Monthly Archives

December 2018

Target Agrees To Pay $3 Million To Resolve Allegations Of Operating An Unauthorized Automatic Refill Program In Massachusetts

By | Business Fraud, Business Litigation, Qui Tam Litigation

The Massachusetts Attorney General announced on December 11, 2018 that Target Corp. has agreed to pay $3 million to resolve allegations that it violated federal and state law by improperly billing and receiving payments from the Massachusetts’ Medicaid program (MassHealth).

Under the terms of the settlement, Target Corp. will pay $3 million to resolve allegations that from August 2009 through July 2015, the company operated an unauthorized automatic refill program at their Massachusetts locations.

Current regulations prohibit pharmacies in Massachusetts from automatically refilling prescriptions that were not explicitly requested by a MassHealth patient or caregiver at the time of each filling event. The AG’s Office alleges that Target automatically refilled prescriptions and billed MassHealth inappropriately for them: “Target did not follow state and federal regulations put place to prevent waste in our MassHealth system. This settlement will bring money back to our state and will help ensure that our health care resources reach those who need them the most.”

The AG’s Office has previously taken action against pharmacies for using improper automatic refill programs for MassHealth members. In August, PharmaHealth agreed to pay $360,000 to settle allegations of operating an unauthorized automatic refill program. In 2015, Neighborhood Diabetes paid $1.5 million to resolve allegations of improper billing and in 2013, AllCare Pharmacy paid $1.6 million to settle with the AG’s Office to resolve similar allegations.

The investigation stemmed from a qui tam action brought by a whistleblower in the United States District Court for the District of Minnesota. The qui tam action alleged claims under the federal False Claims Act and the Massachusetts False Claims Act.

If you have information regarding false claims having been submitted to the federal government and the information is not publically known and no actions have been taken by the government with regard to recovering the false claims, you should promptly consult with a False Claims Act attorney (also known as qui tam attorneys) in your U.S. state who may investigate the basis of your False Claims Act allegations and who may also assist you in bringing a qui tam lawsuit on behalf of the United States, if appropriate, for which you may be entitled to receive a portion of the recovery received by the U.S. government.

Email us at info@businesslitigationcontingencylawyers.com or telephone us toll-free in the United States at 800-756-2143 to to be connected with qui tam lawyers (False Claims Act lawyers) in your U.S. state who may assist you with a False Claims Act lawsuit.

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Defense Contractor Pleads Guilty To Major Fraud In Provision Of Supplies To U.S. Troops In Afghanistan

By | Business Fraud, Business Litigation, Qui Tam Litigation

The U.S. Department of Justice announced on December 8, 2014 that Supreme Foodservice GmbH, a privately held Swiss company, and Supreme Foodservice FZE, a privately-held United Arab Emirates (UAE) company, pleaded guilty to major fraud against the United States and agreed to resolve civil violations of the False Claims Act, in connection with a contract to provide food and water to the U.S. troops serving in Afghanistan. The companies pleaded guilty in the Eastern District of Pennsylvania (EDPA) and paid $288.36 million in the criminal case, a sum that includes the maximum criminal fine allowed.

In addition, Supreme Group B.V. and several of its subsidiaries agreed to pay an additional $146 million to resolve a related civil lawsuit, as well as two separate civil matters, alleging false billings to the Department of Defense (DoD) for fuel and transporting cargo to American soldiers in Afghanistan.  The lawsuit was filed in the EDPA, and the fuel and transportation allegations were investigated by the Southern District of Illinois and the Eastern District of Virginia, respectively, along with the Department’s Civil Division.

According to court documents, between July 2005 and April 2009, Supreme Foodservice AG, together with Supreme Foodservice KG, now called Supreme Foodservice FZE, devised and implemented a scheme to overcharge the United States in order to make profits over and above those provided in the $8.8 billion subsistence prime vendor (SPV) contract.  The companies fraudulently inflated the price charged for local market ready goods (LMR) and bottled water sold to the United States under the SPV contract.  The Supreme companies did this by using a UAE company it controlled, Jamal Ahli Foods Co. LLC (JAFCO), as a middleman to mark up prices for fresh fruits and vegetables and other locally-produced products sold to the U.S. government, and to obscure the inflated price the Supreme companies were charging for bottled water.  The fraud resulted in a loss to the government of $48 million.

The government alleged that Supreme AG, Supreme FZE and Supreme’s owners made concentrated efforts to conceal Supreme’s true relationship with JAFCO, and to make JAFCO appear to be an independent company.  They also took steps to make JAFCO’s mark-up on LMR look legitimate, and persisted in the fraudulent mark-ups even in the face of questions from DSCP about the pricing of LMR.

Defendant Supreme GmbH pleaded guilty to major fraud against the United States, conspiracy to commit major fraud and wire fraud.  Supreme FZE, which owns JAFCO, pleaded guilty to major fraud against the United States.  The Supreme companies agreed to jointly pay $48 million in restitution and $10 million in criminal forfeiture.  Each company also agreed to pay $96 million in criminal fines.  In addition, as a result of the criminal investigation, the Supreme companies paid $38.3 million directly to the DSCP as a refund for separate overpayments on bottled water.

