QOL Medical and Its CEO Agree To Pay $47 Million for Allegedly Paying Kickbacks To Induce Claims for QOL's Drug Sucraid

Press Release

BOSTON - Pharmaceutical company QOL Medical, LLC (QOL) and its CEO, Frederick E. Cooper, have agreed to pay $47 million to resolve allegations that they caused the submission of false claims to federal health care programs, in violation of the False Claims Act, by offering kickbacks, in the form of free Carbon-13 breath testing services, to induce claims for QOL's drug Sucraid.

Sucraid is an FDA-approved therapy for the rare genetic condition, Congenital Sucrase-Isomaltase Deficiency (CSID). CSID patients have difficulty digesting sucrose (table sugar) and suffer from chronic gastrointestinal symptoms such as diarrhea, abdominal pain, bloating and gas.

As part of the settlement, QOL and Mr. Cooper admitted and accepted responsibility for certain facts providing the basis of the settlement. Beginning in 2018, QOL, with Mr. Cooper's approval, distributed free Carbon-13 breath test kits to health care providers and asked providers to give the kits to patients with common gastrointestinal symptoms. QOL claimed that the test could "rule in or rule out" CSID. In fact, the test does not specifically diagnose CSID. Conditions other than CSID can cause a patient to test "positive" for low sucrase activity on a Carbon-13 breath test. Approximately 30% of the Carbon-13 breath tests from QOL were positive for low sucrase activity.

QOL paid a laboratory to analyze the breath tests, report the results to health care providers, and provide the results to QOL. The results QOL received from the laboratory did not contain patient names, but did contain the name of the health care provider who ordered the test, along with the patient's age, gender, symptoms and test result. Between 2018 and 2022, QOL disseminated this information to its sales force with instructions to make sales calls for Sucraid to health care providers whose patients had positive Carbon-13 breath test results. QOL tracked whether sales representatives converted "positive" Carbon-13 breath tests into Sucraid prescriptions. As QOL's CEO, Mr. Cooper was aware of and approved the implementation and continuation of this marketing program.

Some QOL sales representatives also made claims regarding the Carbon-13 test's ability to definitively diagnose CSID that were not supported by published scientific literature. For example, in slides at a 2019 national sales training, which Mr. Cooper reviewed, QOL suggested that sales representatives tell health care providers, "If you have a positive breath test, the patient will not improve unless you treat with Sucraid."

"QOL provided free goods to doctors and patients in order to induce prescriptions for the very expensive drug QOL manufactured," said Acting United States Attorney Joshua S. Levy. "Not all kickbacks come in the form of cash going into a doctor's or a patient's pocket. Here, the defendants relied on free breath tests and misleading sales tactics to drive patients to their product. This conduct unnecessarily drained money from the federal health care programs and improperly influenced treatment decisions by physicians and their patients."

"Participants in the federal healthcare system, including pharmaceutical manufacturers, may not offer improper inducements to generate business," said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division. "The department is committed to protecting the integrity of federal health care programs, upholding the objectivity of treatment decisions by physicians and patients and preventing overutilization and waste in government health care programs."

"Kickback arrangements can compromise medical decisions and threaten the integrity of the Medicare program," said Special Agent in Charge Roberto Coviello of the U.S. Department of Health and Human Services, Office of Inspector General. "We are committed to protecting taxpayer-funded health care programs and the patients served by those programs, and we will thoroughly pursue allegations of False Claims Act violations."

"It is extremely important that we protect our government funded health care programs against fraud of any kind. Today's settlement with QOL Medical and its CEO is the result of years of hard work by the FBI and our partners to make sure this company did not get away with offering improper incentives to boost sales of its drug Sucraid," said Jodi Cohen, Special Agent in Charge of the FBI Boston Division. "Let this case be a warning to others that we will aggressively pursue all those, motivated by greed, who try to unlawfully enrich themselves at taxpayers' expense."

"The Defense Criminal Investigative Service, the law enforcement arm of the Department of Defense Office of Inspector General, has placed a high priority on pursuing companies that engage in fraudulent activity at the expense of the U.S. military," said Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office. "This settlement demonstrates our commitment to protecting the TRICARE program, and we will continue to work with our partners to ensure critical healthcare funds are utilized in the appropriate manner."

The allegations resolved by the settlement agreement were, in part, originally bought in a case filed under the qui tam or whistleblower provisions of the False Claims Act by former QOL Medical employees. The case is captioned United States ex rel. John Doe 1, et al. v. QOL Medical, LLC, et al., No. 1:20-cv-11243 (D. Mass.). Of the total $47 million recovery, approximately $43.6 million constitutes the federal portion of the recovery and approximately $3.4 million constitutes a recovery for State Medicaid programs. The whistleblowers will receive approximately $8 million as their share of the recovery.

This matter was handled by Assistant U.S. Attorneys Brian LaMacchia and Lindsey Ross for the District of Massachusetts and Trial Attorneys Emily Bussigel and Paige Ammons of the Justice Department's Civil Division. The case was investigated by HHS-OIG, FBI, DCIS and the Office of Inspector General for the Department of Veterans Affairs.

The settlement agreement can be found here: https://www.justice.gov/d9/2024-11/usa_v._qol_medical_llc_and_cooper_-_settlement_agreement.pdf

Updated November 15, 2024