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News: 2011 Press Release

For Release: March 18, 2011
Media Calls Only: 916-492-3566
Insurance Commissioner Dave Jones Intervenes in Lawsuit Against Pharmaceutical Giant Bristol Myers-Squibb Alleging Illegal Kickbacks Provided to Doctors to Increase Sales of Its Drugs

Insurance Commissioner Dave Jones today announced his intervention in a "qui tam" (whistleblower) lawsuit against Bristol Myers-Squibb (BMS), one of the largest pharmaceutical companies in the U.S. The lawsuit is the largest health insurance fraud case ever pursued by a California state agency.

Former employees of BMS filed a whistleblower action under seal in Superior Court in Los Angeles alleging that BMS bribed doctors to prescribe BMS drugs. The lawsuit alleges that the company provided illegal kickbacks to doctors in order to increase the company's pharmaceutical sales in California. The Commissioner seeks monetary penalties and the disgorgement of millions of dollars in unlawful profits the company made as a result of kickbacks, plus treble damages. The kickback scheme ultimately came at the expense of the private health insurance industry, which paid for the drugs, and California consumers.

"This sort of fraud has long plagued our health insurance system, leading to billions of dollars annually in added health care costs nationally," Commissioner Jones said. "Besides the obvious and deplorable ethical violations in such cases, health care fraud also leads to higher premiums for consumers and an unnecessary and unjust increase in health care costs. As Insurance Commissioner, I will use the full force and resources of this department to root out insurance fraud and hold all responsible people and companies accountable. In this particular case, we are uncertain whether the kickback scheme is still occurring. If discovery discloses that violations are continuing, the Department will seek an injunction and penalties to address those violations."

The case in which Commissioner Jones is intervening was initially filed by former BMS employees Michael Wilson and Lucius and Eve Allen, all of whom are represented by the law firm of Waters Kraus & Paul in Los Angeles. The suit alleges that BMS instructed its sales representatives to court doctors with sports tickets, fancy meals, honoraria, all-expense-paid trips, and gifts to induce them to prescribe BMS drugs. The complaint alleges that the result of the scheme was to increase prescriptions of BMS drugs, which private health insurers (and, ultimately, the policy holding public) in California ended up paying for. It is believed that insurance companies in California have spent over $3.5 billion to cover the costs of the drugs the lawsuit claims BMS sought to promote with its kickback scheme.

"We need to be sure that doctors are prescribing drugs because those drugs are best for their patients and not because a pharmaceutical company provided doctors with trips and kickbacks," Commissioner Jones said. "These illegal practices drive up the cost of health insurance for millions of Californians. Besides the illegality involved in this case, such actions are plainly and simply unjust, and I will seek to stop such unlawful practices."

The case will be decided by a jury in Los Angeles.

For a copy of the complaint, please select this link.

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The California Department of Insurance, established in 1868, is the largest consumer protection agency in California, regulating the $123 billion insurance marketplace. In 2013 the California Department of Insurance received more than 170,000 calls from consumers and helped recover over $63 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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