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Medical equipment manufacturer to pay for improper marketing, illegal kickbacks

Press release from N.C. Attorney General’s office, dated Feb. 3, 2014

Raleigh: Medical device manufacturer CareFusion will pay more than $500,000 to North Carolina to resolve allegations that it defrauded the state’s Medicaid program, Attorney General Roy Cooper announced Monday.

The recoveries for North Carolina are part of a $40.1 million multistate settlement that also includes the federal government. The settlement resolves allegations that CareFusion improperly promoted and marketed its surgical preparation solution Chloraprep and concealed kickbacks to a doctor who promoted the drug.

“Using trickery to sell medical products diverts tax dollars for treatments that aren’t approved as safe and effective,” Cooper said. “This kind of fraud cheats Medicaid and also drives up health care costs for everyone.”

North Carolina’s total share of the settlement is $581,363.13 and includes funds for Medicaid efforts in the state as well as civil penalties for the public schools. Medicaid is a joint federal-state program that provides health insurance for the poor.

North Carolina and the other states allege that the company promoted and marketed Chloraprep for uses that were not approved by the Food and Drug Administration (FDA). Once the FDA approves a drug as safe and effective, a manufacturer cannot market or promote that drug for an unapproved use, a practice called off-label marketing. Chloraprep was approved for very specific inpatient hospital procedures, including the preparation of a patient’s skin prior to surgery or injection.

The states contend that between September 1, 2009, and August 31, 2011, the company promoted Chloraprep for use with intravenous preparation and suture care, even though the FDA had explicitly rejected Chloraprep for those uses. The states also contend that CareFusion’s predecessor, Cardinal Health, entered into agreements to make payments to Health Care Concepts, Inc. (HCC). The payments, for which CareFusion assumed legal and financial responsibility, were made to conceal kickbacks paid to HCC’s physician-owner in exchange for promoting Chloraprep to other health care providers.

CareFusion’s unlawful conduct led to false and/or fraudulent claims being submitted government funded health care programs, including Medicaid. North Carolina’s share of the funds will go to resolve these claims.

The settlement is based on whistleblower actions filed in the United States District Court for the District of Kansas, under the provisions of the federal False Claims Act and equivalent state False Claims statutes.

The North Carolina settlement agreement was reached by the Attorney General’s Medicaid Investigations Division (MID) and the North Carolina Division of Medical Assistance. The MID investigates fraud and abuse by hospitals, doctors, pharmaceutical companies, mental health care providers, and others, as well as patient abuse and neglect in Medicaid-funded facilities. Over the past decade, Cooper’s MID has recouped more than $500 million and helped to convict hundreds of individuals on criminal charges.

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