QOL Medical to Pay $47M in Sucraid Kickback Settlement

QOL Medical LLC and its CEO, Frederick E. Cooper, have agreed to pay $47 million to resolve allegations that they paid kickbacks in the form of free Carbon-13 breath tests to drive prescriptions of the company’s rare-disease drug, Sucraid. The settlement, announced on November 15, 2024, by the U.S. Attorney’s Office for the District of Massachusetts, ends a whistleblower lawsuit filed by four former QOL employees. The full QOL Medical settlement agreement is set out in the Justice Department press release.

The Scheme Alleged by the Government

Beginning in 2018, QOL distributed free Carbon-13 breath test kits to health care providers and asked those providers to give the kits to patients with common gastrointestinal symptoms. The company’s pitch was that the test could “rule in or rule out” Congenital Sucrase-Isomaltase Deficiency (CSID), the rare genetic condition that Sucraid is approved to treat. CSID patients have difficulty digesting sucrose, or table sugar, and suffer from gastrointestinal symptoms such as diarrhea, abdominal pain, bloating, and gas. QOL tracked whether sales representatives turned “positive” Carbon-13 breath tests into Sucraid prescriptions.

The test cannot specifically diagnose CSID. Conditions other than CSID can cause a patient to test “positive” for low sucrase activity on a Carbon-13 breath test. Approximately 30% of the Carbon-13 breath tests from QOL were positive for low sucrase activity, according to the settlement. QOL paid a laboratory to run the tests, report the results to providers, and pass the same results back to QOL. The data did not include patient names, but it paired the patient’s age, gender, symptoms, and test result with the name of the ordering provider and forwarded it to the company’s sales force.

How the Sales Pitch Was Built

The marketing program ran on training materials Cooper personally reviewed. At a 2019 national sales training, slides reviewed by Cooper told representatives to tell health care providers that “If you have a positive breath test, the patient will not improve unless you treat with Sucraid.”

Between 2018 and 2022, QOL pushed that data to its sales force with instructions to make sales calls for Sucraid to health care providers whose patients had positive breath test results. Some QOL sales representatives also made claims about the test’s ability to definitively diagnose CSID that were not supported by published scientific literature, the Justice Department said. As QOL’s CEO, Cooper was aware of and approved the implementation and continuation of the program.

The Arc of the Alleged Scheme

1. 2018: QOL begins distributing free Carbon-13 breath test kits to providers.
2. 2018-2022: Patient test results flow from a contracted lab to QOL’s sales force.
3. 2019: QOL’s national sales training installs the pitch to providers.
4. 2020: Four former QOL employees file a sealed whistleblower lawsuit.
5. 2024: QOL and Cooper agree to pay $47 million to resolve the allegations.

The Whistleblowers Behind the Case

The allegations were first brought in a case filed under the qui tam provisions of the False Claims Act. Elizabeth Allen, Lauren Canlas, Donald Johnson, and Stacey Adams, all former QOL employees, brought the case, which is captioned United States ex rel. John Doe 1 et al. v. QOL Medical LLC, et al., No. 1:20-cv-11243 (D. Mass.). The False Claims Act lets private parties sue for fraud on the government’s behalf and share in any recovery. The government intervened, in part, in the case, and the relators will draw a share of the federal portion of the recovery.

Where the $47 Million Is Going

Of the total $47 million QOL Medical settlement, approximately $43.6 million constitutes the federal portion of the recovery. About $3.4 million constitutes a recovery for State Medicaid programs. The whistleblower share, drawn from the federal portion rather than added on top, is set out in the table below.

The False Claims Act rewards relators with a share of the proceeds when their information leads to a government recovery. The share is set by formula in qui tam cases where the government intervenes. The relator share is drawn from the federal portion of the recovery, not added on top of the total.

The federal share returns money to federal health care programs that reimbursed Sucraid claims during the period covered by the settlement. TRICARE is named explicitly in the DCIS agent’s statement about the case. The state share returns money to state Medicaid programs that joined the settlement. The full joint federal-state allocation is set out in the QOL Medical settlement filing in Massachusetts.

The federal allocation and the state allocation add up to the total the government announced. The figures are all “approximately” amounts as the government disclosed them. There has been no determination of liability, the Justice Department said. With the exception of facts admitted by QOL and Cooper, the claims resolved by the settlement are allegations only. The admission narrows what the company can dispute in any future proceeding on the same conduct.

