Narrative Opinion Summary
This case involves a lawsuit filed by the Commonwealth against Schering-Plough Corporation, Schering Corporation, and Warrick Pharmaceuticals for fraudulently inflating the Wholesale Acquisition Cost (WAC) of the generic drug Albuterol, resulting in excessive payments by the Massachusetts Medicaid Program. The jury found the defendants liable for violating both the Massachusetts False Claims Act (MFCA) and the Massachusetts Medicaid False Claims Act (MMFCA), awarding the Commonwealth $4,563,328 in damages. Post-trial, the defendants sought a judgment as a matter of law or a new trial, while the Commonwealth moved for judgment in its favor with trebled damages and civil penalties. The court ruled that applying the MFCA retroactively was impermissible and found no breach of the implied covenant of good faith and fair dealing. However, it denied the remainder of the defendants' motions. The court awarded the Commonwealth $13,689,984 in trebled damages and civil penalties totaling $152,000 for 28 false statements. The final judgment includes prejudgment interest and costs, with parties directed to submit calculations for the total amount. The court's decision reinforces the stringent application of the MFCA and highlights the careful consideration required for retroactive legal applications and implied covenants in contract law.
Legal Issues Addressed
Civil Penalties under the Massachusetts False Claims Actsubscribe to see similar legal issues
Application: The court awarded civil penalties based on the number of false statements made by the defendants under Prong 2 of the MFCA.
Reasoning: For statements made before July 28, 2000, a $2,000 penalty per statement totals $32,000 for 16 statements. For the 12 statements made after this date, a $10,000 penalty each results in $120,000.
Fraudulent Pricing under Massachusetts False Claims Actsubscribe to see similar legal issues
Application: The defendants were found liable for inflating the Wholesale Acquisition Cost (WAC) of the drug Albuterol, which led to overpayments by the Massachusetts Medicaid Program.
Reasoning: Following a trial, the jury found in favor of the Commonwealth, determining that the defendants committed fraud and violated the Massachusetts False Claims Act (MFCA) and the Massachusetts Medicaid False Claims Act (MMFCA), resulting in damages of $4,563,328.
Implied Covenant of Good Faith and Fair Dealingsubscribe to see similar legal issues
Application: The court found no breach of the implied covenant of good faith and fair dealing by the defendants under the Medicaid Rebate Agreement.
Reasoning: The Medicaid Rebate program aims to lower state Medicaid costs, but the court determined that the defendants did not breach the implied covenant of good faith and fair dealing, resulting in a judgment favoring the defendants on that claim.
Retroactive Application of Massachusetts False Claims Actsubscribe to see similar legal issues
Application: The court ruled that applying the Massachusetts False Claims Act to actions predating its enactment in 2000 was impermissibly retroactive.
Reasoning: Additionally, it deemed the application of the MFCA to actions prior to its 2000 enactment as impermissibly retroactive.
Treble Damages under Massachusetts False Claims Actsubscribe to see similar legal issues
Application: The awarded damages were trebled under the MFCA, increasing the total damages to $13,689,984.
Reasoning: The jury awarded the Commonwealth $4,563,328 in damages, which will be trebled under the MFCA to $13,689,984.