NJ joins global settlement resolving False Claims Act allegations against medical supply manufacturer

TRENTON – Acting Attorney General John Hoffman and the Office of Insurance Fraud Prosecutor announced today that New Jersey will receive approximately $240,000 as a result of its participation in a global settlement resolving allegations that the CareFusion Corp. violated state and federal laws in promoting its surgical preparation solution Chloraprep.

According to Hoffman, the settlement resolves allegations that San-Diego-based CareFusion violated the federal False Claims Act, as well as False Claims Act statutes in New Jersey and other states, by using unlawful marketing practices and paying illegal kickbacks to induce health care providers to use Chloraprep.

Under terms of the settlement, CareFusion will pay a total of approximately $40 million to participating states and the federal government. The agreement resolves a qui tam or “whistleblower” lawsuit filed in U.S. District Court in Kansas.

A corporate spinoff of Cardinal Health, CareFusion allegedly promoted and marketed Chloraprep for uses that were not approved by the federal Food and Drug Administration, including some uses that did not involve medically-accepted indications.

Chloraprep was approved by the FDA for specific in-patient hospital procedures, including preparation of the patient’s skin prior to surgery or injection, but the FDA explicitly rejected its use for intravenous preparation and suture care. Despite that rejection, the federal whistleblower suit alleged, CareFusion promoted Chloraprep for use in intravenous preparation and suture care during a period spanning from Sept. 1, 2009 through Aug. 31, 2011.

“Promoting health care products for unapproved uses is dangerous and wholly inappropriate, and the resultant false billing to government health care programs costs us all,” Hoffman said.

In addition to promoting its Chloraprep solution for uses not approved by the FDA, CareFusion also allegedly made unsubstantiated statements about the solution during the 2009-through-2011 time period.

The states also contended that, during a period of several months in 2008, CareFusion’s predecessor corporation entered into agreements — for which CareFusion assumed legal and financial responsibility — for the payment of monies to an entity known as Health Care Concepts, Inc. The payments allegedly were made to conceal kickbacks to the physician-owner of HCC in return for using and promoting use of Chlorprep, in violation of various federal and state anti-kickback statutes.

CareFusion’s alleged unlawful conduct caused false and/or fraudulent claims to be submitted to government-funded health care programs, including state Medicaid programs.

“This kind of alleged fraudulent conduct simply cannot be tolerated. Through our own efforts, and through cooperative efforts like this one involving our state and federal partners, we are committed to identifying Medicaid fraud and abuse, and to holding those who engage in such conduct accountable,” said Hoffman.