In April 1999, the Food and Drug Administration (FDA) determined that the drug Nitroglycerin SR did not produce substantial enough results to warrant approval by the FDA for reimbursement by government programs such as Medicaid.

Despite the fact that the use of Nitroglycerin SR would not be subsidized by Government programs, Eon Labs continued to submit quarterly reports to the government that misrepresented Nitroglycerin SR’s status and failed to notify that the drug was not longer eligible for Medicaid reimbursement. The government accuses Eon Labs of knowingly causing false Medicaid claims to be filed for Nitroglycerin SR through the autumn of 2008.

The case was settled under the False Claims Act, and was brought to court by an anonymous civilian whistle blower on behalf of the United States Government. The False Claims Act entitles the whistle blower to a share of the settlement, which will be $525,000 in the Eon Labs case.

Following the reports of fraud, the Eon Labs case was investigated by the Attorney’s Office of the District of Massachusetts, the Department of Health and Human Services and the Justice Department.

The Department of Justice (DOJ) and the Department of Health and Human Services (HHS) are working together to prevent, detect, and prosecute health care fraud. At the National Health Care Fraud Summit held on January 28, 2010, HHS Secretary Kathleen Sebelius and Attorney General Eric Holder discussed, among other things, the accomplishments of the Health Care Fraud Prevention and Enforcement Action Team (HEAT)—an initiative created in May 2009 by the DOJ and HHS.  The HEAT has increased the number of Medicare Fraud Strike Forces, which now operate in seven major cities across the country:  (1) Baton Rouge, Louisiana; (2) Brooklyn, New York; (3) Detroit, Michigan; (4) Houston, Texas; (5) Los Angeles, California; (6) Miami, Florida; and (7) Tampa, Florida.  Since the first Strike Force began operations in Miami, Florida in 2007, Strike Force teams have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program in excess of $1 billion dollars.

On February 1, 2010, President Obama unveiled the 2011 fiscal year budget.  This budget allocates $1.7 billion for efforts to combat health care fraud.  This is an increase of $250 million over the 2010 enacted level.   This increased support will, among other things, expand the HEAT and implement a set of proposals to strengthen Medicare, Medicaid, and the Children’s Health Insurance Program.  The ultimate goal is to prevent health care fraud before it occurs, detect it as early as possible when it does occur, and vigorously enforce all penalties and recourses available when fraud is identified.