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Van Hollen Stops Out of State Lawyers From Claiming $37.5 Million in Medicaid Funds


MADISON — Attorney General J.B. Van Hollen announced that Dane County Circuit Judge Richard Niess has granted the State's request to dismiss a lawsuit where four out-of-state law firms attempted to claim part of a possible recovery of damages to the Medicaid Program.


In June 2010, lawyers from Seattle, Washington; Mt. Pleasant, South Carolina; Oxford, Mississippi; and Washington D.C. filed a complaint under Wisconsin's False Claims Act (State ex rel. Hagens Berman Sobel Shapiro LLP, et al. v. McKesson Corporation) claiming that their respective law firms were “whistleblowers” and demanded a share of whatever amounts may be recovered from national drug wholesaler McKesson. The Wisconsin Department of Justice moved to dismiss the case principally because the State had already filed suit seeking recovery of substantially the same amount of money.


Assistant Attorney General Frank Remington also told the Court that Wisconsin is actively pursuing its claim against McKesson, a San Francisco based pharmaceutical wholesaler, as part of a national effort and individually has preserved its claim by earlier agreement with the company.


Accepting that Wisconsin is already pursuing McKesson, Circuit Judge Richard Niess ruled:


“In short, the State has ‘been all over' these Medicaid fraud claims against McKesson for a number of years and accordingly is a far cry from the ‘unknowing government watchdog'. Additionally, this action is not needed to propel the State forward in its claims against McKesson, because these claims are already being pursued by the State. Accordingly, the qui tam plaintiffs, accomplished attorneys though they certainly are, bring no real meat to the Wisconsin table.


But, thirdly, they surely intend to eat more than their fair share from that table. … [A]llowing this action to proceed would essentially throw away $37,500,000 of the state taxpayer money…


… [I]t would not take a hardened cynic to see the Complaint as simply a parasitic, opportunistic attempt at self-aggrandizement by the law firm plaintiffs to the severe detriment of the citizens and taxpayers of the State of Wisconsin.”


Attorney General Van Hollen noted: “For over six years we have been pursuing the pharmaceutical industry and its practice of reporting inflated prices which are used in the State Medicaid Program. Since I was elected in 2006, the Department's Medicaid Fraud Control Unit has recovered over $40 million in damages on behalf of the State's Medicaid Program. In these difficult economic times, I see absolutely no reason to divert money from the Medicaid Program to line the pockets of out of state lawyers.”


In 2004, Wisconsin filed a lawsuit in Dane County Circuit Court against 36 drug manufacturers (State v. Abbott Laboratories, et al.) alleging that under Wisconsin law it is unlawful for the defendants to make representations with the intent to sell pharmaceuticals when the representations are untrue, deceptive or misleading. Pharmaceutical manufacturers identify an average wholesale price ("AWP") for most, if not all, of the drugs they market to the public and federal and state agencies. The Medicare and Medicaid programs, particularly, rely on these prices as a basis for their drug payments or reimbursements.


In 2009, the State went to trial against the first of the defendants and the Court awarded over $22 million in damages, fees and forfeitures. That verdict is now on appeal. Additionally, the State has reached settlement agreements with eight of the other defendants in the suit resulting in payments of $12.8 million.


According to Van Hollen, “The law prohibits the publication of false prices. The fact that these prices have been used to overcharge the Medicaid Program fraudulently depletes it of funds which could be used to help the poor, disabled, and needy. That's reprehensible and this department will continue to pursue those who violate the law.”


A link to the decision:


2010 file: