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Anyone who discovers that the United States government is being defrauded can file a whistleblower lawsuit on government’s behalf, under the “qui tam” provision of the False Claims Act of 1863. If private citizens have insiders’ knowledge of fraud, they can sue companies (or individuals) suspected of such fraud in order to help recover the government’s stolen dollars.

Several whistleblowers did just that when they filed suits alleging that Allergan Inc., the pharmaceutical manufacturer of Botox, was marketing the drug for uses not approved by the Federal Drug Administration (FDA).

Botox has been approved by the FDA to smooth out wrinkles, treat neck, wrist and finger spasms, as well as help combat eye muscle disorders and excessive arm sweating.

Per the whistleblowers’ complaint, Allergan was promoting Botox for “off-label” use in treating overactive bladders, headaches and even for use in alleviating symptoms of cerebral palsy in children. In addition to the aggressive off-label marketing campaign, the whistleblower complaint also alleged that Allergan set up a third-party hotline that doctors could call for billing assistance so they could draft letters and claims in such a way that insurance companies and government health care programs would pay for the non-approved uses.

Department of Justice (DOJ) Assistant Attorney General Tony West noted that “Allergan also taught doctors how to bill for off-label uses, including coaching doctors on how to miscode Botox claims, leading to millions of dollars of false claims being submitted to federal and state government programs.”

On September 1, 2010, Allergan agreed to settle the civil claims, along with criminal fines, in a $600 million agreement. According to the DOJ, it is one of the fifth-largest settlement amounts by a single pharmaceutical manufacturer for their drug marketing practices.

The False Claims Act aka the “Lincoln Law”

The False Claims Act was originally created during the Civil War so that private citizens could report war profiteers who were selling fraudulent supplies to the Union Army. “Relators,” those who filed the whistleblower lawsuits, were eligible to receive half of the amount the government recovered from these cases. Congress drastically reduced this amount in 1943, and with less incentive to report fraud, the Act was rarely used. During the Cold War, increased reports of defense contractors taking advantage of the U.S. government led Congress to amend the act again in 1986 – allowing whistleblowers to receive 15 to 30 percent of the government’s recovery.

Of the $225 million Allergan is paying to settle the civil claims, the federal government will receive just over $210 million and participating states (as part of a Medicaid state settlement) will receive almost $15 million. It is expected that the whistleblowers will receive about $37 million of the federal government’s $210 million share.

Read more about the role Lourie, Chance, Forlines, Carter & King, PC played in the $600 million Botox whistleblower case.