Baxter Whistleblower Lawsuit Reveals Mold, Prompts $18M Settlement

Public Health Watchdog Breaking News
Public Health Watchdog Breaking News

Whistleblower Raises Concerns about Mold Contamination at Baxter Plant

Baxter Healthcare Corp. will pay $18 million to settle several lawsuits related to inadequate manufacturing conditions at its Marion, North Carolina facility. The settlement stemmed from a whistleblower, an employee who repeatedly raised concerns about moldy air filters at the facility where sterile products are made. The whistleblower will reportedly receive $430,000 for his efforts.

The whistleblower attorneys at Parker Waichman LLP keep up-to-date with whistleblower lawsuits and settlements. The firm continues to offer free legal consultations to individuals with questions about filing a whistleblower lawsuit.

Baxter produces IV therapies, premixed drugs, renal therapies and other sterile solutions at its Marion facility. According to a Jan. 12, 2017 press release issued by the Department of Justice, Baxter admitted that it introduced adulterated drugs onto the market because it failed to comply with good manufacturing practices. The company entered into a deferred prosecution agreement with the United States government.

“Despite notification by an employee of potential contamination concerns, Baxter was poorly focused on instituting sufficient safety standards for their products,” said Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina, according to the press release. “Today’s resolution reflects (the court’s) commitment to hold accountable drug companies that violate manufacturing standards and wrongly profit from those violations.”

According to Citizen-Times, the whistleblower is an HVAC technician who started working at the plant in 1979. Court records show that the whistleblower identified mold and discoloration on air filters, which were located near a machine that filled IV bags, in 2011 and 2012. The employee reported the issue to management multiple times, but the moldy filters remained for another 16 months. According to court documents, management instructed the technician to only replace air filters with holes in them.

The whistleblower is still employed at the plant, and about five managers were fired in connection to the case. The law protects whistleblowers from retaliatory actions such as demotion, firing or other form of punishment related to their whistleblower activities.

The U.S. Food and Drug Administration (FDA) inspected the plant in 2012, as a result of the whistleblower’s reports. The agency identified “several mold species and other particulate matter,” court documents state. The whistleblower continued to raise concerns until regulators probed the plant.

The whistleblower lawsuit was filed under the False Claims Act, alleging that the IVs had been manufactured illegally. The government ultimately paid for these adulterated products through federal programs such as Medicare and Medicaid, the suit alleged.

The settlement totals $18.158 million, including $16 million in penalties and forfeiture, and a civil settlement under the False Claims Act totaling $2.158 million. Under the agreement, Baxter admitted to violating the Federal Food, Drug, and Cosmetic Act (FDCA) by failing to comply with current Good Manufacturing Practices.

Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, commented on the settlement stating “Following current good manufacturing practices is essential to ensure the safety and efficacy of our drugs,” according to the release. “Today’s settlement shows that the government will continue to hold companies accountable for failing to fulfill this critically important responsibility.”

FDA testing did not identify mold in IV products, the release states. When sterile products are tainted with mold, the consequences can be deadly. In 2012, 743 people became ill and 64 people died due to a fungal meningitis outbreak linked to contaminated steroid injections. The products were produced by the New England Compounding company.

“FDA’s manufacturing standards are designed to ensure the quality, safety, and efficacy of drugs distributed to American consumers, and FDA expects pharmaceutical companies to correct deficiencies in an expedited manner,” said Special Agent in Charge Justin Green of FDA’s Office of Criminal Investigations, Miami Field Office, according to the press release. “We will remain vigilant in our efforts to protect the U.S. public health from potentially dangerous products.”

Whistleblower Lawsuit and the False Claims Act (Qui Tam)

Under the False Claims Act, private individuals and entities who have knowledge of fraud against federal programs can file a lawsuit on behalf of the United States government. The government can join these so-called “Qui tam” actions, but if it does not then the plaintiff can continue to pursue litigation on their own. These lawsuits are filed against a party that allegedly caused a false or fraudulent claim to be submitted through federal programs such as Medicare or Medicaid.

If companies are found to violate the False Claims Act, the government can penalize them for three times the dollar amount defrauded. Each false claim can lead to civil penalties between $5,000 and $10,000 each. The whistleblower is eligible to receive 15 to 30 percent of damages recovered.

The False Claims Act offers certain whistleblower protections. Individuals who report acts of fraud against the government are protected from retaliation, which includes being fired, demoted or harassed for reporting the actions.

Whistleblower protections and the False Claims Act has many complex components. Legal counsel is advised for individuals seeking to file a Qui tam lawsuit.

According to the DOJ press release, the government launched its Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative in May 2009. The team was established to reduce Medicare and Medicaid fraud. The release highlights the importance of the False Claims Act in these efforts, stating, “One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $31.4 billion through False Claims Act cases, with nearly $19.6 billion of that amount recovered in cases involving fraud against federal health care programs.”

Filing a Whistleblower Lawsuit

Whistleblowers play a crucial role in identifying corporate healthcare fraud and other actions that cause false claims to be submitted to federal programs such as Medicare and Medicaid. Whistleblowers are protected from retaliation, and can recover compensation for their efforts. If you or someone you know is interested in filing a whistleblower lawsuit, contact Parker Waichman today. Our experienced attorneys offer free, no-obligation case evaluations. For more information, fill out our online form or call 1-800-YOURLAWYER (1-800-968-7529).