Bayer's Record Fraud. (the Front)

By Mokhiber, Russell | Multinational Monitor, May 2003 | Go to article overview

Bayer's Record Fraud. (the Front)


Mokhiber, Russell, Multinational Monitor


ON FEBRUARY 9, 1999, George Couto, a Bayer Corporation marketing executive, attended a mandatory ethics training session at a Bayer office in Connecticut.

The training session was kicked off by a video address by Helge Wehmeier, the head of Bayer's entire U.S. operation.

"Everyone is expected to obey the law -- not only the letter of the law, but the spirit of the law as well," Wehmeier told the assembled Bayer executives. "You will never be alone to adhere to the high standards of the law. Should you feel prodded, speak with a lawyer, or call me. I'm serious about that."

The assembled employees in the room erupted into laughter.

But Couto had something on his mind. He knew that Bayer had engaged in an elaborate scheme to defraud the Medicaid program out of $100 million.

On February 11, 1999, two days after the ethics training class, he wrote his boss a one paragraph memo asking how the company reconciled the Medicaid scheme with the company's expectation of adherence to the spirit and letter of the law. No one ever got back to him.

So, Couto decided to pursue the matter elsewhere. He sought legal assistance from Neil Getnick and Lesley Skillen -- partners at Getnick & Getnick in New York City, and Scott Tucker of Boston -- and filed a qui tam lawsuit against Bayer. That lawsuit was filed in early 2000.

He quit Bayer soon thereafter.

The case was filed under seal. In April 2002, Couto, age 39, was diagnosed with pancreatic cancer. He knew he was going to die, but wanted to make sure that the case would not die with him.

So his lawyers, over the strenuous objections of Bayer's lawyers, demanded that Couto be deposed on videotape. In August 2002, he was deposed, and withstood a grueling cross-examination.

"In my view, all that cross-examination did was to underscore the strength of the case and demonstrate what an extraordinary person George was," says Getnick. "As a litigator, I came to the conclusion -- and I believe everyone in that room where the deposition was taken came to the same conclusion -- that no defendant company would ever have wanted that videotape played before a jury at trial. The success of George in delivering his testimony is what accounted for this case resolving itself within months thereafter."

Couto died in November 2002. But in April, his wishes came true, as Bayer pled guilty to one federal criminal count and agreed to pay a $5.5 million criminal fine.

The company also agreed to pay $251 million to settle Couto's civil False Claims Act case.

Couto's estate will get a $34 million relator's fee. GlaxoSmithKline, which engaged in a similar fraud against Medicaid, will pay $87 million to settle its case.

Bayer was charged with knowingly providing Medicaid incorrect data regarding pricing of prescription drugs, preventing Medicaid from receiving discounts to which it was entitled.

Couto, who began his career as a store pharmacist with a drugstore chain, brought Bayer's actions to light in 2000.

"At great risk to himself, his career, and quite probably his health, George Couto decided to do the courageous, ethical thing," Getnick says.

Under the Medicaid Drug Rebate Program, pharmaceutical manufacturers that sell drugs to Medicaid -- ultimately for distribution to the poor -- are required to give the government its best available price on each drug. …

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