Delaware has reached a multistate agreement with Mallinckrodt ARD, LLC to settle allegations that Mallinckrodt violated the Federal False Claims Act and the Delaware False Claims Act by underpaying Medicaid rebates.
“Medicaid is a precious resource, and fraud that wastes that resource harms both taxpayers and Medicaid recipients,” said Delaware Attorney General Kathy Jennings. “We will continue to hold companies accountable and ensure the integrity of Delaware’s Medicaid program.”
This action returns nearly $800,000 to Delaware, including restitution toward the state’s share of Medicaid funding. Mallinckrodt, which is a subsidiary of an Irish pharmaceutical company, ells, and markets pharmaceutical products throughout the United States. The total value of the nationwide settlement is nearly $234 million to resolve various civil fraud allegations.
The settlement resolves allegations that from January 2013 through June 2020, Mallinckrodt knowingly underpaid Medicaid rebates due for its drug H.P. Acthar Gel. The government alleged that this resulted in false claims being made to the Delaware Medicaid program. In such settlements, companies do not admit guilt.
This settlement resulted from a whistleblower lawsuit. The federal government, Delaware and twenty-five other states, the District of Columbia, and Puerto Rico intervened in the civil action in 2020.
The settlement, which is based on Mallinckrodt’s financial condition, required final approval of the U.S. Bankruptcy Court for the District of Delaware, the Bankruptcy Court of the Republic of Ireland, and the United States District Court for the District of Massachusetts, which approved the settlement on May 11.
After a flood of claims, Mallinckrodt filed for bankruptcy protection and being described as the kingpin of Opioid makers for its aggressive stance in manufacturing and selling the drugs blamed for a wave of addictions and deaths. Mallinckrodt and other companies were accused of knowingly making and selling opioids well above legal demand.
The Attorney General’s Medicaid Fraud Control Unit receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $2,023,800 for the fiscal year 2022. The remaining 25 percent, totaling $674,595 for fiscal 2022, is funded by Delaware.
