Legislation that would make it easier for whistle blowers to hold companies liable for corporate fraud is being pushed by Pfizer and other large pharmaceutical corporations.
Pfizer is fighting an update to the False Claims Act, a Civil War-era law that rewards whistle blowers for filing anti-fraud lawsuits against contractors on behalf of the government, in the midst of a busy legislative environment.
The law has returned over $65 billion to the government, with people who have whistled on wrongdoing helping uncover it.
The law has been difficult for Pfizer. In 2009, Pfizer paid over two billion dollars in fines for off-label marketing of drugs that were not approved by the FDA. The company instructed its marketing team to promote Bextra, which was only approved for arthritis and menstrual pain. One of the largest health care fraud settlements in history was reached after a lawsuit was brought under the False Claims Act.
The law poses less risk to companies that engage in criminal behavior. The anti-fraud statute has been hampered by a series of federal court decisions that expanded the scope of what is known as materiality. The Supreme Court ruled in Universal Health Services. If the government continued to pay the contractor, the fraud lawsuit could be dismissed.
If the government continues to pay a company despite fraudulent activity, then the fraud is not material to the contract, according to the court. The False Claims Act cannot be used against companies that are so large that the government can't cut off payments.
Recent court decisions show contractors winning dismissal of fraud cases by simply citing government payments. The False Claims Act case against Aecom was dismissed by a federal district court last year. Aecom lawyers said the government continued to make payments to the company. The lawsuit is being appealed.
The federal government is discouraging cases. TheGranston Memo was issued by the Justice Department in order to encourage the dismissal of more False Claims Act suits.
The Attorney General's "overly restrictive" memo was officially withdrawn in October.
The erosion of the statute has brought together a bipartisan push to make it harder for companies to dismiss fraud cases on procedural grounds.
The False Claims Act has made it difficult for fraud cases to be brought to justice, and as he introduced the legislation earlier this year, he showed images of scrapped Afghanistan War contracts and other examples of fraud cases that have escaped accountability because of the judicial constraints placed on the False Claims Act.
The senator said that defendants get away with scalping taxpayers because some government bureaucrats failed to do their job. The Department of Defense has taught me that a Pentagon bureaucrat is rarely motivated to recognize fraud. The money doesn't come out of their pocket.
A Pentagon bureaucrat is not motivated to recognize fraud. The money doesn't come out of their pocket.
The False Claims Amendments Act of 2021, adjusts the standard for the government to make payments even if they know of fraud. The bill expands the anti-retaliation protections of the law, which only apply to current employees of a company. The bill is meant to prevent the blacklisting of former whistle blowers.
Some of the corporate opposition has been disclosed and some of it has been hidden. Hazen Marshall, a former policy director for Senate Minority LeaderMitch McConnell, was hired by Pfizer to lobby on the issue.
Pfizer did not respond to a request for comment about its fight against Covid-19.
The bill was blocked in the initial test vote. The bipartisan infrastructure agreement in the Senate was an amendment to the False Claims Amendments Act that was proposed by Grassley. The bill never made it to the floor for a vote because of an objection from Senate Democrats.
The legislation was heard in October. Cotton tried to remove most of the bill from the meeting. Cotton wanted to strike all substantive lines of the bill except for the first title, which is simply the description of the legislation. Cotton argued that the Supreme Court made the right decision in the Escobar case and that the continued payment standard was appropriate. The legislation could potentially increase health care costs, the senator argued, citing industry claims that litigation from the False Claims Act would force health care interests to raise prices.
The bill passed out of the Senate Judiciary Committee despite the American Hospital Association trying to delay the vote.
The lobbying effort took our supporters by surprise.
The lobbying effort took the supporters of the law firm by surprise, according to the attorney.
Many of the companies engaged in the lobbying fight have chosen to conceal their efforts through undisclosed third-party groups. The chamber doesn't reveal its membership or which corporations direct its advocacy, but previous reporting suggests companies such as Halliburton, Lockheed Martin, and JPMorgan Chase have faced False Claims Act violations in the past.
The American Hospital Association, the Healthcare Leadership Council, the Pharmaceutical Research and Manufacturers of America, and the American Bankers Association have been lobbying against the bill.
Pfizer, Genentech, and other companies are lobbying on the bill. The legislation was listed on the lobbying disclosures. The False Claims Act brought to light health care fraud.
Drug companies are notorious for paying kickbacks in order to get a competitive advantage. Drug companies and health care firms recover most of the False Claim Act.
In the case of Pfizer, the company promoted Bextra for uses that were not approved by the FDA, putting patients at risk for heart attack and stroke. The company paid kickbacks to doctors. The False Claims Act gives a portion of the money the government recovers from lawsuits to the whistle blower.
Drug companies are notorious for paying kickbacks in exchange for benefits.
The culture of Pfizer was driven by sales and if you didn't sell drugs illegally, you were not seen as a team player, according to John Kopchinski, one of the Pfizer whistle blowers.
A variety of watchdog groups support the initiative. Taxpayers Against Fraud, the National Whistleblower Center, the Project on Government Oversight, and the Government Accountability Project are some of the groups supporting the update to the anti-fraud law.
Advocates are confused about the involvement of other taxpayer protection organizations. Two conservative groups that do not disclose donor information sent a letter to lawmakers urging them to vote against the measure.
The lobbying arm of Citizens Against Government Waste argued in a letter that the bill was not appropriate for inclusion in the infrastructure package because it was not related to traditional infrastructure. The Americans for Tax Reform argued that the legislation had not received proper debate.
Neither Citizens Against Government Waste nor Americans for Tax Reform responded to the request for comment explaining why they have been lobbying against taxpayer protection legislation.
