J&J tried, failed to squeeze whistle blower in Texas Medicaid case

A Texas judge Tuesday approved the $158 million settlement between Johnson & Johnson and the state of Texas over allegations that J&J's Janssen subsidiary illegally promoted the antipsychotic drug Risperdal through the Medicaid program.

Before Travis County District Judge John Dietz banged the gavel in Austin for the last time in this eight-year case, lawyers for the company, state and whistle blower Allen Jones argued over how the money should be divided.

Whistle blowers often get between 10 and 30 percent depending on a variety of circumstances.

One of Jones' lawyers, Tom Melsheimer, said J&J wanted Jones to only get 7 percent.

"There is no basis in the law for that," Melsheimer said.

"My view is it's none of their business, but they don't always see it my way," said Tommy Jacks, another member of the Fish & Richardson firm that represented Jones. "The state has the ultimate say in the allocation and the final allocation works well for us in this case. Fittingly, the state of Texas gets the largest share."

Texas gets $61 million, according to the Attorney General's Office, which prosecuted the case, or about 39 percent. The federal government gets the next biggest chunk because Medicaid is the federal-state insurance program that serves the poor and disabled.

Jones will get almost 13 percent, or roughly $20 million, of the total, with his law firm rest. Fish & Richardson spent millions of dollars since it took Jones' case in 2004, according to Melsheimer.

Jones was relieved and happy.

"The number is not what it was originally about," Jones said, referring to his efforts as an investigator for the Office of Inspector General to uncover Medicaid fraud in Pennsylvania. That effort led to convictions of state officials and to problems in Texas, but he was also fired by other Pennsylvania government officials.

Jones said he had worried that J&J's last effort, if successful, would have discouraged other whistle blowers and their law firms from filing such cases.

"I need to rest," said Jones, who filed the whistle blower suit in 2004. (The state joined in 2006.)

As for Johnson & Johnson, the company denied wrongdoing and said in a statement that the settlement saved future court costs in Texas. (It has several other state cases pending.)

"We are pleased the settlement agreement has been brought to a close," Janssen spokeswoman Teresa Mueller said in a statement. "Under the terms of the settlement, Janssen will pay $158 million in full resolution of all claims in Texas. This settlement represents a resolution to claims brought by the State in 2004 for alleged Medicaid overpayment during the years 1994-2008, and will circumvent potentially lengthy and costly appellate activities.

"Janssen is committed to ethical business practices, and has policies in place to ensure its products are only promoted for their FDA-approved indications."

Tom Kelley, spokesman for Texas Attorney General Greg Abbott, said in a statement, "The largest recovery of taxpayer funds in a Texas civil Medicaid fraud case was approved today by Travis County District Judge John K. Dietz. Under an agreed final judgment entered this morning, Johnson & Johnson and its subsidiaries must pay $158 million to resolve the State's enforcement action charging Janssen Pharmaceutica with defrauding the taxpayer-funded Texas Medicaid program.

"In 2006, the Attorney General's Civil Medicaid Fraud Division charged Johnson & Johnson and its subsidiaries with illegally promoting Risperdal, an antipsychotic drug, for use by pediatric Medicaid patients, despite the fact that the U.S Food and Drug Administration had not approved Risperdal for use by children. Johnson & Johnson simultaneously downplayed the drug's serious side effects."