MONTGOMERY, ALA. (September 4, 2013) – Judge Thomas L. Zebert found in favor of the State of Mississippi against Watson Pharmaceuticals in the state’s ongoing Medicaid Fraud litigation against a number of pharmaceutical companies. Judge Zebert awarded $12,382,552.00 in compensatory damages and limited statutory penalties, finding that Watson fraudulently inflated the Average Wholesale Price (AWP) of medications, overcharging the state’s Medicaid program. A hearing to determine punitive damages will be held in the next few weeks. Mississippi Attorney General Jim Hood authorized the filing of these lawsuits against the pharmaceutical companies and Beasley Allen attorneys W. Daniel “Dee” Miles, III, Clay Barnett, Roman Shaul, Chad Stewart, and Alison Hawthorne, along with former Mississippi Governor Ronnie Musgrove from Copeland, Cook, Taylor, and Bush are trying the case.
“This is another huge victory for the State of Mississippi. This is the second of some 54 cases Mississippi has filed against the pharmaceutical manufacturers to go to trial and the State has prevailed victorious in both trials,” Miles said. “Pharmaceutical companies overcharging for drugs to the state’s Medicaid program – a program designed to assist the state’s neediest citizens – is egregious conduct, and the court agreed.”
This is the second trial victory for the State of Mississippi in its ongoing AWP / Medicaid Fraud litigation. The State has recovered to date more than $120 million in settlements in the AWP litigation and has now obtained two trial verdicts. In September 2011, Judge Zebert held that pharmaceutical company Sandoz, Inc.’s prices were fraudulent, unfair, and deceptive. In ruling for the state, Judge Zebert awarded Mississippi $23,661,618.00 in compensatory damages, $3,750,000.00 in punitive damages and $2,699,000.00 in civil penalties for a total award of $30,110,618.00. The court also entered an injunction against Sandoz prohibiting the company from reporting false AWP prices to Mississippi.
The Watson case differed slightly from the previous Sandoz trial in that Watson had already settled its claim with the federal government on their portion of damages resulting from Watson’s misconduct. The Medicaid Program is a joint venture between the federal government and the state governments. Mississippi could only pursue its portion of the damages in the Watson case because of the federal settlement, resulting in a smaller verdict. The federal government settled its portion of damages in all States for approximately $106 million. “If the Court now imposes punitive damages in addition to the roughly $12.4 million verdict it has already awarded the State, Mississippi’s recovery from defendant Watson will be substantially higher proportionally than that of most other states and of the federal government’s recovery,” said Miles.
The case is Mississippi Medicaid Pharmaceutical Average Wholesale Price Litigation (Master Docket No. 65586-65632, 66312, 66313, 66314). It involves allegations that Watson and other pharmaceutical companies caused to be published inflated “Average Wholesale Prices” (AWPs) for the drugs they manufactured, which resulted in the Mississippi Division of Medicaid (DOM) reimbursing pharmacies at an inflated price, all allegedly in violation of the Mississippi Consumer Protection Act; the Mississippi Medicaid Fraud Control Act and common law fraud.