Health Care & Reproductive Rights

LOS ANGELES—California Attorney General Edmund G. Brown Jr. today settled an antitrust lawsuit that charged Barr Pharmaceuticals with taking $20 million for keeping off the market a cheaper, generic version of the oral contraceptive Ovcon.

“Barr illegally kept its generic drug off the market in exchange for $20 million from Warner Chilcott, thereby keeping drug prices higher,” Attorney General Brown said. “Today’s agreement ensures that these pharmaceutical companies will not collude to keep affordable medications away from consumers,” Brown added.

In 2005, California and thirty-three other states and the District of Columbia sued Barr Pharmaceuticals and Warner Chilcott for entering into an illegal arrangement by which Barr agreed not to sell generic Ovcon for five years in exchange for $20 million. The states’ alleged that the agreement violated state and federal antitrust laws and artificially inflated the price of Ovcon.

Non-competition agreements, as well as pharmaceutical industry practices including efforts to steer consumers to more costly medications, have increased the average retail price of prescription medications 8.3% annually, triple the rate of inflation.

In 2003, Warner Chilcott made approximately $61 million from sales of brand name Ovcon. In 2005, the company reported a 16% increase in annual revenue from Ovcon sales.

After the states filed their lawsuit Warner Chilcott voided its agreement with Barr, opening the door to competition between the two companies. Within one month of restoring competition in late 2006, the Ovcon price dropped 18%, from $39 to $32. As of May 2007, Ovcon prices were down to $20, a total drop of nearly 50%.

Under today’s settlement, Barr will not enter into non-competition agreements with companies that sell brand name drugs. In addition, a ten-year consent decree with California requires Barr to provide the state with copies of any future related agreements. Without the consent decree such agreements have traditionally been kept secret between the companies. Barr will also pay California approximately $500,000 in statutory penalties and attorneys fees.

Previously, California reached a similar settlement with Warner Chilcott, which bars the company from entering non-competitive agreements with generic drug manufacturers.

Americans spent $275 billion on prescription drugs in 2006, expenditures which will grow about 8% per year. Between 1994 and 2005, the total volume of drugs prescribed grew 71% according to a Kaiser Family Foundation analysis.

The multi-state settlement agreement is attached.

SAN DIEGO--California Attorney General Edmund G. Brown Jr. today announced a multi-million dollar settlement with Caremark, resolving allegations that the prescription management company tricked doctors into switching
patients to different brand name drugs in exchange for “secret rebates from drug manufacturers.”

“Caremark received secret rebates from drug manufacturers in exchange for convincing doctors to switch patients to different brand name drugs,” Attorney General Brown said. “Under today’s settlement, the company must disclose the payments it receives for recommending certain drugs.”

Caremark provides prescription drug services to approximately 2,000 health care plans nationwide. California alleged that Caremark engaged in deceptive business practices by convincing doctors to switch patients to different brand name drugs in exchange for secret rebates from pharmaceutical companies.

Health plans were financially harmed by these practices and some patients were forced to pay higher co-payments for the new drugs that they received. Under today’s settlement, Caremark must reimburse patients for any out-of-pocket expenses related to drug changes and inform patients if switching drugs will increase co-payments.

Caremark must also inform physicians of the company’s financial incentives for making certain recommendations and must inform physicians if sales presentations are funded by pharmaceutical manufacturers. Caremark is barred from promoting a drug switch if the new drug exceeds the cost of the originally prescribed medication.

Under today’s settlement, Caremark will pay $38.5 million to 29 states for costs of litigation and programs to benefit patients. $22 million of this amount is a cy pres payment which will fund a prescription medication program for low income, disabled or elderly consumers and a program to educate consumers about important differences between similar medications. Caremark will pay up to an additional $2.5 million in reimbursements to patients who paid extra because they were switched from one cholesterol-controlling drug to another.

California will receive approximately $3.4 million for charitable organizations that provide elderly and low income people with free prescription medications.

Maryland and Illinois led the investigation into Caremark’s drug switching practices. Twenty-eight other states participating in today’s settlement include: Arizona, Arkansas, Connecticut, Delaware, District of Columbia, Florida, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia and Washington.

In 2006, Caremark’s net revenues were $36.8 billion, making it one of the nation’s largest pharmacy benefit management companies. Caremark also administers mail order pharmacies, which sold 516 million prescriptions to patients in 2006.

The complaint and the agreement are available at www.ag.ca.gov/newsalerts

LOS ANGELES – California Attorney General Edmund G. Brown Jr. today announced the arrest of four suspects involved in a $1.5 million “fake healthcare clinic” scam. The suspects created a health clinic and recruited people to undergo unnecessary medical tests, with the sole purpose of filing false claims with Medi-Cal and Medicare.

Commenting on the arrests, Attorney General Brown said, “The suspects create a fake healthcare clinic to line their own pockets rather than help the sick and elderly. These arrests send a strong message that this kind of rip-off will not be tolerated.”

