Parent Company of Ethex Corporation to Pay a 17 Million Dollar Settlement to the Federal Government and to State Medicaid

On December 6, 2011, the Department of Justice announced its latest False Claims Act settlement.  KV Pharmaceutical Company has agreed to pay $17 million to resolve allegations in a lawsuit brought by the Government against one of its former subsidiaries, Ethex Corporation.  Ethex was accused of failing to inform the Centers for Medicare and Medicaid Services (“CMS”) that two of its drugs were ineligible for coverage under federal healthcare programs.

The two drugs were Nitroglycerin ER and Hyoscyamine ER.  In the 1990s, the FDA determined that these drugs would not qualify for reimbursements by government healthcare programs.  According to the lawsuit, Ethex failed to mention this crucial information to the CMS, which resulted in false claims being submitted for the drugs.  Under the terms of the settlement, KV will pay approximately $10.2 million to the federal government and approximately $6.8 million to the state Medicaid program.

The whistleblower in this case was Constance Conrad.  She will be receiving $1,523,804 from the federal share of the settlement.  She will also receive an additional undetermined sum of money from the state share.  Her will to take action under the qui tam provisions of the False Claims Act is impressive and commendable.  If you believe that you have information regarding healthcare fraud or other types of fraud, contact experienced qui tam attorneys at www.fraudfighters.net.

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