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LOS ANGELES—California Insurance Commissioner Dave Jones said Friday that he is intervening in a whistle-blower lawsuit against drugmaker Bristol Myers-Squibb Co. regarding health insurance fraud and alleged kickbacks provided to doctors to increase sales.
Mr. Jones is seeking a monetary judgment against BMS for the “disgorgement” of millions of dollars in unlawful profits the company made as a result of the alleged kickbacks. In a statement, he said the scheme defrauded the private health insurance industry, which paid for the drugs, and California consumers.
Former employees of BMS filed a whistle-blower action in February under seal in Superior Court in Los Angeles. They allege that BMS bribed doctors to prescribe its drugs and provided illegal kickbacks to doctors to increase the company’s pharmaceutical sales in California.
The suit alleges that BMS instructed its sales representatives to court doctors with sports tickets, fancy meals, honoraria, all-expense-paid trips and gifts to induce them to prescribe BMS drugs.
The lawsuit is the largest health insurance fraud case ever pursued by a California state agency, the California insurance office said in a statement.
The case will be decided by a jury in Los Angeles.
It is believed that insurance companies in California have spent more than $3.5 billion to cover the costs of the drugs the lawsuit claims New York-based BMS sought to promote with its kickback scheme.
“Besides the obvious and deplorable ethical violations in such cases, health care fraud also leads to higher premiums for consumers and an unnecessary and unjust increase in health care costs,” Mr. Jones said in the statement.
“I will use the full force and resources of this department to root out insurance fraud and hold all responsible people and companies accountable. In this particular case, we are uncertain whether the kickback scheme is still occurring. If discovery discloses that violations are continuing, the insurance department will seek an injunction and penalties to address those violations,” Mr. Jones said.