Scott + Scott and the Connecticut Attorney General’s Office worked together to obtain a $39 million verdict against a Florida-based pharmacy that defrauded the state of $10 million in a kickback scheme.
And the attorneys say the decision could lead to similar outcomes across the nation.
Connecticut claimed that Assured Rx LLC and Nitesh Patel, the sole owner of Assured, recruited former and current state employees to request compound drugs covered by state insurance in exchange for a kickback.
While the court determined that Assured violated the Connecticut False Claims Act, it ruled in Patel’s favor.
“Mr. Patel was shocked that the attorney general brought the case against him personally, and has maintained his innocence from the beginning,” Ross H. Garber of the Garber Group, counsel for Patel and Assured, said. “He is gratified that the court emphatically rejected the attorney general’s claims and found him not liable.”
The seven-day bench trial took place in Hartford Superior Court, and Judge John B. Farley issued the decision Friday.
“This is a major victory for Connecticut taxpayers,” Attorney General William Tong said. “These defendants orchestrated an elaborate kickback scheme that cost the state nearly $10 million. This decision, imposing $39 million in treble damages as well as civil penalties, sends a clear message that this state does not tolerate abuse of public funds. I want to thank the entire trial team for their diligent, determined work in this case.”
Patrick Coughlin of Scott + Scott, lead counsel for the state, said the decision included precedent-setting analysis of the FCA.
“The trend in federal court has been to establish a claim was made and something that entitled you to payment,” Coughlin said. “Here, the court found that it was enough that Assured signed an agreement with CVS that they wouldn’t violate state or federal law, and then these claims were submitted. … And the fact that the information provided, such as the patient’s name, address, policy number, prescriptions, refills, etc. was enough for the second element to be established. … Those two things are really important for the state of Connecticut to enforce its antikickback statute.”
Patrick Coughlin of Scott + Scott. Courtesy photo
Beyond Connecticut, Coughlin called it a groundbreaking decision that is going to help self-insured states struggling to keep insurance costs down.
“It gives a road map to other states to make sure that they’re not defrauded and that there’s somebody to be held accountable,” Coughlin said. “The federal government has actually tied its False Claims Act to the Anti-Kickback Statute, but most states, including Connecticut, have not done that.”
During litigation, Coughlin said Patel and Assured both argued that they were unaware the state employees were receiving illegal kickbacks. While Patel was successful in distancing himself from the illegal conduct, the court agreed with the plaintiff’s claims against Assured.
“We got CVS to help us put together the process and present it to the court in a way that established that the false claims were made and that the payments by the state were made for the claims for the compound drugs,” Coughlin said. “That was a key strategy, to make sure we included CVS and brought a key representative from CVS to testify about how their claims process work, and why it was the state that ultimately paid.”