On January 19th, 2012, the AP reported that the state of Texas and a subsidiary of health care giant Johnson & Johnson reached a $158 million settlement in a Medicaid fraud lawsuit. The settlement allows the drugmaker to pay a fraction of the potential $1 billion in penalties and fines that state officials had initially sought.

The lawsuit was one of dozens of state and federal cases alleging that the company committed fraud by making false or misleading statements about the safety, cost and effectiveness of the anti-psychotic medication Risperdal, and improperly influencing officials and doctors to push the drug. The lawsuit said the company engaged in illegal marketing practices and kickbacks in an effort to boost Risperdal, and also alleged the drugmaker falsely told doctors Risperdal was safe to use with children when federal regulators had not approved its use.

The lawsuit originally was filed in 2004 by whistleblower Allen Jones, a former employee of the Office of the Inspector General of Pennsylvania, who said he uncovered the drug company’s actions in Texas while investigating claims in his home state. Texas joined the lawsuit in 2006.

Lawyers for Texas and Jones had said Texas was a key market for the drug companies because schizophrenic patients often rely on Medicaid to pay for medications, and Texas has one of the largest populations of Medicaid patients.

As the whistleblower, Jones will receive a portion of the settlement, but he said Thursday he doesn’t know yet how much. Details of the settlement were not released.

If you are seeing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.