$77 million paid by Feds to drug company whistleblower; $17 mil to DR.

Home Health Columnist / Guide · Oct 9, 2001

Blowing whistle nets record sum for former TAP exec

By Bruce Japsen

Tribune Staff Reporter

Published October 7, 2001

http://www.chicagotribune.com/business/chi-0110070018oct07.story?coll=chi%2Dbusiness%2Dhed

The $77 million that the federal government will pay a former executive of TAP Pharmaceutical Products Inc. for blowing the whistle on his employer is the largest such reward in U.S. history.

For his help, Douglas Durand, 50, will walk away with his record payout largely because he was the first to bring to light the health-care fraud committed by TAP. A second whistleblower lawsuit, filed by Dr. Joseph Gerstein and Boston-based Tufts Health Plan, will net them $17 million.

Lake Forest-based TAP last week agreed to pay $875 million in civil and criminal penalties and plead guilty to a criminal charge of conspiring with doctors to overbill government insurers for the prostate cancer drug Lupron. TAP is a joint venture of North Chicago-based Abbott Laboratories and Takeda Chemical Industries of Japan.

The rewards, which represent 17 percent of the $558 million in civil penalties levied against TAP, should encourage more whistleblowers to come forward with allegations of corporate misdoings, observers said. Under the federal False Claims Act, individuals filing suits that uncover wrongdoing can share from 15 percent to 25 percent of the civil penalties.

"This is by far the biggest award to an individual whistleblower," said James Moorman, president of Taxpayers Against Fraud, a Washington-based group that advocates on behalf of the federal whistleblower law. "This is the high-water mark. I doubt it will ever be equaled."

In last year's $840 million health-care fraud settlement by hospital chain HCA-The Healthcare Co., about 30 whistleblowers filed suit. The biggest individual award in that case was more than $30 million, Moorman said.

In Durand's case, the wrongdoing came to light in a 1996 whistleblower suit he filed on concerns about "illegal marketing conduct of some of its employees," prosecutors said.

Durand was unavailable for an interview. His attorney, Elizabeth Ainslie of Philadelphia, described Durand as a private person who wants to remain that way.

When Durand sought out Ainslie in late 1995, he was employed by TAP and found some of TAP's business practices "ethically troubling," she said.

"We decided when he discussed the issue with me that he should leave as soon as possible," Ainslie said.

Durand subsequently left his job at TAP in March 1996 and moved to Philadelphia to work for another drugmaker.

When he came to TAP in January 1995, Durand found a culture much different from that of his previous employer, Merck & Co., where he also had held a management position in sales.

According to the indictment, TAP offered doctors enticements become kickbacks," Ainslie said.

TAP wouldn't comment about Durand, but company officials have ranging from free drug samples to "educational grants" that at times were used to pay country club bar tabs.

"They had crossed the line. Not just gifts to doctors, but they had admitted that billing for samples was wrong. TAP also has said it is taking steps to ensure that such "inappropriate" practices never happen again.