The two companies in the case study present a clear situation where the False Claim Act is applicable. Indeed, it should, however, be noted that the issues emanating are far beyond the False Claim and border on even greater criminal offenses such as murder, causing grievous bodily harm and torts like negligence and strict liability. However, for purposes of this paper, the discussion shall be limited to the application of the False Claim Act, otherwise, known as the Lincoln Law. In the ensuing discussion, the paper shall capture the application of the Act, the mistakes committed by both companies, the recommendations that a student would give in addressing the problems thereof, the tort actions that injured and or affected persons may sue on and lastly the ethical premise on which the companies were operating. From the onset, it is the observation of this paper that the companies were wrong ethically, legally and morally. As a consequence, it is incumbent on regulatory agencies to fasten their seat belts and tighten their nuts as they look towards playing their oversight regulatory roles effectively.
The two companies in question are the Sidra Branch of GlaxoSmithKline located in Puerto Rico and the now defunct New England Compounding Center located in Framingham in Massachusetts. Both of the companies were involved in the processing, packaging and distribution of health products and more specifically drugs. The applicability of the False Claim Act can be seen in the strain of an apparent defraud of the government. According to the Act, it is illegal to defraud the government knowingly. It is the contention of this paper that the actions committed by the two companies qualify as defrauding of the government knowingly. This is essentially because the largest consumer of the products manufactured by these companies was the government facilities courtesy of Medicaid programs intended for the impoverished and the elderly. This is not to say that other non-government consumers were not affected by these regrettable occurrences. However, under the False Claims Act, it is the defrauding of government that is relevant. This is not to say that suits in question have no other limbs in the law to stand on. Far from, the litigants may rely on a number of laws including the expansive tort laws. However, within the context of this paper, it is critical to discuss the application of the False Claim Act. The two companies are guilty of defrauding the government with the full knowledge that the products released in the market were harmful and not proper for the market. In fact, the full import of the last statement is seen in the spate of deaths witnessed particularly in regard to the New England Compounding Center case in which thousands have been left with infections and a few tens died as a direct consequence of the fungal infection.
It is imperative, in the same vein, to mention the elaborate provision of the False Claims Act which gives a caveat for whistleblowers. As it stands, the Act provides for whistleblowers, who in one way or another, may possess the information as to the illegality leading to the defrauding of government. The Act appreciates such a person and provides that successful proof by the whistleblower entitles the latter to a share of the fines imposed on the perpetrating company. It is equally this provision that was relied on by Cheryl Eckard in the GlaxoSmithKline case. The award of over eighty million by the Court to her should, therefore, be construed as the fruits from a law that appreciates and embraces whistleblowers.
Having canvassed the application of the Act in detail, it essential to consider the mistakes occasioned by the companies. The case of GlaxoSmithKline Cidra branch has more than meets the eye. In this case, the company had become complacent to the extent that it disregarded even the basic regulations and procedures. As captured in Cheryl’s revelations, the company had manufactured adulterated drugs and knowingly released the same to the market for consumption. The company then proceeded to claim payment from among others the federal government. The particulars of the fraud are captured in the evidence as intimated by Cheryl. In her reports, she observed that the production runs were mixed up with drugs that ought to have been produced in different production runs being produced all at once. She particularly mentions the diabetes and anti-depressants which in essence need to be produced differently being mixed up. In the same vein, her report mentions the case of mixed concentrations so that the output was either too strong or not strong enough. She captures the sad story of the old grandmother whose eight year old consumed an overdose and was now feeling worse.
The situation is further compounded by the fact that the water used was contaminated with bacteria and the fact that the employees accessed the products in process in a manner that left the same contaminated. What worsens the position is the fact that upon her discovery and consequential report to the head of production and later to the Board, no action is taken. She had advised that the shipments meant for delivery on that particular day be stopped and that the Federal Drug Agency as the oversight regulator be alerted. However, despite the obvious illegalities, the company declined to take responsibility. Instead, the company opted to lay her off in an alleged restructuring.
On the other hand, the New England Compounding Center case is premised on the contamination of the methylprednisolone acetate injections. It was discovered upon investigation by investigators at the Center for Disease Control and Prevention that the spates of meningitis fungal infections were consequent of the injections. The contamination was discovered to have been on the part of the packaging and distribution company. What makes this case serious is the deadly effect it had on the consumers of the injections. As at 2013, it was on the record that 14000 patients had received the injections across 23 states. In addition, it was observed that there were 750 victims suffering from meningitis courtesy of the injection and that another 64 were already dead. It is not known whether the injected patients would later develop infections and die. While the company was not ready to take responsibility for its actions, the evidence gathered by the CDC was overwhelming. Consequent suits for claims have rendered the company bankrupt and the shareholders proposed a $100 million settlement for both the suits and the creditors.
While it may be argued that such occurrences may happen, it is the manner in which the companies carried themselves that is disturbing. It shows the typical corporate culture which has no consideration for the consumers of products. The interest lies on the capitalism premise on accumulation of wealth. The overtures by GlaxoSmithKline is a case in point where companies consider profits and image as being more essential as opposed to honesty and protection of the sanctity of life. It would have been desirable for the companies to recall their products, make reports to the Federal Drug Agency and have their mistakes fixed. It is regrettable that the companies did not consider recalling their defective drugs even with the knowledge of their inappropriateness. Indeed, this is the height of dishonesty and disrespect for the sanctity of life. As a student, had I been in the same position, I would have recalled the consignments and issues an apology to the public. In addition, it would be necessary to establish a fund in the company to compensate the affected people.
On the issue of tort that can be relied on by the injured persons, the case of Brown v Superior Court, is illustrative enough. According to the rule laid in Brown case, while the manufacturers are not strictly liable for not warning the physicians of the defects anticipated in any drugs, they remain fully liable strictly for the manufacturing defects, general negligence and failure to convey unreasonable side effects in the said drugs. It is the postulation of this paper that reliance may be put on the manufacturing defects and a suit on the tort of strict liability applied.
Finally, it is critical to consider the ethical practices of the company. It is the postulation of this paper that both companies acted unethically. In fact, theirs’ constituted illegalities that needed to be remedied by the law. It is unethical to supply to the market what is unsafe and harmful to the health of consumers albeit with the full knowledge of such consequences.
References
Boese, F. (2010). Civil False Claims and Qui Tam Actions. New York: Aspen Publishers.
Lipman, F. (2011). Whistleblowers: Incentives, Disincentives, and Protection Strategies. New York: John Wiley & Sons.
United States of America. (2014, January 17). False Claims Act. Washington DC. Retrieved February 2, 2014, from http://www.justice.gov/civil/docs_forms/C-FRAUDS_FCA_Primer.pdf
