Attorney General Stumbo Announces $3 Million Settlement for Kentucky Medicaid Program in Fraudulent Prescription Drug Pricing Scheme

FRANKFORT, KY (March 23, 2006) – Attorney General Greg Stumbo announced today that Kentucky has received a settlement from King Pharmaceuticals, a pharmaceutical manufacturing company headquartered in Bristol, Tennessee. As the result of the total settlement, Kentucky will receive over $3 million in state and federal claims, of which the Kentucky Medicaid program will be reimbursed $947,317.55.

King agreed to pay more than $124 million to settle federal criminal and civil charges arising out of its fraudulent reporting of pricing information used to establish drug prices for Medicaid and other federal and state drug programs and to calculate the quarterly rebate payments that King must make to the Kentucky Medicaid program.

"I will not stand idly by and permit large pharmaceutical companies to enrich themselves at the expense of Kentucky taxpayers,” Stumbo said. “The Medicaid Fraud and Abuse Control Unit of my office aggressively pursues Medicaid recoveries. Since I became Attorney General, we have secured $22,726,516.20 in state and federal recoveries.”

The criminal investigation against King and the subsequent civil settlement were triggered when a former King employee filed a lawsuit under the federal False Claims Act, which has been the federal government’s principal civil tool to recover funds that have been fraudulently obtained from government programs and has resulted in the recovery of over $15.5 billion in judgments since 1986.

Unlike fifteen other states and the District of Columbia, Kentucky does not have a False Claims Act. The King settlement underscores yet again what a valuable law enforcement tool a False Claims Act can be in ferreting out those who submit false Medicaid and other claims to the Commonwealth to fraudulently obtain funds from government programs. Stumbo’s office has proposed legislation enacting a Kentucky False Claims Act to encourage the reporting of Medicaid fraud and assist the Attorney General in bringing the violators to justice.

The Attorney General’s Tip Line for reporting allegations of Medicaid fraud is 1-877-228-7384.