HAGENS BERMAN

Date Filed: February 20, 2007
Court: U.S. District Court
Location: Texas

On March 30, 2010, Hagens Berman agreed to a settlement in a qui tam lawsuit filed by Cynthia I. Fitzgerald on behalf of the United States government against Novation, the largest group-purchasing organization for hospitals and health care institutions in the country. The suit claimed Novation solicited and accepted kickbacks from device maker Becton Dickinson that inflated the cost of medical supply contracts, which directly affected the costs borne by the Medicaid and Medicare programs.

The suit was profiled in a New York Times article.

According to its website, Novation negotiates medical supply contracts worth $35 billion annually on behalf of a third of the nation's hospitals. The complaint alleged that Novation had been using its role as gatekeeper to the hospital supply market to demand kickbacks and other illegal remuneration from medical supply vendors as payment for awarding coveted contracts.

The suit claimed that these kickbacks violated the Federal Civil False Claims Act.

Fitzgerald claimed that Becton Dickinson paid Novation $1 million with no strings attached beyond the award of four hospital supply contracts offered by Novation. Fitzgerald also claimed that Becton Dickinson paid Novation an additional $625,000 in payments disguised as “sponsorships” and “assistance” to hospitals in exchange for one of the four contracts.

Hagens Berman argued that Novation’s and Becton Dickinson’s exchange of kickbacks violated the Anti-Kickback Statute and the False Claims Act. Novation claimed that Becton Dickinson’s payments were covered by an exception to the Anti-Kickback Act for payments to GPOs disclosed to their member hospitals, but Fitzgerald asserted that Novation never disclosed these cash payments to hospitals.

Novation and Becton Dickinson settled the suit by paying the United States $3 million, twice the amount of the kickbacks Fitzgerald claimed. The two companies also were required to contribute $50,000 to a Dallas nonprofit health care clinic designated by Fitzgerald.

Under the False Claims Act, Fitzgerald, as the whistleblower, was entitled to between 15 percent and 30 percent of the damages paid to the government. Hagens Berman negotiated for Fitzgerald to receive 28 percent of the government’s recovery, among the highest percentages ever awarded to a whistleblower by the U.S. Department of Justice.

        

Related Documents

	NY Times Article - Blowing the Whistle, Many Times
	Amended Complaint
	Motion to Dismiss Ruling