California Insurance Commissioner to Pursue Healthcare Fraud Case

Allegations Against Bristol-Myers Squibb Prompt ‘Groundbreaking’ Intervention

LOS ANGELES —March 18, 2011 — California Insurance Commissioner Dave Jones announced today that the California Department of Insurance will intervene in a case alleging that Bristol-Myers Squibb provided perks and kickbacks to induce doctors to write prescriptions for certain drugs.

The lawsuit was filed under seal in March 2007 under the private citizen provision of the California Insurance Code, which specifies that any interested parties, known as “relators,” may bring a suit on behalf of themselves and the State of California. In this case, the initial relator was Michael Wilson, a former territory business manager for Bristol-Myers Squibb. Concerned about his former employer’s sales practices, Mr. Wilson consulted the law firm of Waters Kraus & Paul — the West Coast practice of Waters & Kraus, LLP. In particular, he described provisions of gifts, expensive meals, and speakers’ fees routinely given to high-prescribing doctors.

“We recognized immediately that what he was complaining about was actionable, not only under the federal false claims act, but also under section 1871.7 of the California Insurance Code,” said Loren Jacobson, a partner with Waters & Kraus.

Waters Kraus & Paul filed the suit on behalf of Mr. Wilson, who later brought former Bristol-Myers Squibb employees Lucius and Eve Allen into the case. Mr. Allen was a cardiovascular metabolic risk specialist who dealt with such well-known drugs as Plavix and Provachol, while part of Ms. Allen’s job as an integrated health manager involved obtaining formulary status for Bristol-Myers Squibb drugs.

Mr. Wilson’s federal false claims act case was one of several resolved pursuant to a Department of Justice settlement of $328 million. The state insurance fraud case will be tried by a Waters Kraus & Paul team led by two-time Consumer Attorneys association of Los Angeles trial lawyer of the year Gary Paul in conjunction with the commissioner’s General Counsel Adam Cole, Assistant Chief Counsel Dick Krenz, and Senior Staff Counsel Tony Celaya.

As Ms. Jacobson explained, the California Insurance Code statute under which the case was filed was initially drafted to address worker’s compensation and automobile insurance fraud, but was broadened in the late ’90s to target fraud against private health insurance companies.

“This is the first time the insurance commissioner’s office has ever intervened in a healthcare fraud case against a large pharmaceutical company for these types of practices. It’s groundbreaking,” said Ms. Jacobson. “I laud the insurance commissioner for using the statute as a tool to address healthcare fraud. Not only are these practices raising the cost of drugs for all of us, but they’re undermining the relationship of trust between doctor and patient. I think the insurance commissioner’s message is clear: This has to stop. This is no longer how it’s going to work in California.”

About Waters Kraus & Paul

Waters Kraus & Paul is the West Coast practice of Waters & Kraus, LLP — a nationally recognized plaintiffs’ firm concentrating on complex product liability and personal injury/wrongful death cases. The firm’s diverse practice includes toxic tort litigation (mesothelioma-asbestos), qui tam (whistleblower) cases, and pharmaceutical and medical product liability litigation, among others. With offices in California, Texas, and Maryland, Waters & Kraus, LLP, has litigated cases in jurisdictions across the United States on behalf of individuals from all 50 states, as well as foreign governments.

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