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AG Kilmartin Announces a $40.1 Million Settlement with CareFusion Corporation to Resolve Fraud Allegations

Rhode Island to Receive $59,000 to its Medicaid Budget

Attorney General Peter F. Kilmartin announced today that Rhode Island has joined with other states and the federal government in a settlement with CareFusion, a manufacturer of medical and surgical supplies and medical devices, to resolve civil allegations of unlawful marketing practices and the payment of kickbacks aimed at promoting sales of CareFusion's surgical preparation solution, Chloraprep.

Under the terms of the civil settlement, CareFusion will pay $40.1 million to the states and the federal government. The settlement resolves a qui tam, or whistleblower, lawsuit filed in the United States District Court for the District of Kansas, under the provisions of the federal False Claims Act and analogous state False Claims statutes. As part of the settlement, approximately will be $59,000 returned to Rhode Island's Medicaid budget.

"As our healthcare system evolves and changes, it is critical that companies engaged in the industry operate fully within the boundaries of the law and established regulations. In this instance, CareFusion stepped across the line in promoting products not approved for certain uses, potentially risking patient safety, for the benefit of the company's bottom line. This type of reckless and greedy action will not be tolerated," said Attorney General Kilmartin.

CareFusion, a corporation spun off from Cardinal Health in 2009, allegedly promoted and marketed Chloraprep for uses that were not approved by the Food and Drug Administration (FDA) some of which were not medically accepted indications. Once the FDA approves a surgical solution such as Chloraprep as safe and effective, its manufacturer cannot market or promote it for an "off-label" use, i.e., any use not specified in the FDA-approved product label.

Chloraprep was approved by the FDA for specific inpatient hospital procedures, including the preparation of a patient's skin prior to surgery or injection, but the FDA explicitly rejected its use for intravenous preparation and suture care.

The lawsuit alleges that during the period between September 1, 2009 and August 31, 2011, CareFusion promoted Chloraprep for use with intravenous preparation and suture care, which went beyond the FDA-approved label uses for Chloraprep. CareFusion also allegedly made and disseminated unsubstantiated representations about the use of Chloraprep solutions during the same time period.

The states further contend that during the course of several months in 2008, CareFusion's predecessor corporation entered into agreements, as to which CareFusion assumed legal and financial responsibility, for the payments of monies to an entity known as Health Care Concepts, Inc. (HCC). The payments were allegedly made in order to conceal kickbacks to the physician-owner of HCC, for the purpose of promoting and inducing providers to use Chloraprep, 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 or caused purchases by government funded health care programs, including the state Medicaid programs.

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