There's No Such Thing as a Free BBQ: Kickbacks Cost Physicians Too

doctor preparing online...
doctor preparing online...

On October 29th, pharma giant Warner Chilcott pled guilty to a felony healthcare fraud charge, agreeing to pay $125 million to settle allegations that it had paid illegal kickbacks to doctors and engaged in other illegal marketing behavior to sell its drugs Actonel®, Asacol®, Atelvia®, Doryx®, Enablex®, Estrace,® and Loestrin®. Perhaps more significant than the size of the settlement is the fact that multiple individuals, including the company's former President, have either plead guilty or been indicted in connection with the fraud.

In fact, the criminal charges extended beyond the ranks of company employees. Shortly before Warner Chilcott pled guilty, prominent Massachusetts gynecologist, Dr. Rita Luthra, was arrested at her home and charged with obstructing a criminal healthcare investigation and violating the anti-kickback statute and HIPAA regulations. She faces up to five years in prison, substantial criminal fines, and potential civil liability under the False Claims Act.

That the Government would pursue a physician for taking kickbacks should not come as a surprise; the Department of Justice has recently stepped up its enforcement of the federal Stark Law and Anti-Kickback statutes against individual physicians.

The Government alleged that Dr. Luthra took $23,000 in kickbacks from Warner Chilcott between October 2010 and November 2011. Among the alleged kickbacks, Warner Chilcott:

  • paid Dr. Luthra250 for speaker training, despite the fact that she never spoke to any other physicians;
  • paid Dr. Luthra750 to talk to a sales representative for 25-30 minutes while she ate;
  • paid to cater a barbeque that Luthra hosted at her home for her friends; and
  • brought Dr. Luthra and her office lunch on 31 occasions.

And what did Warner Chilcott get for its money? Dr. Luthra allegedly prescribed more of the company's osteoporosis drugs while they were paying her. When the payola stopped, Dr. Luthra's prescriptions for the Warner Chilcott drugs "precipitously declined." In addition, while she was allegedly on the take, she "allowed a Warner Chilcott sales representative to access protected health information in her patients' medical files." When challenged by federal agents, she allegedly lied to them and directed an employee to do the same.

One has to wonder why a doctor who has been practicing for more than 30 years and is reportedly a liaison to the United Nations and the World Health Organization would betray her patients' trust by--it would seem--deciding which drug to prescribe based on how much she was paid by the drug's manufacturer, or by letting a drug company go through her patients' confidential medical records.

This case demonstrates the insidious corrupting influence of money offered by unscrupulous pharmaceutical (and, unfortunately, medical device and other healthcare) companies. What is somewhat shocking, though, is how little it cost Warner Chilcott to allegedly induce Dr. Luthra to engage in significant betrayals of her patients' trust.

A question Dr. Luthra must be asking herself right about now is why she did not do what Dr. Michael Drakeford did when faced with a similar choice: blow the whistle instead of accepting illegal kickbacks. Dr. Drakeford refused illegal kickbacks offered by Tuomey Healthcare System, filed a False Claims Act case instead, and got $18.1 million for doing the right thing.

In this case, the whistleblowers who reported Warner Chilcott's fraud to the Government did not file their False Claims Act case until early 2011. If Dr. Luthra had blown the whistle in October 2010, when she allegedly started taking Warner Chilcott's kickbacks, she would likely be in line to get some or all of the $22.9 million that the whistleblowers will get from the United States for their courage. Instead, she is facing time in prison.