Pharmaceutical Company QOL Medical and CEO Agree to Pay $47M for Allegedly Paying Kickbacks to Induce Claims for QOL’s Drug Sucraid

Pharmaceutical company QOL Medical LLC (QOL) and its co-owner and CEO, Frederick E. Cooper, have agreed to pay $47 million to resolve allegations that they caused the submission of false claims to federal health care programs, in violation of the False Claims Act and similar state statutes, by offering kickbacks in the form of free Carbon-13 breath testing services to induce claims for QOL's drug Sucraid.

Sucraid is an FDA-approved therapy for the rare genetic condition Congenital Sucrase-Isomaltase Deficiency (CSID). CSID patients have difficulty digesting sucrose (table sugar) and suffer from gastrointestinal symptoms such as diarrhea, abdominal pain, bloating and gas.

Beginning in 2018, QOL, with Cooper's approval, distributed free Carbon-13 breath test kits to health care providers and asked providers to give the kits to patients with common gastrointestinal symptoms. QOL claimed that the test could "rule in or rule out" CSID. In fact, the test does not specifically diagnose CSID. Conditions other than CSID can cause a patient to test "positive" for low sucrase activity on a Carbon-13 breath test. Approximately 30% of the Carbon-13 breath tests from QOL were positive for low sucrase activity.

QOL paid a laboratory to analyze the breath tests, report the results to health care providers and also provide the results to QOL. The results provided to QOL did not contain patient names, but did contain the name of the health care provider who ordered the test, along with the patient's age, gender, symptoms and test result. Between 2018 and 2022, QOL disseminated this information to its sales force with instructions to make sales calls for Sucraid to health care providers whose patients had positive Carbon-13 breath test results. QOL tracked whether sales representatives converted "positive" Carbon-13 breath tests into Sucraid prescriptions. As QOL's CEO, Cooper was aware of and approved the implementation and continuation of this marketing program.

Some QOL sales representatives also made claims to health care providers regarding the Carbon-13 test's ability to definitively diagnose CSID that were not supported by published scientific literature. For example, in slides at a 2019 national sales training, which Cooper reviewed, QOL suggested that sales representatives tell health care providers, "If you have a positive breath test, the patient will not improve unless you treat with Sucraid."

As part of the settlement, QOL and Cooper admitted and accepted responsibility for certain facts providing the basis of the settlement.

"Participants in the federal healthcare system, including pharmaceutical manufacturers, may not offer improper inducements to generate business," said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division. "The department is committed to protecting the integrity of federal health care programs, upholding the objectivity of treatment decisions by physicians and patients and preventing overutilization and waste in government health care programs."

"QOL provided free goods to doctors and patients in order to induce prescriptions for the very expensive drug QOL manufactured," said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. "Not all kickbacks come in the form of cash going into a doctor's or a patient's pocket. Here, the defendants relied on free breath tests and misleading sales tactics to drive patients to their product. This conduct unnecessarily drained money from the federal health care programs and improperly influenced treatment decisions by physicians and their patients."

"Kickback arrangements can compromise medical decisions and threaten the integrity of the Medicare program," said Special Agent in Charge Roberto Coviello of the Department of Health and Human Services Office of Inspector General (HHS-OIG). "We are committed to protecting taxpayer-funded health care programs and the patients served by those programs, and we will thoroughly pursue allegations of False Claims Act violations."

"Kickbacks have no place in our healthcare system," said Assistant Director Chad Yarbrough of the FBI Criminal Investigative Division. "This settlement should send a message that the FBI is committed to finding fraudsters and investigating all those who try to exploit the healthcare system at the expense of patients."

"The Defense Criminal Investigative Service (DCIS), the law enforcement arm of the Department of Defense Office of Inspector General, has placed a high priority on pursuing companies that engage in fraudulent activity at the expense of the U.S. military," said Special Agent in Charge Patrick J. Hegarty of the DCIS Northeast Field Office. "This settlement demonstrates our commitment to protecting the TRICARE program, and we will continue to work with our partners to ensure critical healthcare funds are utilized in the appropriate manner."

The allegations resolved by the settlement agreement were, in part, originally brought in a case filed under the qui tam or whistleblower provisions of the False Claims Act by Elizabeth Allen, Lauren Canlas, Donald Johnson and Stacey Adams, who are former QOL Medical employees. The case is captioned United States ex rel. John Doe 1 et al. v. QOL Medical LLC, et al., No. 1:20-cv-11243 (DMA). The False Claims Act permits private parties to sue for fraud on behalf of the United States and to share in any recovery. The act also permits the government to intervene in such actions, as the government did, in part, in this case. Of the total $47 million recovery, approximately $43.6 million constitutes the federal portion of the recovery and approximately $3.4 million constitutes a recovery for State Medicaid programs. The whistleblowers will receive approximately $8 million from the federal portion of the recovery.

The government's pursuit of this matter illustrates the government's emphasis on combating health care fraud. One of the most powerful tools in this effort is the FCA. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division's Commercial Litigation Branch, Fraud Section, and the U.S. Attorney's Office for the District of Massachusetts, with investigative support from HHS-OIG, the FBI Boston Field Office, DCIS and Department of Veterans Affairs' Office of the Inspector General.

Trial Attorneys Emily Bussigel and Paige Ammons of the Justice Department's Civil Division and Assistant U.S. Attorneys Brian LaMacchia and Lindsey Ross for the District of Massachusetts handled the matter.

With the exception of the facts admitted by QOL and Cooper, the claims resolved by the settlement are allegations only. There has been no determination of liability.

Settlement