In a related civil settlement, Supreme Group agreed to pay another $101 million to settle a whistleblower lawsuit, filed in the U.S. District Court for the EDPA by a former executive, which alleged that Supreme Group, and its food subsidiaries, violated the False Claims Act by knowingly overcharging for supplying food and water under the SPV contract.  The payment also resolves claims that, from June 2005 to December 2010, the Supreme food companies failed to disclose and pass through to the government rebates and discounts it obtained from its suppliers, as required by its SPV contract with the United States.

Separately, Supreme Site Services GmbH, a Supreme Group subsidiary, agreed to pay $20 million to settle allegations that they overbilled for fuel purchased by the Defense Logistics Agency (DLA) for Kandahar Air Field (KAF) in Afghanistan under a NATO Basic Ordering Agreement.  The government alleged that Supreme Site Services’ drivers were stealing fuel destined for KAF generators while en route for which the company falsely billed DLA.

Supreme Group’s subsidiary Supreme Logistics FZE also has agreed to pay $25 million to resolve alleged false billings by Supreme Logistics in connection with shipping contracts between the U.S. Transportation Command (USTRANSCOM), located at Scott Air Force Base in Illinois, and various shipping carriers to transport food to U.S. troops in Afghanistan during Operation Enduring Freedom.  The shipping carriers transported cargo destined for U.S. troops from the United States to Latvia or other intermediate ports, and then arranged with logistics vendors, including Supreme Logistics, to carry the cargo the rest of the way to Afghanistan.  The United States alleged that Supreme Logistics falsely billed USTRANSCOM for higher-priced refrigerated trucks when it actually used lower-priced non-refrigerated trucks to transport the cargo.

The EDPA lawsuit was initially filed under the qui tam or whistleblower provisions of the False Claims Act, by Michael Epp, Supreme GmbH’s former Director, Commercial Division and Supply Chain.  The False Claims Act prohibits the submission of false claims for government money or property and allows the United States to recover treble damages and penalties for a violation.  Under the Act’s whistleblower provisions, a private party may file suit on behalf of the United States and share in any recovery.  The case remained under seal to permit the United States to investigate the allegations and decide whether to intervene and take over the case.  Epp will receive $16.16 million as his share of the government’s settlement of the lawsuit.

Source

If you have information regarding false claims having been submitted to the federal government and the information is not publically known and no actions have been taken by the government with regard to recovering the false claims, you should promptly consult with a False Claims Act attorney (also known as qui tam attorneys) in your U.S. state who may investigate the basis of your False Claims Act allegations and who may also assist you in bringing a qui tam lawsuit on behalf of the United States, if appropriate, for which you may be entitled to receive a portion of the recovery received by the U.S. government.

Email us at info@businesslitigationcontingencylawyers.com or telephone us toll-free in the United States at 800-756-2143 to to be connected with qui tam lawyers (False Claims Act lawyers) in your U.S. state who may assist you with a False Claims Act lawsuit.

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Actelion Pharmaceuticals Agrees To Pay $360 Million To Resolve False Claims Act Liability For Paying Kickbacks

By | Business Fraud, Business Litigation, Qui Tam Litigation

The U.S. Department of Justice announced on December 6, 2018 that Actelion Pharmaceuticals US, Inc. (“Actelion”) has agreed to pay $360 million to resolve claims that it illegally used a nonprofit foundation as a conduit to pay the copays of thousands of Medicare patients taking Actelion’s pulmonary arterial hypertension drugs, in violation of the False Claims Act.

Under the Anti-Kickback Statute, a pharmaceutical company is prohibited from offering or paying, directly or indirectly, any remuneration (which includes money or any other thing of value) to induce Medicare patients to purchase its drugs. This prohibition includes the payment of patients’ copay obligations.

When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible (“copays”). The U.S. Congress included copay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs. The copay obligations can be substantial for expensive medications.

It was alleged by the federal government that Actelion used the foundation as an illegal conduit to pay the copay obligations of thousands of Medicare patients taking Actelion’s pulmonary arterial hypertension drugs, as an inducement for those patients to purchase its drugs because Actelion knew that the prices it set for those drugs could otherwise pose a barrier to those purchases.

The federal government claimed that from 2014 to 2015, Actelion made donations to the foundation, which, in turn, used those donations to pay copays of patients prescribed Actelion’s pulmonary arterial hypertension drugs. The federal government alleged that Actelion routinely obtained data from the foundation detailing how much the foundation had spent for patients on each such drug and then used this information to decide how much to donate to the foundation and to confirm that its contributions were sufficient to cover the copays of only patients taking its pulmonary arterial hypertension drugs. The foundation reportedly warned Actelion against receiving such data.