The 4 defendants, arrested yesterday morning at various locations in Los Angeles County, are: Richard Melkonyan, Akop Melkonian, Lilit Baghdasaryan, and Dr. Rito Castanon-Hill. Dr. Neil Hollander has agreed to surrender next week. David James Garrison remains at large.

The suspects operated Scott Medical Center in Burbank and hired two physicians, Dr. Hollander and Dr. Castanon-Hill, to create a front for a physician assistant who falsified records and billed for procedures not actually performed. The suspects recruited patients to undergo unnecessary exams and then the clinic operators and medical supply company billed Medi-Cal and Medicare.

Baghdasaryan supplied false information to the Franchise Tax Board to conceal stolen funds in 2003 and 2004. Garrison under-reported and failed to report to the Franchise Tax Board monies he was paid by Dr. Hollander, Dr. Rito Castanon-Hill, United Management Group, Inc., and S.M.C. Group, Inc., violations of Revenue and Taxation code Section 19706, Tax Evasion.

All of the defendants are charged with Penal Code Section 550, Submission of False Insurance claims; Penal Code Section 487, Grand Theft; Welfare & Institutions Code Section 14107, submission of False Medi-Cal Claims: and Penal Code Section 186.10 (a) (1), Money Laundering.

Agencies involved in the investigation include the California Department of Justice Bureau of Medi-Cal Fraud and Elder Abuse, Los Angeles Health Authority Law Enforcement Task Force, United States Office of Inspector General Health and Human Services, the Department of Health Services and Glendale Police Department. During the investigation, agents executed search warrants in Tujunga, Chatsworth, Glendale and the LAX area, seized 4 guns, and approximately $150,000 in cash.

Medi-Cal is a state managed program that pays for essential medical services, medical equipment, and medication for qualifying disabled, indigent and elderly California residents. It is funded by the state and federal governments and administered by the California Department of Health Services.

The Department of Justice Bureau of Medi-Cal Fraud and Elder Abuse investigates and prosecutes those who file fraudulent claims for medical services, medical equipment and drugs.

During the 2005/2006 Fiscal Year, the Bureau of Medi-Cal Fraud and Elder Abuse recovered $267,854,037 in Medi-Cal fraud and $6,525,097 in criminal prosecutions.

Suspects charged include:

• Richard Melkonyan (DOB 12/11/1970) was arrested at his home in Glendale, California.
• Akop Melkonian (DOB 10/28/1972) was arrested at his home in Chatsworth, California.
• Lilit Baghdasaryan (DOB 06/12/1980) was arrested at her home in Tujunga, California.
• David James Garrison (DOB 06/16/1961) resides in Los Angeles, California, is currently at large.
• Neil Hollander, M.D. (DOB 07/28/1940) resides in Huntington Beach, California, has agreed to surrender to authorities next week.
• Rito Castanon-Hill, M.D. (DOB 08/19/1971) arrested at his home in Los Angeles, California.

The California Supreme Court on Wednesday upheld California’s $3 billion stem cell agency, which was approved by voters under Proposition 71 in 2004. California Attorney General Edmund G. Brown Jr.’s office defended the measure’s legal challenge. Fifty-nine percent of voters approved the groundbreaking measure in 2004.

Wednesday’s decision frees $3 billion in funding for stem cell research that was stalled by opponents’ frivolous legal challenges. California voters adopted the measure in the wake of the Bush administration’s failure to support research that potentially help people with Parkinson’s disease, diabetes, spinal cord injuries and other serious conditions.

“I pledged to vigorously support stem cell research and today is a victory for California’s voters and medical science,” Brown said. “This decision allows California to take on the groundbreaking scientific research that the Bush administration ignored.”

(OAKLAND) – Attorney General Jerry Brown today announced an $8 million, 30-state settlement with Bayer Corporation that will resolve an enforcement action initiated because of Bayer’s failure to adequately disclose safety risks associated with the use of Baycol, a drug used to lower cholesterol that was pulled from the market in August 2001.

“This settlement is important because it establishes an obligation on pharmaceutical companies to inform the public and physicians about the tests they conduct on products,” Attorney General Brown said. “Posting both the positive and negative results from studies, will allow medical professionals to make better and safer prescribing decisions for their patients.”

The judgment, filed today in San Diego Superior Court, requires Bayer to publicly register most of its clinical studies and post the results at the end of each study. It also requires future marketing, sale, and promotion of its pharmaceutical and biological products to comply will all legal requirements, and prohibits Bayer from making false or misleading claims relating to any of these products sold in the United States.

In May 1998, Bayer introduced Baycol, a statin cholesterol-lowering drug, into the United States market. All statins carry a known risk of myopathy (a weakening of the muscles) and rhabdomyolysis (a more serious muscular disease). Bayer learned the risk of Baycol was significantly higher than other statins, especially at higher doses and when combined with genfibrozil (another cholesterol-lowering drug), through post-marketing surveillance of its product. In August 2001 Bayer voluntarily withdrew Baycol from the market.

The Attorneys General allege while Bayer informed the U.S. Food and Drug Administration about these adverse effects, they failed to adequately warn prescribing doctors and consumers about the risks. In entering the settlement, Bayer denies any wrongdoing.

