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Merck Pays More Than $400 Million to Settle Federal, State Medicaid Fraud Investigation Sparked by Qui Tam Whistleblower Case Detailing Marketing Schemes for Vioxx(R), Zocor(R), Several Other Drugs
Date:2/7/2008

in a nationwide investigation by federal and state prosecutors that returned hundreds of millions of taxpayer dollars to the Medicaid program," Cohen said.

"When we realized the extent of the fraud, we took the evidence straight to the Government. Taking on Merck required close coordination and cooperation between us and the state and federal prosecutors. This taskforce approach and unrelenting commitment won a huge victory for the taxpayers." Kleiman said.

"This landmark case exposed abuses of Medicaid's Best Price nominal price exception, and strengthened the Medicaid Rebate program to reduce the states' drug costs," Yeager said.

Aside from the huge settlement, the second largest FCA civil fraud Medicaid recovery, the case marked new ground with a collaborative investigation model that saw the relator and his lawyers work closely with state and federal Government investigators to press the case. This new investigative model, Cohen said, "will become the basis for future qui tam whistleblower investigations, especially in an age of shrinking government budgets."

The FCA, initially sponsored by President Abraham Lincoln to stop military fraud during the Civil War, allows private citizens with knowledge of fraud to help the Government recover ill-gotten gains and additional civil penalties. The FCA allows the Government to collect up to three times the amount it was defrauded, in addition to civil penalties of $5,500 to $11,000 per false claim. Whistleblowers whose cases settle or are won in court usually receive rewards representing 15 to 25 percent of qui tam recoveries.

The federal investigation was conducted by the U.S. Attorney's Office for the Eastern District of Pennsylvania, under the direction of Patrick L. Meehan, U.S. Attorney, Assistant U.S. Attorney Virginia Gibson, Chief of the Civil Division, and Assistant U.S. Attorney Viveca Parker. Parker led the broad investigation, including the review of more than 400 boxes of
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