The federal government further alleged that Actelion had a policy of not permitting Medicare patients to participate in its free drug program, which was open to other financially needy patients, even if those Medicare patients could not afford their copays for its pulmonary arterial hypertension drugs. The federal government claimed that Actelion referred such Medicare patients to the foundation, which allowed the patients copays to be paid and resulted in claims to Medicare for the remaining cost, in order to generate revenue from Medicare and induce purchases of its pulmonary arterial hypertension drugs.

Actelion was acquired by Johnson & Johnson on June 16, 2017.

Source

If you have information regarding false claims having been submitted to Medicare, Medicaid, TRICARE, other federal health care programs, or to other federal agencies/programs, and the information is not publically known and no actions have been taken by the government with regard to recovering the false claims, you should promptly consult with a False Claims Act attorney (also known as qui tam attorneys) in your U.S. state who may investigate the basis of your False Claims Act allegations and who may also assist you in bringing a qui tam lawsuit on behalf of the United States, if appropriate, for which you may be entitled to receive a portion of the recovery received by the U.S. government.

Email us at info@businesslitigationcontingencylawyers.com or telephone us toll-free in the United States at 800-756-2143 to to be connected with qui tam lawyers (False Claims Act lawyers) in your U.S. state who may assist you with a False Claims Act lawsuit.

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Federal Government Intervenes In Health Care Qui Tam Lawsuit

By | Business Fraud, Business Litigation, Qui Tam Litigation

The U.S. Department of Justice announced on December 11, 2018 that the United States has intervened in a complaint against Sutter Health LLC, a California-based healthcare services provider, and an affiliated entity, Palo Alto Medical Foundation, that alleges that Sutter violated the False Claims Act by submitting inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans.

Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed healthcare insurance plans called Medicare Advantage Plans (MA Plans) that are owned and operated by private Medicare Advantage Organizations (MAOs).  MA Plans are paid a capitated, or per-person, amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans.

The Centers for Medicare and Medicaid Services (CMS), which oversees the Medicare program, adjusts the payments to MA Plans based on demographic information and the health status of each plan beneficiary.  The adjustments are commonly referred to as “risk scores.”  In general, a beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary.

Sutter Health, a non-profit public benefit corporation that provides healthcare services through affiliated entities, including hospitals and medical foundations, contracted with certain MAOs to provide healthcare services to California beneficiaries enrolled in the MAOs’ MA Plans.  In exchange, Sutter received a share of the payments that the MAOs received from CMS for the beneficiaries under Sutter’s care.

Sutter submitted diagnoses to the MAOs for the MA Plan enrollees that they treated.  The MAOs, in turn, submitted the diagnosis codes to CMS from the beneficiaries’ medical encounters, such as office visits and hospital stays, and these diagnosis codes were used by CMS to calculate a risk score for each beneficiary.

The False Claims Act lawsuit alleges that Sutter Health and Palo Alto Medical Foundation knowingly submitted unsupported diagnosis codes for certain patient encounters for beneficiaries under their care.  These unsupported diagnosis scores allegedly inflated the risk scores of these beneficiaries, resulting in inflated payments to Sutter.   The lawsuit further alleges that once the Sutter entities became aware of these unsupported diagnosis codes, they failed to take sufficient corrective action to identify and delete additional potentially unsupported diagnosis codes.

The lawsuit was filed under the qui tam, or whistleblowerprovisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery.  The False Claims Act also permits the government to intervene in such lawsuits, as it has done in this case.  The whistleblower was a former employee of Palo Alto Medical Foundation.

The case is captioned United States ex rel. Ormsby v. Sutter Health, et al., Case No. 15-CV-01062-JD (N.D. Cal.).

Source

If you have information regarding false claims having been submitted to Medicare, Medicaid, TRICARE, other federal health care programs, or to other federal agencies/programs, and the information is not publically known and no actions have been taken by the government with regard to recovering the false claims, you should promptly consult with a False Claims Act attorney (also known as qui tam attorneys) in your U.S. state who may investigate the basis of your False Claims Act allegations and who may also assist you in bringing a qui tam lawsuit on behalf of the United States, if appropriate, for which you may be entitled to receive a portion of the recovery received by the U.S. government.

Email us at info@businesslitigationcontingencylawyers.com or telephone us toll-free in the United States at 800-756-2143 to to be connected with qui tam lawyers (False Claims Act lawyers) in your U.S. state who may assist you with a False Claims Act lawsuit.

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“Camp Fire” Class Action Lawsuit Filed Against PG&E Corporation

By | Class Action Lawsuits

A class action lawsuit was filed against PG&E Corporation in the Superior Court of the State of California County of San Francisco on December 5, 2018 alleging that it is responsbile for the devastation cause by the “Camp Fire” during November 2018.

