This Week in the False Claims Act: McKesson's $190 Million Settlement and the Government Intervenes Against Toyo for Failing to Pay Antidumping Duties

It has been a slow week for Qui Tams and False Claims Act matters.

The government has just announced its most recent settlement against another drug company last week: McKesson Corporation for $190 million.  The government alleged that McKesson reported "inflated mark-up percentages" to a publisher of drug prices, First Databank, for a "wide variety of brand name drugs," which in turn caused many state Medicaid programs to overpay for the drugs.  Overall, the DOJ proudly announces that more than "$2 billion" has been recovered from other drug manufacturers that were alleged to have engaged in the same type of conduct.

The most interesting qui tam I found this week was the Department of Justice's announcement  that it is intervening in US ex rel  Dickson v. Toyo Ink Manufacturing Co., Ltd et al.  Filed under seal in 2009 in the Western District of North Carolina, the case alleges that "Toyo Ink companies," a leading provider of printing inks, "knowingly misrepresented the country of origin on [import] documents presented to U.S. Customs and Border Protection to avoid paying antidumping and countervailing duties on" what appears to be an imported ink: "the colorant carbazole violet pigment number 23 (CVP-23)."   According to DOJ, the Department of Commerce assesses antidumping and countervailing duties, which are collected by U.S. Customs, to protect U.S. businesses by offsetting unfair foreign pricing and government subsidies" for certain imports, such as CVP-23, "from China and India."  Toyo is alleged in the suit to have "misrepresented Japan and Mexico as the countries of origin for its CVP-23 imports to avoid these duties."   According to the Complaint, which has not yet been released on Pacer, "Toyo’s CVP-23 imports from China and India underwent a finishing process in Japan and Mexico," but that  "process was insufficient to change the country of origin." 

I find this most recent announcement interesting only because it further shows the breadth of the False Claims Act and the different kind of industries and settings to which it can apply: anywhere there is a payment obligation to the United States, including as shown here, Customs' duties for imports.

A. Brian Albritton

May 2, 2012