Why ‘Free’ Counts as a Kickback

The U.S. Attorney’s Office for the District of Massachusetts led the prosecution, with the Civil Division’s Commercial Litigation Branch Fraud Section. Their theory: providing a free service with the intent to induce federal reimbursable claims still runs afoul of the anti-kickback statute.

• HHS Office of Inspector General (HHS-OIG)
• FBI Boston Field Office
• Defense Criminal Investigative Service (DCIS)
• VA Office of Inspector General
• FDA Office of Criminal Investigations

QOL provided free goods to doctors and patients in order to induce prescriptions for the very expensive drug QOL manufactured. Not all kickbacks come in the form of cash going into a doctor’s or a patient’s pocket. Here, the defendants relied on free breath tests and misleading sales tactics to drive patients to their product. This conduct unnecessarily drained money from the federal health care programs and improperly influenced treatment decisions by physicians and their patients.

The investigation brought together a multi-agency team drawn from federal health, defense, and criminal units. HHS-OIG Special Agent in Charge Roberto Coviello said kickback arrangements “compromise medical decisions and threaten the integrity of the Medicare program.” DCIS Special Agent in Charge Patrick J. Hegarty said the case “demonstrates our commitment to protecting the TRICARE program.” The coordinated response signals how the government treats free-product kickback cases.

“Participants in the federal healthcare system, including pharmaceutical manufacturers, may not offer improper inducements to generate business,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to protecting the integrity of federal health care programs, upholding the objectivity of treatment decisions by physicians and patients and preventing overutilization and waste in government health care programs.” The Justice Department has signaled that the case is part of a broader effort to police in-kind kickbacks across federal health care programs.

What the Settlement Requires

As part of the deal, QOL and Cooper admitted and accepted responsibility for certain facts providing the basis of the settlement. The government’s settlement announcement is the public record of the admitted facts and the broader allegations. The DOJ emphasized that, with the exception of the facts admitted by QOL and Cooper, the claims resolved by the settlement are allegations only. There has been no determination of liability, the Justice Department said.

Separately, the HHS Office of Inspector General has listed QOL Medical and Cooper under a Corporate Integrity Agreement, with an estimated completion date of November 2029, per the HHS-OIG listing of QOL Medical’s Corporate Integrity Agreement. The agreement requires the company to put in place ongoing compliance measures overseen by federal monitors for the duration of the agreement. The QOL case lands in the same enforcement lane as another 2024 pharmaceutical kickback settlement over the migraine drug Nurtec ODT.

Frequently Asked Questions

What is Sucraid prescribed for?

Sucraid is an FDA-approved therapy for Congenital Sucrase-Isomaltase Deficiency (CSID), a rare genetic condition in which patients have difficulty digesting sucrose, or table sugar, and suffer from gastrointestinal symptoms such as diarrhea, abdominal pain, bloating, and gas.

What is a Carbon-13 breath test?

It is a non-invasive test that measures exhaled gases after a patient drinks a labeled sugar solution. The Justice Department said the version QOL distributed could not specifically diagnose CSID, and that conditions other than CSID can produce a positive result.

Who blew the whistle on QOL Medical?

Four former QOL employees filed a sealed qui tam lawsuit in 2020: Elizabeth Allen, Lauren Canlas, Donald Johnson, and Stacey Adams. The government intervened, in part, in the case, and the relators will receive approximately $8 million from the federal portion of the recovery.

How was the $47 million split?

About $43.6 million went to the federal government, about $3.4 million went to state Medicaid programs, and the four relators together will receive about $8 million from the federal share. The split was set under the False Claims Act formula for qui tam recoveries.

What is the Corporate Integrity Agreement?

It is a compliance agreement QOL Medical and Cooper must follow after the settlement. The HHS Office of Inspector General has listed it in its Corporate Integrity Agreement database with an estimated completion date of November 2029, and it requires the company to put in place ongoing compliance measures overseen by federal monitors.

Disclaimer: This article reports on a settled federal enforcement action. It is provided for informational purposes only and does not constitute legal, medical, or financial advice. Figures and admissions reflect the public settlement as published by the U.S. Department of Justice and may be subject to subsequent proceedings. Consult a qualified attorney for advice on any specific False Claims Act or healthcare compliance matter.