The class action complaint alleges the November 2018 Camp Fire was the deadliest and most destructive wildfire in modern California history that razed more than 150,000 acres across parts of Butte and Plumas Counties, destroying homes, businesses, and lives. The Camp Fire started just before sunrise on November 8th near the town of Pulga and moved rapidly west, virtually leveling the town of Paradise, with at least 88 lives lost, countless others injured, and 25 people still missing. The Camp Fire completely destroyed nearly 14,000 homes and hundreds of commercial buildings, along with everything in them.

The Camp Fire class action complaint further alleges that tens of thousands of people are now displaced from their homes, and many are now forced to live in shelters, tents, or their cars. They are left not knowing where they will sleep, when they will have a roof over their heads again, or whether they will be able to rebuild their lives.

The plaintiffs contend that the Camp Fire was caused by unsafe electrical infrastructure owned, operated, and (improperly) maintained by PG&E Corporation, and that PG&E had a duty to properly maintain its electrical infrastructure to ensure its safe operation, including by adequately designing, constructing, monitoring, maintaining, operating, repairing, replacing, and/or improving its power lines, poles, transformers, conductors, insulators, reclosers, and/or other electrical equipment.

The plaintiffs allege that PG&E Corporation’s duty included inspecting and managing vegetation around its power lines and/or other electrical equipment given the foreseeable risk of such vegetation coming into contact with this equipment and starting fires. Even though PG&E knew that its infrastructure was aging, unsafe, and vulnerable to weather and environmental conditions, it failed to fulfill these duties, and failed to take preventative measures in the face of known high-risk weather conditions, such as de-energizing its electrical equipment. The plaintiffs state that PG&E’s failures ultimately resulted in the deadliest and most destructive wildfire in California history.

The plaintiffs contend that the catastrophic damage and loss of life was preventable: PG&E’s failing infrastructure and its inadequate efforts to maintain its equipment and mitigate risk have caused tragedy before, and PG&E has been sanctioned a number of times for virtually identical misconduct. Despite notice of its past failures and even public reprimand, PG&E has continued to cut corners and put profits over safety, and continued to operate dangerous equipment without adequate risk management controls in place.

The plaintiffs seek the costs of repair, depreciation, and/or replacement of damaged, destroyed, and/or lost personal and/or real property;
loss of use, benefit, goodwill, and enjoyment of the plaintiffs’ real and/or personal property, and/or alternative living expenses; loss of wages, earning capacity, and/or business profits or proceeds and/or any related displacement expenses; attorneys’ fees, expert fees, consultant fees, and litigation costs and expense, as allowed under California Code of Civil Procedure § 1021.9; treble or double damages for wrongful injuries to timber, trees, or underwood on their property, as allowed under California Civil Code § 3346; general damages for fear, worry, annoyance, disturbance, inconvenience, mental anguish, emotional distress, and loss of quiet enjoyment of property; and, punitive/exemplary damages, inter alia.

Source

If your business is presently or may soon be involved in class action litigation in the United States, email us at info@businesslitigationcontingencylawyers.com or telephone us toll-free in the United States at 800-756-2143 to find class action lawyers who may handle your class action litigation matter on a contingency basis.

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Class Action Lawsuit Filed Against Walmart And Drug Companies Regarding Adulterated High Blood Pressure Medication

By | Class Action Lawsuits, product liability lawsuits

On December 1, 2018, a proposed class action  lawsuit was filed in the U.S. District Court for the Middle District of Florida Tampa Division (“federal court”) regarding Walmart and the other defendants’ (Aurobindo Pharma Ltd., ScieGen Pharmaceuticals, Inc., and Westminster Pharmaceuticals, LLC)  “manufacturing, distribution, and sale of generic irbesartan prescription medications containing an active pharmaceutical ingredient (“API”) adulterated with N-nitrosodiethylamine (“NDEA”), a probable human carcinogen.” Irbesartan is a prescription medication mainly used to treat high blood pressure and diabetic nephropathy.

The federal class-action lawsuit alleges: “Due to manufacturing defects originating in Defendant Aurobindo Pharma Ltd.’s (“Aurobindo”) facility in India, certain batches of irbesartan active pharmaceutical ingredient were supplied to Defendant ScieGen Pharmaceuticals, LLC (“ScieGen”), and thus introduced to the United States market, that were adulterated with the probable human carcinogen, NDEA (the “Adulterated Irbesartan”). After ScieGen used the Adulterated Irbesartan to manufacture and produce finished generic prescription irbesartan tablets, ScieGen shipped the tablets containing Adulterated Irbesartan to Defendant Westminster Pharmaceuticals (“Westminster”) in or about Tampa, Hillsborough County, Florida. Westminster, in turn, further manufactured, labeled, packaged, and
distributed the tablets containing Adulterated Irbesartan to pharmaceutical retailers nationwide, including Defendant Walmart Inc. (“Walmart”).”

The federal class action lawsuit further alleges: “Plaintiff and the putative class members were injured by paying the full purchase price of their medications containing Adulterated Irbesartan and by paying for incidental medical expenses. These medications are worthless because they are contaminated with carcinogenic and harmful NDEA and are thus not fit for human consumption.”

