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False Claim allegations result in $22 Million Settlement for Chicago Pharmaceutical Company

by Andrew Barr on April 29, 2010

Schwartz Pharma, a Chicago based Pharmaceutical company, settled allegations on April 29, 2010 that the company violated the False Claims Act. Schwartz Pharma’s two drugs Deponit and Hyoscyamine Sulfate Extended Release, did not qualify for coverage under federal health care programs. The FDA determined that the two drugs contained active ingredients that were ineligible for coverage. Schwartz Pharma allegedly failed to tell Centers for Medicare and Medicaid Services that their two drugs didn’t qualify which in turn led to false claims being submitted. Schwartz Pharma was also accused of submitting false quarterly reports to the government that misrepresented the drugs’ regulatory status. The settlement was for $22 million.

This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.38 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion.

The full story here.

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