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AstraZeneca, Cephalon, and Biogen Idec to Pay $55.5 Million to Resolve False Claims Act Allegations Made By Whistleblower Ronald Streck

Posted: July 7, 2015
Source: Berger & Montague, P.C.
Practice Areas: Whistleblowers, Qui Tam & False Claims Act

PHILADELPHIA, PA, July 7, 2015 -- Berger & Montague, P.C., a full-spectrum class action and complex civil litigation law firm with one of the largest and most successful whistleblower practices in the U.S, joined co-counsel Faruqi and Faruqi, LLP in settling three separate but related whistleblower lawsuits against pharmaceutical manufacturers AstraZeneca Pharmaceuticals LP, Cephalon, Inc., and Biogen, Inc., for a total of $55.5 million, plus statutory fees.  Under the agreements, AstraZeneca will pay the largest sum, $46.5 million.  Cephalon will pay $7.5 million, and Biogen will pay $1.5 million.  The case, pending in federal court in the Eastern District of Pennsylvania, is captioned U.S. ex rel. Ronald Streck v. AstraZeneca, LP, et al., C.A. No. 08-5135.

The law firms represent whistleblower Ronald Streck, who alleged that the companies defrauded the federal and state governments by under-reporting their Medicaid rebate obligations.  Medicaid is a joint federal and state program that primarily serves the poor and the elderly, America's most vulnerable citizens.  Mr. Streck became aware of the alleged fraud while working in the pharmaceutical distribution industry in the mid-2000's.  He filed suit in 2008.  With these three settlements, and the years of hotly-contested litigation that led to them, Mr. Streck has helped changed the way pharmaceutical manufacturers report their prices to government authorities.

Mr. Streck brought suit under the United States Civil False Claims Act ("FCA").  The FCA, also called "Lincoln's Law," was signed by President Abraham Lincoln in 1863. Amendments in 1986 made it the primary weapon of the United States against fraud and abuse by government contractors. Under the FCA, a private whistleblower can bring a lawsuit in the name of the government.  After an FCA lawsuit is filed, the government can either intervene in the suit and take over the litigation, or it can decline to intervene, in which case the whistleblower and his legal team can pursue the case on behalf of the government.  In these three cases, the government declined to intervene in 2011, so Mr. Streck and his two law firms, Berger & Montague and Faruqi & Faruqi, litigated the cases until the settlements were reached.

Mr. Streck's lawsuit alleged that the three pharmaceutical manufacturers treated millions of dollars in payments to wholesalers as "discounts," when in fact the payments were for bona fide services rendered.  By treating the payments as discounts, the manufacturers reported lower average manufacturer prices, which consequently led them to pay less in rebates to state Medicaid programs.  Mr. Streck's suit was the first of its kind, in that the alleged fraud scheme had never been revealed in any prior lawsuit or government enforcement operation.

The settlements marked the sixth declined case in the past year that Berger & Montague has successfully litigated on behalf of the federal and state governments.  Daniel R. Miller, a shareholder at Berger & Montague and one of the lawyers litigating the cases on behalf of Mr. Streck, explained the changing landscape of False Claims Act litigation: "In years past, if the government declined a whistleblower's case, it often spelled the end of the litigation.  But more recently, well-equipped law firms like Berger & Montague have been successfully litigating these cases against some of the nation's largest companies.  The results for the taxpayers speak for themselves."  Berger & Montague shareholder Joy Clairmont, also an integral part of Mr. Streck's legal team, continued: "No company, no matter how large, is above the law.  These cases prove that individuals who step forward as whistleblowers really can make a difference."

Mr. Streck's lawsuit is not over.  His suit makes similar allegations against pharmaceutical manufacturer Genzyme Corporation, and the case against Genzyme continues in litigation. Once that matter is concluded, Mr. Streck plans to appeal the trial court's decision to dismiss a related series of allegations against an even larger group of pharmaceutical manufacturers.

Berger & Montague's whistleblower practice group, which has recovered well over $1 billion for federal and state governments over the course of the last decade, is committed to filing and litigating qui tam lawsuits under the federal and state False Claims Acts, the SEC whistleblower program, and the IRS whistleblower program.  Todd Collins, a member of the firm's Management Committee who is also actively involved in Mr. Streck's case, stated that the settlements "underscore Berger & Montague's commitment to representing whistleblowers, and our intention to maintain our Qui Tam Practice Group as a major force in U.S. whistleblower representation."

Anyone with further information is urged to contact Berger & Montague shareholder Daniel Miller, who can be reached at (215) 875-5702, or