What Is Irbesartan?

Irbesartan is a generic drug generally used to treat high blood pressure and diabetic nephropathy, a complication of type 2 diabetes which affects the kidneys. Irbesartan is the generic form of the brand-name drug Avapro. Avapro was initially approved by the FDA and marketed in the United States in 1997.

The federal class action lawsuit alleges: “As a result of Aurobindo’s poor quality-control measures and failure to comply with cGMPs [current Good Manufacturing Practices], its irbesartan API became adulterated and contaminated by NDEA. NDEA is not an FDA-approved ingredient for branded Avapro or generic irbesartan. None of Defendants’ irbesartan products (or any irbesartan product, for that
matter) identify NDEA as an ingredient on their products’ labels or elsewhere … By introducing their irbesartan products into the United States market under the name “irbesartan” as a therapeutic equivalent to Avapro and with the FDA-approved label that is the same as that of Avapro, Defendants represented and warranted to end users that their products are in fact the same as and are therapeutically
interchangeable with Avapro … The presence of NDEA in the Adulterated Irbesartan: (1) renders Defendants’ irbesartan products non-bioequivalent (i.e., not the same) to Avapro and thus non-therapeutically interchangeable with Avapro, thus breaching Defendants’ express
warranties of sameness; (2) was the result of gross deviations from cGMPs thus rendering Defendants’ irbesartan products non-therapeutically equivalent to Avapro, and thus breaching Defendants’ warranties of sameness; and (3) results in Defendants’ irbesartan
containing an ingredient that is not also contained in Avapro, also breaching Defendants’ warranty of sameness (and warranty that the products contained the ingredients listed on each Defendants’ FDA-approved label) … Due to its status as a probable human carcinogen as listed by both the International Agency for Research on Cancer (“IARC”) and as determined by pharmaceutical regulators such as the European Medicines Agency and the FDA, NDEA is not an FDA-approved ingredient in irbesartan. The presence of NDEA in the
Adulterated Irbesartan results in Defendants’ irbesartan products being non-merchantable and not fit for its ordinary purposes (i.e., as a therapeutically interchangeable generic version of Avapro), breaching Defendants’ implied warranties of merchantability and/or
fitness for ordinary purposes.”

The FDA announced on October 26, 2018 that Aurobindo had recalled several  batches of irbesartan API that it had dispatched to ScieGen.  Aurobindo recalled 22 Batches of its irbesartan API, all supplied to ScieGen, and all contaminated with NDEA. The FDA announced that on October 30, 2018, ScieGen had issued its own recall of irbesartan that it supplied to Westminster as well as Golden State Medical Supply, Inc.

Source

If your business is presently or may soon be involved in class action litigation in the United States, email us at info@businesslitigationcontingencylawyers.com or telephone us toll-free in the United States at 800-756-2143 to find class action lawyers who may handle your class action litigation matter on a contingency basis.

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Data Breach Class Action Lawsuit Filed Against Marriott International, Inc.

By | Class Action Lawsuits, Data Breach

A class-action lawsuit was filed on November 30, 2018 against Marriott International, Inc. (“Marriott) on behalf of over 500 million consumers whose personal information, including their names, birthdates, addresses, locations, gender information, email addresses, payment card information, and passport information were stolen.

Bethesda, Maryland-based Marriott is a leading global lodging company with more than 6,700 properties across 130 countries and territories, reporting revenues of more than $22 billion in fiscal year 2017. Founded by J. Willard and Alice Marriott and guided by family leadership for more than 90 years, the company is headquartered outside of Washington, D.C. Marriott’s hotel brands include W Hotels, St. Regis, Sheraton Hotels, and Westin Hotels. Source

The class action lawsuit alleges that cybercriminals broke into Marriott’s servers in 2014 and obtained the personal information of approximately 500 million Marriott customers, and continued to have access throughout Marriott’s system, with unfettered and undetected access, for four years. The lawsuit alleges that Marriott did not discover the breach until September 8, 2018 yet did not notify its consumers until November 30, 2018. Marriott allegedly does not know the origin or identity of the hackers and has not fully assessed the scope of the attack.

The Marriott class action lawsuit alleges that Marriott failed to ensure the integrity of its servers and to properly safeguard consumers’ highly sensitive and confidential information, knowing that it had an obligation to protect the personal and financial data of its guests and customers and being aware of the significant repercussions to its customers if it failed to do so.  The class-action lawsuit alleges that Marriott  violated consumer protection statutes, breached confidence, and was reckless and grossly negligent.

Source

On November 30, 2018, Marriott issued the following statement (in part):

Marriott has taken measures to investigate and address a data security incident involving the Starwood guest reservation database.  On November 19, 2018, the investigation determined that there was unauthorized access to the database, which contained guest information relating to reservations at Starwood properties* on or before September 10, 2018.

