Over the past two weeks, Texas and its conservative Republican attorney general, Ken Paxton, settled three separate Medicaid fraud suits with pharmaceutical companies totaling over $123 million.
And proving that politics and law often make for some strange bedfellows, none of those settlements would have been possible without the help of lawyers from Baron & Budd, a Dallas-based plaintiffs firm founded by the late Fred Baron and Russell Budd, two well-known fundraisers for the Democratic Party. The law firm represents the whistleblowers who originally filed all three fraud cases.
The cases were all filed under the Texas Medicaid Fraud Prevention Act, a 1995 qui tam statute that allows whistleblowers to pursue private causes of action for fraud along with the state government.
On Aug. 7, AstraZeneca agreed to a $110 million settlement to resolve two whistleblower suits brought by the state and private plaintiffs under the TMFPA. The first settlement is worth $90 million and resolves allegations that the company fraudulently marketed a powerful antipsychotic drug, Seroquel. A second settlement worth $20 million resolves allegations that the company misrepresented and concealed information about the appropriate use of Crestor, a drug used to treat high cholesterol.
“Texas leads the country in protecting its Medicaid system from pharmaceutical fraud,” Paxton said in a statement. “The allegations that led to this settlement are especially disturbing because the well-being of children and the integrity of the state hospital system were jeopardized. The cooperation and support of the Texas Health and Human Services Commission was essential in achieving this outstanding outcome for Texans.”
And on Aug. 1, Endo Pharmaceuticals Inc. agreed to pay a $13.25 million settlement in a whistleblower suit brought by the state that alleged that Endo misrepresented and concealed information about the nerve pain drug Lidoderm.
Baron & Budd represented whistleblowers in all three cases who’d originally filed federal False Claims Act cases in federal courts outside of Texas. In each of those cases, lawyers from the Texas Attorney General’s Office convinced the whistleblowers to refile their cases in Travis County state district court under the TMFP, said Scott Simmer, a Baron & Budd partner who represents whistleblowers.
The Texas Attorney General’s Office later intervened in all of the state court cases, Simmer said.
“They have a long history of significant recovery for Medicaid cases. We first started working with the AG’s office on these three cases over four years ago. And we litigated right along with the AG’s office,” Simmer said.
Simmer’s former Washington, D.C., law firm, the Simmer Law Group, specialized in qui tam litigation and merged with Baron & Budd in March, a move that helped expand the Dallas firm’s practice, which has traditionally focused on asbestos and mass tort litigation.
And the combined effort between plaintiff firms and the Texas Attorney General’s Office that resulted in the huge back-to-back settlements—of which the whistleblowers will receive a 15 percent to 20 percent share—is exactly what qui tam laws are supposed to do, Simmer said.
“It was the best example of a public-private partnership and how these statutes are supposed to work,” Simmer said. “I’m tremendously proud of what we accomplished but also proud of having worked with tremendous people.’’
Simmer praised Assistant Texas Attorneys General Ray Winter, Cynthia O’Keeffe, Eugenia Krieg, and Kris Kennedy for their efforts in pursuing the qui tam claims on behalf of the state.
“The Texas Attorney General’s Office has been very conscientious in investigating and prosecuting Medicaid fraud allegations brought by our whistleblowers, who uncovered this fraud,” Simmer said.
“The politics really didn’t matter,” Simmer added. “This was about protecting the Texas Medicaid program.”
John C. Dodds, a Philadelphia attorney who represents AstraZeneca, and Jon Stern, a Washington, D.C., attorney who represents Endo, did not return calls for comment.