"The worst frauds are those that gobeyond individual harm to institutionalized systemic fraud, and theopioid scheme is no exception," Governor Cuomo said in a statement.(Photo: John Moore/Getty Images)
New York Governor Andrew Cuomo announced that the New York StateDepartment of Financial Services has initiated administrativeproceedings and filed charges against Mallinckrodt PLC and itssubsidiaries. These proceedings are reportedly the first to befiled in the Department of Financial Services' (DFS) ongoinginvestigation into the entities that created and perpetuatedthe opioid crisis.
|The Statement of Charges alleges that Mallinckrodt producedapproximately 39% of the opioid pills that overwhelmed New Yorkfrom 2006 to 2014. Mallinckrodt supplied around 5 million NewYorkers who had commercial health insurance with over one billionopioid pills.
|The statement also alleges that Mallinckrodt knewhow addictive and dangerous the drugs were,downplayed the risks to prescriber's and patients, and used thatknowledge to create a business model for financial gain, whichcost thousands of human lives and billions ofdollars.
|Two New York insurance laws: Section 403, which prohibitsfraudulent insurance acts, and Section 408 of financial serviceslaw, which prohibits intentional fraud or intentional materialmisrepresentation of a material fact with a financial product orservice, including health insurance, were cited in the charges.Although both of these sections only carry a $5,000 penalty, thosepenalties are assessed per violation, and the DFS alleges that eachfraudulent prescription is a separate violation of the abovesections.
|A hearing will be held on August 24, 2020.
|Related:
- Insurance coverage for claims stemming from thenational opioid crisis
- Tangled opioid lawsuit battles over who to blamefor faulty prescriptions
- This is a fearsome time for general counsel atopioid companies
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