On September 8, 2018, Marriott received an alert from an internal security tool regarding an attempt to access the Starwood guest reservation database in the United States.  Marriott quickly engaged leading security experts to help determine what occurred.  Marriott learned during the investigation that there had been unauthorized access to the Starwood network since 2014.  The company recently discovered that an unauthorized party had copied and encrypted information, and took steps towards removing it.  On November 19, 2018, Marriott was able to decrypt the information and determined that the contents were from the Starwood guest reservation database.

The company has not finished identifying duplicate information in the database, but believes it contains information on up to approximately 500 million guests who made a reservation at a Starwood property.  For approximately 327 million of these guests, the information includes some combination of name, mailing address, phone number, email address, passport number, Starwood Preferred Guest (“SPG”) account information, date of birth, gender, arrival and departure information, reservation date, and communication preferences.  For some, the information also includes payment card numbers and payment card expiration dates, but the payment card numbers were encrypted using Advanced Encryption Standard encryption (AES-128).  There are two components needed to decrypt the payment card numbers, and at this point, Marriott has not been able to rule out the possibility that both were taken.  For the remaining guests, the information was limited to name and sometimes other data such as mailing address, email address, or other information.

Source

If your business is presently or may soon be involved in class action litigation in the United States, email us at info@businesslitigationcontingencylawyers.com or telephone us toll-free in the United States at 800-756-2143 to find class action lawyers who may handle your class action litigation matter on a contingency basis.

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Maryland Class Action Lawsuit Contends Pharmaceutical Company Unlawfully Barred Generic Version Of Its Drug

By | Business Litigation, Class Action Lawsuits

On November 20, 2018, a proposed federal class action lawsuit was filed in the United States District Court for the District of Maryland against Actelion Pharmaceuticals Ltd., Actelion Clinical Research, Inc., and Actelion Pharmaceuticals US, Inc. (“Actelion”) alleging that Actelion engaged in an “illegal scheme to maintain its monopoly over the prescription drug bosentan.”

Bosentan is a dual endothelin receptor antagonist that Actelion sells as a treatment for pulmonary artery hypertension (“PAH”) under the brand name “Tracleer.” PAH is a relatively rare, but chronic, and potentially fatal disorder in which elevated blood pressure in the arteries of the lungs causes the heart to work harder than normal. It affects between 10,000 and 20,000 people in the U.S. — most of them women. PAH is a progressive condition. Without treatment, only about 70% of patients survive a year after diagnosis. PAH is also an extremely expensive condition to treat. In 2016, America’s Health Insurance Plans, an industry organization of health insurers, estimated that average drug spending for PAH patients was between $103,464 and $196,560 per year.

The proposed class action lawsuit alleges that while Tracleer is a highly profitable drug (billions in sales for Actelion) and Actelion’s regulatory and patent exclusivity over the use of bosentan to treat PAH expired by November 20, 2008 and November 20, 2015, respectively, no generic manufacturer has brought a generic bosentan to market. At least four manufacturers started the process of bringing a generic bosentan to market, but Actelion allegedly unlawfully blockaded the regulatory process for generic manufacturers to proceed and, thereby, illegally maintained its monopoly over bosentan.

The proposed class action lawsuit alleges that Actelion blocked would-be generic bosentan manufacturers from obtaining samples of Tracleer. This prevented a generic version of bosenten coming to market because in order to obtain FDA approval of a generic drug application, a generic manufacturer must run comparison tests to establish that the brand and the generic are bioequivalent — that is, that the generic is absorbed in the body at the same rate and to the same extent as the brand. Doing so requires samples of the brand product. Without these samples, generic manufacturers cannot complete the regulatory process and cannot bring a competing generic to market.

The proposed class action lawsuit alleges that Actelion prevented would-be generic bosentan competitors from purchasing samples of Tracleer by forbidding its distributors from selling Tracleer to those generic manufacturers and refusing to sell Tracleer directly to the manufacturers as well. By doing both, Actelion allegedly blocked every path generic manufacturers had to obtain samples of Tracleer.

The proposed class action lawsuit alleges that, unable to get samples of Tracleer from distributors as they usually would, at least
four generic manufacturers requested samples directly from Actelion, offering to pay the market price for the samples. Actelion refused, allegedly offering subterfuge for its reason. Tracleer carries risks of serious liver damage and birth defects if taken during pregnancy. Therefore, the FDA approved Actelion’s New Drug Application (“NDA”) for Tracleer subject to two restrictions: (1) a “black box” warning on Tracleer’s packaging, and (2) Actelion’s implementation of a Risk Evaluation and Mitigation Strategy (“REMS”) for Tracleer. Actelion cited its REMS as the reason it would not sell to would-be generic competitors.

