Dey, Inc, a wholly-owned subsidiary of German pharmaceutical giant,Merck KGaA, has agreed to pay the US government and the State of Texas $18.5 million. The Department of Justice, in a June 11, 2003 press release announced that the payment settles allegations of Medicaid fraud against the pharmaceutical company.

Or at least in Texas. The federal government may now look further into the company’s activities in other states.

Violations of the False Claims Act due to acts of Medicaid/Medicare Fraud

What exactly were those allegations? They concern the company’s drugs used to treat asthma and other respiratory conditions. The government claims that Dey gave false prices to the Texas Vendor Program. The Texas program, in turn, distributed these false prices to providers who used the state Medicaid program. As a result of this inflated pricing for their drugs, healthcare providers unknowingly submitted inflated reimbursement claims. They simply relied on pricing information the Texas Vendor Program provided them. Those claims, submitted to the Texas Medicaid program, provided higher payments than should have been paid.

Medicaid fraud hurts “….not only the federal health care programs, but also our most vulnerable citizens" said Robert D. McCallum, Jr., Assistant Attorney General for the Justice Department’s Civil Division.

The Civil Medicaid Fraud Section of the Texas Attorney General's Office took action against two other drug manufacturers, along with Dey, in 2000. At the time of the press release, court action had been scheduled, but not concluded, for those other companies. As a result of the findings in this legal suit, The US DOJ continues to investigate Dey’s actions in respect to its involvement with Medicaid programs in other states, the press release revealed.

This suit and similar ones initiated by the DOJ and other states makes it clear that Medicaid fraud perpetrators need to be on the lookout. The government is serious about ending these abuses.

In some cases, whistleblowers bring infractions to the government’s and state’s attention. Besides being good citizens, they may also share in any damages or payment recoveries that result.

Have information on Medicaid Fraud?

If you have information about Medicaid fraud, contact the Medicaid Fraud Reporting Center for a confidential claim evaluation today. You may report Medicaid fraud by completing the form on this page, or by calling our Medicaid Fraud Hotline at 1-800-934-2921.