Cuomo Goes After Endo For Insurance Fraud, Financial Fraud

Liz Carey

New York City, NY (WorkersCompensation.com) – New York Gov. Andrew Cuomo said he is going after opioid manufacturer Endo International for insurance and financial fraud.

In an announcement this week, Cuomo said the N.Y. Department of Financial Services had filed charges and initiated administrative proceedings against Endo International plc and its subsidiaries, Endo Health Solutions, Inc., Endo Pharmaceuticals, Inc., and Par Pharmaceutical Companies, Inc. The department charged the companies knowingly misrepresented their opioid products as safe pain treatments, while downplaying their addictive nature, even going so far as to market one product as “abuse-resistant.”

“All these opioid manufacturers knew how addictive and dangerous their products were, and they used it as a reckless business model for their own financial gain at the cost of thousands of human lives and billions of dollars. New York demands accountability from the drug companies and others responsible for the opioid epidemic that continues to devastate families and communities throughout the state and across the country,” Cuomo said in a statement. “Their greedy, fraudulent behavior is inexcusable, and New York will make sure that justice is served and these big pharmaceutical companies are ultimately held responsible for their actions.”

According to DFS, its ongoing investigation into the opioid crisis found that Endo manufactured 18.4 percent of the opioid distributed in the state of New York between 2006 and 2014.

DFS said Endo violated two New York State insurance laws – Section 403 which prohibits fraudulent insurance acts; and Section 408, which prohibits intentional fraud or misrepresentation of material fact. Each of these is punishable by a penalty of up to $5,000 per charge. DFS contends that each opioid prescription for which Endo provided an opioid is a separate violation of each charge.

“In particular, pursuant to Section 403 of the New York Insurance Law, the Superintendent has the authority to levy civil penalties upon any person who has committed a fraudulent insurance act, as defined in Section 176.05 of the New York Penal Law, up to $5,000 and the amount of the claim — per fraudulent claim. 17. Under New York Penal Law Section 176.05, a fraudulent insurance act is an act ‘committed by any person who, knowingly and with intent to defraud presents [or] causes to be presented . . . to or by an insurer . . . or any agent thereof: . . . a claim for payment, services or other benefit pursuant to [a health insurance] policy, contract or plan that he or she knows to: (a) contain materially false information concerning any material fact thereto; or (b) conceal, for the purpose of misleading, information concerning any fact material thereto . . . .’”the DFS wrote. “In addition, under Sections 404 and 408(a)(1)(A) of the New York Financial Services Law, the Superintendent has the authority to levy civil penalties upon any person who has committed any intentional fraud or intentional misrepresentation of a material fact with respect to a financial product or service or involving any person offering to provide or providing financial products or services, up to $5,000 per offense. ‘Financial product or service’ includes, among other things, any financial product or service provided by person regulated by the Superintendent under the New York Insurance Law. This includes commercial health insurance plans.

According to the National Institute on Drug Abuse, New York healthcare providers wrote 34 opioid prescriptions for every 100 persons, the equivalent of more than 673,030 prescriptions.

“From 2007 to 2014, for example, private insurance claims related to opioid dependence diagnoses rose more than 3000 percent nationally, and nearly 500 percent in New York State,” DFS said in its statement of charges. “Over just the past 10 years, the dramatic rise in additional claims paid by commercial health insurers in the State of New York as a direct result of the opioid crisis led to, in turn, New York consumers of commercial health insurance overpaying an estimated $1.8 billion in premiums. One study has estimated that opioid overdose patients add approximately $11.3 billion to the U.S. healthcare system each year — or approximately 1 percent of all expenditures.”

In its charges DFS said that Endo knowingly promoted a false narrative that opioids were an appropriate treatment for pain while downplaying their long-known addictive risks. Additionally, DFS said, the company misrepresented the product’s safety without legitimate scientific proof in marketing materials to health care providers and patients.

DFS specifically pointed to Opana ER, Endo’s reformulated version of Opana, that the company marketed as abuse-resistant without any scientific evidence to support its claim. The U.S. Food and Drug Administration rejected the company’s request to use language to that effect on its product labelling on the basis that “the data did not show that the reformulation could be expected to meaningfully reduce abuse.” Data from Edno appeared to show that the new product remained subject to abuse, yet Endo continued to market the new reformulation as safer and less likely to be abused than other products, DFS said.

In June 2017, the FDA asked Endo to remove the reformulated Opana ER from the market because of its high risk of abuse.

The hearing is scheduled to begin on Oct. 26, 2020 at the office of the New York State Department of Financial Services.

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