The proposed class action lawsuit alleges that Actelion cited the safety protocols imposed by FDA as the reason it refused to sell Tracleer samples to generic manufacturers (and the reason it prevented its distributors from selling them as well). Congress has specified however, that REMS may not be used to delay generic competition. The FDA has also expressly indicated that REMs do not prevent distributors from selling samples to generics nor empower the NDA holder to veto such sales. Indeed, the FDA has repeatedly confirmed that allowing the generics to buy samples does not run afoul of the FDA’s required safety protocols, both generally and with respect to Tracleer specifically.

The proposed class action lawsuit alleges that Actelion wanted to keep its competitors out of the market in order to prevent competition and prolong its monopoly well past its period of legitimate exclusivity, and this is the only logical explanation for Actelion foregoing potential sales, but it is allegedly illegal: the FTC, the FDA, courts, and commentators all agree that the antitrust laws do not tolerate such exclusionary conduct.

The proposed class action lawsuit alleges that Actelion’s anticompetitive scheme has been 100% effective. To date, no generic Tracleer is available in the U.S. nearly three years after the expiration of the Tracleer patent. Actelion’s alleged scheme has forced Plaintiff and other purchasers to pay higher prices for bosentan for far longer than they otherwise would have. Absent Actelion’s years-long blockade, one or more generics would have been available at or around the expiration of Tracleer’s patent protection in November 2015. Actelion’s alleged unlawful conduct has prevented generic manufacturers from entering the market with competing generic bosentan products and has cost purchasers hundreds of millions of dollars in overcharge damages.

GOVERNMENT EMPLOYEES HEALTH ASSOCIATION V. ACTELION PHARMACEUTICALS LTD, ET AL., Case 1:18-cv-03571-CCB.

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California Supreme Court Rules Law Firm’s Fee Arbitration Clause With Its Client Unenforceable

By | Attorney Fee Request, Business Arbitration, Business Litigation

The Supreme Court of California (“California Supreme Court”), in its opinion filed on August 30, 2018, decided a case in which a large law firm agreed to represent a manufacturing company in a federal qui tam action brought on behalf of a number of public entities. During the same time period, the same law firm represented one of these public entities in matters unrelated to the qui tam suit. Both clients had executed engagement agreements that purported to waive all such conflicts of interest, current or future, but the agreements did not specifically refer to any conflict and the law firm did not tell either client about its representation of the other. This arrangement fell apart when the public entity discovered the conflict and successfully moved to have the law firm disqualified in the qui tam action. A fight over the manufacturer’s outstanding law firm bills followed, and the dispute was sent to arbitration in accordance with an arbitration clause in the parties’ engagement agreement.

The engagement agreement’s arbitration clause provided that any dispute over fees or charges that was not resolved through voluntary arbitration under the auspices of the California State Bar, and any other type of dispute between the parties, would be settled by “mandatory binding arbitration” conducted in accordance with the California Arbitration Act (CAA; Code Civ. Proc., § 1282 et seq.). The arbitration clause also stated the agreement would be governed by California law.

The arbitrators ruled in the law firm’s favor and the superior court confirmed the award, but the Court of Appeal reversed. That court concluded that the matter should never have been arbitrated because, notwithstanding the broad conflict waiver in the engagement agreement, the law firm’s undisclosed conflict of interest violated rule 3-310(C)(3) of the Rules of Professional Conduct (i.e., an attorney “shall not, without the informed written consent of each client . . . [¶] . . . [¶] . . . [r]epresent a client in a matter and at the same time in a separate matter accept as a client a person or entity whose interest in the first matter is adverse to the client in the first matter.”). This ethical violation, the court ruled, rendered the parties’ agreement, including the arbitration clause, unenforceable in its entirety. The Court of Appeal further held that the conflict of interest disentitled the law firm from receiving any compensation for the work it performed for the manufacturer while also representing the utility district in other matters.

The California Supreme Court held: “We agree with the Court of Appeal that, under the framework established in Loving & Evans v. Blick (1949) 33 Cal.2d 603, the law firm’s conflict of interest rendered the agreement with the manufacturer, including its arbitration clause, unenforceable as against public policy. Although the manufacturer signed a conflicts waiver, the waiver was not effective because the law firm failed to disclose a known conflict with a current client. But we conclude, contrary to the Court of Appeal, that the ethical violation does not categorically disentitle the law firm from recovering the value of the services it rendered to the manufacturer; whether principles of equity entitle the law firm to some measure of compensation is a matter for the trial court to address in the first instance.”

In Loving & Evans v. Blick, the California Supreme Court had held that the excess-of-authority exception applies, and an arbitral award must be vacated, when a court determines that the arbitration has been undertaken to enforce a contract that is “illegal and against the public policy of the state.” In the present case, the California Supreme Court held that “an attorney contract that has as its object conduct constituting a violation of the Rules of Professional Conduct is contrary to the public policy of this state and is therefore unenforceable” (“California law holds that a contract may be held invalid and unenforceable on public policy grounds even though the public policy is not enshrined in a legislative enactment” – “violation of a Rule of Professional Conduct in the formation of a contract can render the contract unenforceable as against public policy”).