In addition to California, the Attorneys General of the following states joined the settlement: Arizona, Arkansas, Connecticut, Delaware, Florida, Idaho, Illinois, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nevada, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, Washington and Wisconsin.

(SACRAMENTO) – Attorney General Bill Lockyer today filed criminal complaints against 20 dentists throughout the state, charging them with defrauding the state Medi-Cal System of $4.5 million, health benefits and workers' compensation fraud, conspiracy, grand theft, child abuse, elder abuse, assault and intentional infliction of great bodily injury.

"These dentists put at risk the health and well-being of hundreds of children and adults by performing slipshod dental services that were unnecessary, ignoring health problems that needed tending, and even skimping on appropriate amounts of anesthesia before submitting patients to painful procedures," Lockyer said. "This office will continue to aggressively prosecute those who rip off the Medi-Cal system that more than 6 million poor and elderly Californians depend on for vital health care."

Filed in Stanislaus County Superior Court, the complaint charges Modesto dentist Kyon Maung Teo, who owns Hatch Dental clinics in Ceres, Stockton and Modesto, with being the mastermind of a scam involving dentists from throughout the state. The complaint alleges Teo, 42, placed advertisements on the back of missing-children flyers and in PennySaver and DollarSaver publications. The advertisements offered gifts or rebates to Medi-Cal beneficiaries and "new patients" who sought services at Hatch Dental.

The investigation by the Attorney General's Bureau of Medi-Cal Fraud and Elder Abuse (BMFEA), assisted by the California Department of Health Services (DHS) showed Teo recruited 19 other dentists, who were paid about 25 percent of the insurance proceeds received by Hatch Dental for the work they performed. The kickbacks provided an incentive to perform unnecessary dental procedures of poor quality, including unnecessary filings and even unnecessary root canal procedures. It was not uncommon for a patient to walk out of Hatch Dental with 20 or more unnecessary fillings. To help increase billings, dental assistants also were instructed to perform procedures such as cementing crowns, which lawfully can only be performed by licensed dentists.

Co-defendant Kin Thor Pang, Teo's wife, was the office manager for all three Hatch Dental clinics. The complaint alleges Pang, 33, trained office staff to complete false dental claims, including changing dates of service or billing Medi-Cal and private insurance companies for "emergency" office visits if the patients were ineligible for routine coverage at the time of service.

The Hatch clinic staffs also were trained to fabricate periodontal charts and prepare Treatment Authorization Requests (TARs) to obtain Medi-Cal reimbursement for services based on the fabricated charts. Claims also were submitted for visits that never occurred and for non-existent procedures purportedly performed during the fabricated office visits. Insurance billing clerks were docked a dollar from their paycheck for each "mistake" they made.

As part of the conspiracy to defraud the Medi-Cal system, the dentists committed acts injurious to public health, placing the patients at risk of pain, infection, loss of teeth and great bodily injury, including: reusing dental instruments without sterilizing them, developing treatment plans that called for unnecessary dental surgeries such as root canals and fillings, performing dental surgeries without considering the patient's medical history, providing numerous shallow fillings in lieu of comprehensive treatment to patients in need of such treatment, issuing prescriptions for Schedule III narcotics without documenting the source and type of pain, forcibly restraining children during dental operations, performing extensive dental treatment on minors without fully disclosing the extent of the treatment to the minor's parent or guardian and performing dental surgeries without adequate anesthesia.

As the result of a separate investigation conducted by the California Department of Insurance, Teo and Pang also are charged with committing Workers' Compensation premium fraud by grossly understating the salaries of Hatch employees. The under-reporting resulted in a loss of $948.19 to Superior National Insurance Company, and $9,154 to Everest National Insurance Company.

Other dentists named as defendants in the complaint are:

• Steve Sangmoon Ahn, 41, of Fullerton
• Hoon Young Chang, 34, of Anaheim Hills
• Wen Hsiang Chou, 46, of Alhambra
• Anthony Halili Galvan, 42, of Dublin
• Eduardo Sabater Gerodias, 36, of Modesto
• Shahryar Baradaran Hashemi, 37, of Reseda
• Keith Yoshikuzu Komaki, 58, of Anaheim
• Ricky Hung-Tak Lam, 35, of Antioch
• Rahim Mesbah, 49, of Modesto
• Duc Sy Nguyen, 33, of Milpitas
• Sang-Hyuk "Sean" Park, 35, of Merced
• Luis Alexandrino Pinto, 42, of Irvine
• Rodolfo Poscablo Ravanera, 57, of Oakland
• Behnam Rostami, 48, of Stockton
• Williams Defreitas Saraiva, 60, of Irvine
• Seyed Mohamed Tarifard, 58, of Stockton
• Tri Duy Vu, 32, of Sunnyvale
• Shiyu Wang,44 of Alameda
• Faruk Cenap Yetek, 43, of Pleasant Hill

Patients who believe they have been victimized by the Hatch Dental clinic dentists are urged to contact the Attorney General's Medi-Cal Fraud Hotline number at 1-800-722-0432.