a stake in this, because when government funds are the target of fraud, every taxpayer is a victim,” Neuman said in an op-ed published in early October.

Without a state-level law, Pennsylvania can’t prosecute government fraud under its own laws, and instead has to rely on the federal government to prosecute a claim.

Neuman pointed out that the State of Texas, which has such a statute on the books, recovered more than $820 million for state and federal taxpayers between 2006 and 2012 in cases brought under Texas false claims laws.

The federal False Claims Act, also known as “Lincoln’s Law,” after President Abraham Lincoln, was passed to combat fraud perpetuated by companies selling goods to the Union Army during the Civil War.

Since the federal law’s strengthening in the 1980s, the results have been “remarkable,” Neuman stated, noting that between 1986 and 2011, federal false claims settlements and judgments totaled $31 billion.

The federal False Claims Act, however, doesn’t protect Pennsylvania taxpayers, Neuman wrote in his op-ed, rather it only deals with federal government spending.

“Without our own false claims law in place, Pennsylvania has no way to adequately protect the billions of hard-earned Pennsylvania taxpayer dollars that are spent every year on education, public safety, job creation, road construction, and many other critical programs,” Neuman wrote.

The state representative also took aim at critics who say such laws pave the way toward frivolous claims by “unhappy employees looking for a payday,” stating that that has not been the experience of states that have enacted their own false claims statutes.

Neuman said under his proposal, anyone bringing a case found to be frivolous would have to pay the other side’s attorneys’ fees and legal costs.

The bill would also give the attorney general the authority to review claims of wrongdoing and decide, based on the merits of the allegations, whether or not to proceed with charges, a provision that should help ease the concerns of opponents of the measure, since it would mean most cases wouldn’t proceed without government prosecutorial involvement.

Pennsylvania Attorney General Kathleen Kane is said to support the proposal.