New Jersey’s False Claims Act Suit Against Sackler Family Highlights Growing Trend of State-Level Enforcement, Even at an Individual Level

This week, the state of New Jersey joined the long list of States to file suit against the principle members of the Sackler Family, owners of Purdue Pharma. While Purdue Pharma and the Sackler Family may have become poster children for greed in the face of the opioid epidemic, leading many states to commence politically-popular legal proceedings, this case demonstrates a growing trend of state attorneys’ general offices bringing independent enforcement actions, and has the capability of creating a precedent to target individual owners and executives within companies for violations of state consumer protection and false claims acts.

In the 200 page complaint, the New Jersey Attorney General alleges that – through their control of Purdue Pharma – the Sackler Family caused thousands of false claims to be submitted to the state’s Medicaid, Employee Health, and Workers’ Compensation plans for payment. The state’s claims in this regard are built on the legal theory that “[d]octors, pharmacists, other health care providers, and/or other agents of the health plans and Workers’ Compensation program expressly or impliedly certified to the State that opioids were medically necessary and reasonably required to treat chronic pain because they were influenced by the false and misleading statements disseminated by Purdue.” Based on this, the state is seeking to utilize its own version of the False Claims Act (N.J.S.A. 2A:32C-1) to hold the individuals accountable.

Like the Federal False Claims Act (31 U.S.C. 3729), the New Jersey analog provides liability where a person:

  1. knowingly presents or causes to be presented to an employee, officer, or agent of the state, or to any contractor, grantee, or other recipient of state funds, a false or fraudulent claim for payment or approval; or
  2. knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the state.

In addition, the New Jersey False Claims Act affords treble damages, attorneys’ fees and per claim penalties for violations of the Act. 

Many states have their own “mini-False Claims Acts” that mirror the Federal version, and while New Jersey’s applies to state Medicaid, Employee Health, and Workers’ Compensation plans, other states’ laws expand the scope to a much broader subset of impacted plans. Thus, while federal investigations and enforcement actions have been limited to federally-funded programs (i.e., Medicare, Medicaid, TRICARE), these growing number of state investigations have the capacity to implicate a much larger variety of claims, including, potentially, run-of-the-mill commercial plans.

It is extremely important for healthcare and life sciences companies to have compliance programs dedicated not just to federal rules and regulations, but to the evolving set of state laws and guidelines, as state investigators have increasingly begun to get off the sidelines and prosecute conduct historically enforced by the federal government. Frier Levitt routinely advises firms on compliance with the patchwork of state laws, rules and regulations. Contact Frier Levitt today to speak to an attorney.