The California Supreme Court stated in the present case: “We conclude that Sheppard Mullin’s concurrent representation of J-M and South Tahoe violated rule 3-310(C)(3) and rendered the engagement agreement between Sheppard Mullin and J-M unenforceable. Our conclusion rests on three subsidiary points: First, at the time Sheppard Mullin agreed to represent J-M in the qui tam action, the law firm also represented a client with conflicting interests, South Tahoe; second, because Sheppard Mullin knew of that conflicting interest and failed to inform J-M of it, J-M’s consent was not “informed” within the meaning of the Rules of Professional Conduct; and third, Sheppard Mullin’s unconsented-to conflict of interest affected the whole of its engagement agreement with J-M, rendering it unenforceable in its entirety.”

The California Supreme Court further stated that “[a]n attorney or law firm that knowingly withholds material information about a conflict has not earned the confidence and trust the rule is designed to protect.” In the case it was deciding, the California Supreme Court stated: “Assessed by this standard, the conflicts waiver here was inadequate. By asking J-M to waive current conflicts as well as future ones, Sheppard Mullin did put J-M on notice that a current conflict might exist. But by failing to disclose to J-M the fact that a current conflict actually existed, the law firm failed to disclose to its client all the “relevant circumstances” within its knowledge relating to its representation of J-M. (Rules Prof. Conduct, rule 3-310(A)(1).)”

The California Supreme Court went on to state: “Whether the client is an individual or a multinational corporation with a large law department, the duty of loyalty demands an attorney or law firm provide the client all material information in the attorney or firm’s possession. No matter how large and sophisticated, a prospective client does not have access to a law firm’s list of other clients, and cannot check for itself whether the firm represents adverse parties. Nor can it evaluate for itself the risk that it may be deprived, via motion for disqualification, of its counsel of choice, as happened here. In any event, clients should not have to investigate their attorneys. Simply put, withholding available information about a known, existing conflict is not consistent with informed consent … We conclude, rather, that without full disclosure of existing conflicts known to the attorney, the client’s consent is not informed for purposes of our ethics rules. Sheppard Mullin failed to make such full disclosure here.”

The California Supreme Court held: “Because Sheppard Mullin’s ethical breach renders the engagement agreement unenforceable in its entirety, the rule of Loving & Evans means that Sheppard Mullin is not entitled to the benefit of the arbitrators’ decision awarding it unpaid contractual fees. The final question before us is whether Sheppard Mullin may receive any compensation for its services at all …  contrary to the Court of Appeal, [ ] California law does not establish a bright-line rule barring all compensation for services performed subject to an improperly waived conflict of interest, no matter the circumstances surrounding the violation.”

The California Supreme Court continued: “When a law firm seeks compensation in quantum meruit for legal services performed under the cloud of an unwaived (or improperly waived) conflict, the firm may, in some circumstances, be able to show that the conduct was not willful, and its departure from ethical rules was not so severe or harmful as to render its legal services of little or no value to the client. Where some value remains, the attorney or law firm may attempt to show what that value is in light of the harm done to the client and to the relationship of trust between attorney and client. Apprised of these facts, the trial court must then exercise its discretion to fashion a remedy that awards the attorney as much, or as little, as equity warrants, while preserving incentives to scrupulously adhere to the Rules of Professional Conduct … When a law firm seeks fees in quantum meruit that it is unable to recover under the contract because it has breached an ethical duty to its client, the burden of proof on these or other factors lies with the firm. To be entitled to a measure of recovery, the firm must show that the violation was neither willful nor egregious, and it must show that its conduct was not so potentially damaging to the client as to warrant a complete denial of compensation. And before the trial court may award compensation, it must be satisfied that the award does not undermine incentives for compliance with the Rules of Professional Conduct. For this reason, at least absent exceptional circumstances, the contractual fee will not serve as an appropriate measure of quantum meruit recovery … Although the law firm may be entitled to some compensation for its work, its ethical breach will ordinarily require it to relinquish some or all of the profits for which it negotiated … By leaving open the possibility of quantum meruit compensation for the 10,000 hours that Sheppard Mullin worked on J-M’s behalf, we in no way condone the practice of failing to inform a client of a known, existing conflict of interest before asking the client to sign a blanket conflicts waiver. Trust and confidence are central to the attorney-client relationship, and maintaining them requires an ethical attorney to display all possible candor in his or her disclosure of circumstances that may affect the client’s interests. Sheppard Mullin’s failure to exhibit the necessary candor in this case has rendered its contract with J-M unenforceable and has thus disentitled it to the benefit of the unpaid contract fees awarded by the arbitrators in this case. Whether Sheppard Mullin is nevertheless entitled to a measure of compensation for its work is, along with the other unresolved noncontract issues raised by the pleadings, a matter for the trial court to consider in the first instance.”

Source Sheppard, Mullin, Richter & Hamilton, LLP v. J-M Manufacturing Company, Inc., S232946.

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