DOJ Secures Settlements in Three Major False Claims Act Cases Involving Healthcare & Defense Contractors

Key Takeaways

• Saint Vincents Catholic Medical Centers Settlement: SVCMC agrees to pay $29 million for retaining inflated payments from the Department of Defense (DOD) under the Uniformed Services Family Health Plan (USFHP), following errors in payment calculations.
• Whistleblower Involvement: The case was brought forward by whistleblowers Jane Rollinson and Daniel Gregorie, who will receive $5.655 million for their role in exposing the wrongdoing.
• Lockheed Martin F-35 Pricing Settlement: Lockheed Martin settles for $29.74 million over allegations of inflating pricing proposals for F-35 contracts, failing to provide accurate cost data during contract negotiations from 2013 to 2015.
• Pfizer and Biohaven Kickback Settlement: Pfizer and Biohaven settle for $59.75 million over allegations that Biohaven paid kickbacks to healthcare providers to influence the prescription of Nurtec ODT between 2020 and 2022.
• Whistleblower Action in Pharmaceutical Case: Patricia Frattasio, a former Biohaven sales representative, will receive approximately $8.4 million as part of the settlement for exposing the kickback scheme.

Deep Dive

The U.S. Department of Justice (DOJ) has recently reached settlements in three significant False Claims Act (FCA) cases, securing substantial financial penalties against major organizations in healthcare and defense contracting. These cases not only highlight the government’s commitment to protecting taxpayer dollars but also underscore the importance of accountability in sectors that handle large sums of public funds.

Saint Vincents Catholic Medical Centers: A $29 Million Settlement

Saint Vincents Catholic Medical Centers of New York has agreed to pay $29 million to settle allegations that it kept overpaid funds from the Department of Defense (DOD). These funds came from the Uniformed Services Family Health Plan (USFHP), which provides healthcare to military families and retirees. In 2012, SVCMC realized it had been overpaid due to errors in how healthcare rates were calculated. Instead of reporting the overpayment or returning the money, the hospital continued submitting inflated invoices, keeping the excess funds.

This case came to light thanks to whistleblowers Jane Rollinson and Daniel Gregorie, former employees at Martin’s Point Health Care, another participant in the USFHP. As a result of their role in exposing the wrongdoing, Rollinson and Gregorie will receive $5.655 million. This settlement not only resolves the government’s claims against SVCMC but also highlights the need for transparency when dealing with taxpayer money.

Lockheed Martin Settles for $29.74 Million Over Inflated F-35 Pricing

Lockheed Martin, one of the world’s largest defense contractors, has agreed to pay $29.74 million to settle allegations of inflating pricing proposals for F-35 contracts. Between 2013 and 2015, Lockheed allegedly submitted pricing data to the Department of Defense’s F-35 Joint Program Office that was inaccurate, incomplete, and outdated. This failure to provide accurate pricing led to inflated costs for the production and maintenance of the F-35, costing taxpayers more than necessary.

This settlement adds to an earlier $11.3 million payment Lockheed made over similar issues, emphasizing the critical need for honesty and integrity in government contracting, especially when it comes to high-stakes programs like the F-35.

Acting Assistant Attorney General Brett A. Shumate of the DOJ’s Civil Division made it clear, “Those who do business with the government must do so fairly and honestly.”

Pfizer and Biohaven Pay Nearly $60 Million Over Kickbacks to Physicians

Pharmaceutical giant Pfizer and its subsidiary Biohaven have agreed to pay $59.75 million to resolve allegations that Biohaven paid kickbacks to healthcare providers to encourage them to prescribe Nurtec ODT, a drug used to treat migraines. From 2020 to 2022, Biohaven reportedly offered payments in the form of speaker honoraria and upscale meals at high-end restaurants, all aimed at influencing doctors' prescribing decisions in violation of the anti-kickback statute.

This settlement follows a whistleblower lawsuit filed by Patricia Frattasio, a former Biohaven sales representative, who exposed the scheme. Frattasio will receive approximately $8.4 million as her share of the settlement. The case highlights the DOJ’s ongoing commitment to ensuring that healthcare decisions are based on medical necessity, not financial incentives.

Acting Assistant Attorney General Shumate reinforced the DOJ’s continued resolve to address fraudulent practices, noting, “Through this settlement and others, the government has demonstrated its commitment to ensuring that drug companies do not use kickbacks to influence physician prescribing.” These cases, involving companies like Saint Vincents, Lockheed Martin, and Pfizer, make one thing clear: the DOJ is serious about holding organizations accountable when they fail to uphold the public trust.

These three cases reveal a troubling trend of companies bending the rules when it comes to securing public funds, whether through inflating healthcare payments, overpricing defense contracts, or offering kickbacks in the pharmaceutical industry. Organizations must be diligent and transparent in their dealings with the U.S. government, particularly when public money is at stake. The government will continue to take action when violations occur, and these settlements serve as a reminder that integrity, both in the private sector and in government contracts, is not optional.

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