New York Governor Andrew Cuomo has announced that the New York State Department of Financial Services has initiated administrative proceedings and filed charges against Mallinckrodt PLC and its subsidiaries. These proceedings are reportedly the first to be filed in the DFS' ongoing investigation into the entities that created and perpetuated the opioid crisis.
The DFS' Statement of Charges alleges that Mallinckrodt produced approximately 39 percent of the opioid pills that overwhelmed New York from 2006 to 2014. Mallinckrodt supplied around 5 million New Yorkers who had commercial health insurance with over one billion opioid pills.
The Statement of Charges also alleges that Mallinckrodt knew how addictive and dangerous the drugs were, downplayed the risks to prescriber's and patients, and used that knowledge to create a business model for financial gain, which cost thousands of human lives and billions of dollars.
The statement cites two New York Insurance Laws; Section 403, which prohibits fraudulent insurance acts, and Section 408 of the Financial Services law, which prohibits intentional fraud or intentional material misrepresentation of a material fact with a financial product or service, which includes health insurance. Although both of these sections only carry a $5,000 penalty, those penalties are assessed per violation, and the DFS alleges that each fraudulent prescription is a separate violation of the above sections.
A hearing will be held beginning on August 24, 2020.
In September of 2019, Cuomo announced an action against the opioid industry to recover $2 billion in overcharges for New Yorkers who had been defrauded.