Murphy Anderson lawsuit results in $103 million Medicare pharmaceutical fraud and False Claims Act whistleblower settlement

September 26, 2019

Avanir Pharmaceuticals will pay $103 million to settle claims that it defrauded Medicare and other government insurance programs by paying kickbacks to doctors in the form of speaker fees, in exchange for writing unnecessary Nuedexta prescriptions.  The claims were originally raised by whistleblower Kevin Manieri in a False Claims Act (FCA) qui tam complaint filed in Akron, Ohio. Whistleblower Manieri is a former Avanir sales director and is represented by The Employment Law Group and Murphy Anderson PLLC attorneys.

The U.S. Justice Department indicted four individuals for conduct related to Avanir's alleged scheme, including a physician who is mentioned in Mr. Manieri's lawsuit, Dr. Deepak Raheja of Cleveland, Ohio.

The FDA approved Nuedexta for treating patients with a rare, non-life threatening disorder, pseudobulbar affect (PBA), which causes spontaneous laughing or crying unrelated to the patient’s emotional state. California-based Avanir, a subsidiary of Japanese Otsuka Pharmaceutical Co., Ltd., manufactured the drug and publicized the rare disorder.

Mr. Manieri, an experienced sales director in the pharmaceutical industry, joined Avanir in 2014 to manage Neudexta sales in the northern United States. His complaint alleges that he quickly learned that Avanir management was instructing  sales representatives to promote Neudexta to a relatively few prescribers willing to prescribe Neudexta for patients with only a “bare minimum of symptoms,” in exchange for thousands of dollars in speaking fees. One neurologist in the Cleveland/Akron area, who was personally named in Mr. Manieri's complaint, received more than $56,000 in Avanir fees and wrote double the number of Neudexta prescriptions as any other doctor, far more prescriptions than is consistent with the number of patients who truly need such medication and actually have PBA.

Another Avanir sales manager oversaw Nuedexta sales to nursing homes, long-term care facilities, and other institutional providers of care to the elderly and disabled, where many individuals were prescribed the drug, allegedly without actually suffering from PBA.

Manieri’s whistleblower lawyers Ann Lugbill and Mark Hanna pointed out: “This Avanir Complaint demonstrates how important a brave whistleblower is to our country's health and the Medicare budget. We should all thank whistleblowers like Kevin Manieri and his fellow Georgia whistleblowers who exposed the alleged kickback scheme to sell Nuedexta by getting unscrupulous doctors to prescribe an expensive drug for patients who did not need it—many of these patients were elderly, disabled, or suffering from dementia.”

After opposing the scam speaker fees, Mr. Manieri was terminated and filed a whistleblower complaint in 2015. The suit remained sealed while the Justice Department investigated the allegations, but is now public after today’s settlement, in which Avanir paid $103 million under the FCA and several anti-fraud state laws. Avanir also agreed to a Deferred Prosecution Agreement under federal criminal laws earlier this week in Georgia.

Mr. Manieri and two other whistleblowers who filed a second related FCA lawsuit against Avanir will each receive a share of the Government’s settlement. Both the federal and state false claims acts empower whistleblowers to file “qui tam” lawsuits on the government’s behalf, with the whistleblower receiving a portion of any recovery.

While the FCA prohibits employers from retaliating against whistleblowers who seek to prevent fraud, Mr. Manieri’s whistleblower retaliation lawsuit against Avanir is still pending before Judge Sara Lioi of the U.S. District Court for the Northern District of Ohio in Akron. 

In addition to the settlement payment, Avanir entered into a Corporate Integrity Agreement with the Department of Health & Human Services, intended to prevent its alleged misconduct from reoccurring. The company does not admit to wrongdoing in any of the settlements.

Mr. Manieri’s attorneys include Ann Lugbill of Murphy Anderson in Cincinnati and Washington, D.C., and R. Scott Oswald and Janel Quinn of The Employment Law Group. The case was investigated and resolved on behalf of the United States by Assistant U.S. Attorneys Patricia M. Fitzgerald and Brendan F. Barker of the U.S. Attorneys Office for the Northern District of Ohio, and Natalie Waites, senior counsel for health care fraud at the U.S Justice Department in Washington, D.C.

The settlement involves two cases against Avanir. Kevin Manieri, represented by Murphy Anderson PLLC and The Employment Law Group, filed his qui tam action on March 30, 2015 in the U.S. District Court for the Northern District of Ohio: United States ex rel. Manieri v. Avanir Pharmaceuticals, Inc., et al., No. 5:15CV611. Duane R. Arnold and Mark A. Shipman, represented by Bondurant Mixson & Elmore LLP, filed their qui tam action on April 17, 2015, in the U.S. District Court for the Northern District of Georgia: United States ex rel. Arnold and Shipman, et al. v. Avanir Pharmaceuticals, Inc., No. 1:15-cv-01250.

Read DOJ's press release about the settlement.

Read DOJ’s press release about the indictment.

Read Mr. Manieri’s Complaint.