Is Committing A $1 Billion Health Tech Fraud As Easy As New Indictment Makes It Seem?
Former executives from Outcome Health, a firm that displays health ads in doctors’ offices, are facing federal fraud charges. Stat takes a look at what exactly the feds say the executives did.
How Difficult Is A $1 Billion Health-Tech Fraud?
Building a health-technology startup on nothing but hot air may be easier than you’d think — at least, according to a federal indictment unsealed Monday and related civil charges brought by the Securities and Exchange Commission. Federal prosecutors charge that executives at Outcome Health, a high-flying startup, are guilty of defrauding their clients, lenders, and investors, leading to nearly $1 billion in fraudulently obtained investments and debt. The SEC made its own complaint, alleging that Outcome raised $487 million by falsely portraying itself as a success to its investors, which included Goldman Sachs, Google-affiliated CapitalG, and the Pritzker Group. (Herper, 11/26)
In other health industry news —
MiMedx’s Petit Charged With Fraud Exposed By Short-Sellers
MiMedx Group Inc. was going to be Parker H. Petit’s last act -- the final chapter of a long career building and selling health care companies. For years, the maker of skin grafts repeatedly beat its quarterly revenue targets. Its market value briefly touched $2 billion. At its headquarters in Marietta, Georgia, rumors swirled about an eventual sale to a bigger rival. (Melin, Van Voris and Dolmetsch, 11/26)
J&J Fails To Get $70 Million Risperdal Award Tossed On Appeal
A Pennsylvania appeals court upheld a $70 million verdict against Johnson & Johnson in a lawsuit charging its Risperdal anti-psychotic drug caused a man to grow female breasts and also ruled that punitive damages may be available in the case. In addition to upholding the verdict for Tennessee resident Andrew Yount, the Pennsylvania Superior Court Tuesday sent back to the Philadelphia trial judge the issue of punitive damages in the case, potentially raising the stakes for J&J. The company was hit last month with $8 billion in punitive damages in another Philadelphia Risperdal case. (Feeley, 11/26)