North Carolina Department of Justice
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NC nets $2 million in Medicaid fraud case, AG Cooper announces

Release date: 4/7/2006

King Pharmaceuticals repays state for 8 years of underpaying, agrees to reforms

Raleigh: North Carolina has won more than $2 million that will go to the state’s Medicaid program and public schools thanks to a settlement reached with drug maker King Pharmaceuticals, Attorney General Roy Cooper announced today.

“Cheating Medicaid rips off taxpayers and drives up the costs of health care,” said Cooper. “I’m pleased that our investigators were able to get this money back for the people of North Carolina.”

North Carolina recently received nearly $2.2 million from Tennessee-based generic drug manufacturer King Pharmaceuticals, Inc. In settlements nationwide, King will pay $124 million to forty-nine states and the federal government. The funds are part of at settlement reached with King late last year to settle allegations that the company paid millions of dollars less than it owed to state Medicaid programs.

Cooper contends that from 1994 through 2002, King Pharmaceuticals incorrectly reported prices for several of its drugs to the federal government for the purpose of establishing rebates due to state Medicaid programs. As a result, King paid $62 million less than it should have to Medicaid programs nationwide. The settlement includes a double damages penalty based on the company’s faulty accounting practices, resulting in the total national settlement of $124 million.

Of North Carolina’s settlement, $1,075,823 will go to fund state Medicaid efforts and $1.1 million in civil penalties will go to support public schools.

The civil settlement with King Pharmaceuticals also requires the company to enter into an agreement with the U.S. Department of Health and Human Services’ Office of the Inspector General in order to monitor the company’s operations and ensure compliance with the law in the future.

The North Carolina settlement agreement was reached by Cooper’s Medicaid Investigations Unit and the National Association of Medicaid Fraud Control Units. North Carolina’s Medicaid fraud unit recovered more money last federal fiscal year than in any previous year in the department’s history. Investigations lead to 26 criminal convictions and nine civil settlements that recovered nearly $30 million from Medicaid abusers.