Public Document No. 12 OFFICE OF ATTORNEY GENERAL MARTHA CoaKLEY BOSTON OFFICE CONSUMER HOTLINE INSURANCE FRAUD TIPLINE One Ashburton Place, Boston, MA 02108 100 Cambridge Street Phone: (617) 727-8400 Phone: (617) 573-5330 Phone: (617) 727-2200 TTY: (617) 727-4765 Boston, MA 02108 Hours of operation for the The Insurance Fraud Tipline www.mass.gov/ago Phone: (617) 727-2200 Consumer Hotline are (accepting calls 24 hours) is 10:00 a.m. to 4:00 p.m. intended for calls pertaining to NEW BEDFORD OFFICE fraud in any of the following: 105 William Street, First Floor ELDER HOTLINE workers’ compensation, motor The Office of Attorney General Martha Coakley consists New Bedford, MA 02740 Phone: (888) AG-ELDER vehicle insurance, disability, of the Executive Bureau which includes management Phone: (508) 990-9700 (243-5337) health care billing, and and communications functions, and four bureaus that SPRINGFIELD OFFICE FAIR LABOR HELPLINE unemployment insurance. perform substantive legal work: Government; Criminal; 1350 Main Street, Fourth Floor Phone: (617) 727-3465 Business and Labor; and Public Protection and Advocacy. VICTIM COMPENSATION AND Springfield, MA 01103 Most staff members work in the Boston office locations, INSURANCE AND HEALTH CARE ASSISTANCE HOTLINE Phone: (413) 784-1240 and the Attorney General also maintains regional offices CONSUMER HELPLINE Phone: (617) 727-2200 ext. 2160 in Central (Worcester), Southeastern (New Bedford), WORCESTER OFFICE Phone: (888) 830-6277 and Western (Springfield) Massachusetts. In FY09, the 10 Mechanic Street, Suite 301 Attorney General’s Office returned over $657 million to Worcester, MA 01608 the Commonwealth and its residents. Phone: (508) 792-7600 A Message from Attorney General Martha Coakley T he preparation of this 4th Annual Report marks an opportunity to reflect not only on the past year but also on my first term as your Attorney General. In my first message to readers of this Report, I said that my goal was “to make this office as effective and responsive as it can be, and to use the skills, talent and energy of the staff to bring positive change to the lives and futures of all who call the Commonwealth home.” Over these past four years, I am proud to say that the Attorney General’s Office has successfully stood up for the consumers and taxpayers of the Commonwealth, recovering more than a billion dollars during that time. In fact, for every one dollar in our office’s budget, we recover five dollars for the people of theC ommonwealth. As the state’s chief law enforcement office, we also have worked to make our communities safer through investigations and prosecutions as well as proactive prevention efforts. Of course, one of the great challenges that we faced during these four years was the economic crisis that has affected us all.W e responded to that crisis aggressively by filing groundbreaking actions against companies that contributed to the foreclosure crisis, recovering hundreds of millions of dollars for taxpayers and helping to keep more than 15,000 people in their homes. We’ve worked to keep energy rates down for families and businesses, and stood up for consumers in the face of unfairness. We’ve prosecuted cases of fraud and corruption, and www.mass.gov/ago i leveled the playing field for businesses by taking on companies that mistreated workers. W e’ve taken on those who abused our seniors, violated people’s civil rights, or sought to prey on our kids online. This report is just a snapshot of the work that we do each day. We have highlighted priorities, cases, and issues that we hope will give you the opportunity to better understand the breadth of the work of this office. I am grateful for this opportunity to serve as your Attorney General and look forward to continuing to fight on your behalf over the next four years. Cordially, Martha Coakley Massachusetts Attorney General ii Fiscal Year 2010 Annual Report PROTECTING T AX P A YERS Protecting Taxpayers This year the AGO returned money RECOVERIES FROM to the Commonwealth’s General Fund WALL STREET S MONEY and to the state’s Medicaid program, AVING The AGO continued its strong protecting the investment that we all leadership in holding big banks and make as taxpayers and aggressively Wall Street accountable for their going after the fraudulent use of role in the economic crisis. In FY taxpayer funds. 2010, through numerous landmark PROTECTING Of the $35.7 million recovered by C cases, the office recovered more ONSU the AGO in its capacity as the Medicaid than $20 million in taxpayer money M Fraud enforcement authority, over ERS for the Commonwealth. (A more $18 million was returned to the complete outline of the office’s work Massachusetts Medicaid program. in response to the economic crisis is These funds were recovered as a result outlined later in this report.) of indictments of laboratories for a C O BUILDING variety of fraudulent acts (including FALSE CLAIMS ACTIONS MM UNITIES taking kickbacks) and other litigation During FY10, the AGO entered which addressed off-label marketing into agreements with two major of drugs. In addition to the significant supermarket chains in Massachusetts funds returned to the Commonwealth, after an investigation unveiled that the in parallel consumer protection FINANCIAL companies were overcharging public A DDRESSING matters, the AGO obtained restitution entities for various prescription drugs and compensation to consumers who under the workers compensation C RISIS were defrauded. Other Medicaid fraud insurance system, violating the actions involved cases of unnecessary Massachusetts False Claims Act. medical or dental services or, in at least Together the companies paid one case, the diversion of drugs paid $246,127 to the Commonwealth and D EVELO E for by Medicaid and were hallmarks of $94,463 to certain cities and towns in CONO AGO efforts to save taxpayers money. PM Massachusetts. M IC ENT www.mass.gov/ago 1 YERS A P AX T PROTECTING Saving Money for the Commonwealth The AGO continued to look at the anti- The AGO defends state agencies, one case, the AGO saved $2.7 million and as such had an important role AVING AVING competitive effects of the pharmaceutical in damages claimed by a plaintiff MONEY S industry’s efforts to undermine the in FY10 in the implementation arguing that its factory was damaged ready availability of generic drugs. of pension reform, ensuring that due to an inadequate culvert on In a case against pharmaceuticals only eligible residents receive state Interstate 1-95. In another case, staff manufacturer Abbott Labs /TriCor, the services. When the validity of fees or, defended state agencies in cases AGO in some cases, an Agency’s authority where the court or, in some cases a recovered more than $750,000 (as ERS M part of a nationwide settlement of $22.5 to levy taxes was challenged, jury, ultimately found no valid claim. ONSU C the AGO defended the relevant The AGO also beat back overzealous PROTECTING million) for Massachusetts agencies. Also, the AGO’s work in the field agencies. Of particular significance efforts by plaintiffs to attach of anti-trust has had international was the AGO work in support of government funds in situations impact as in the case against consolidation in the Department where there was no right – these are manufacturers of Dynamic Random of Transportation and the defense often matters in which swift analysis Access Memory (“DRAM”). AGO of the State Retirement Board. In and action by AGO staff also saved UNITIES MM BUILDING staff litigated a multistate price addition, the AGO’s defense of the plaintiffs’ legal fees by narrowing the fixing O C case on behalf of Massachusetts insurance commissioner’s order issues to be tried. government purchasers of electr onic rejecting proposed health insurance The AGO has been a national equipment containing DRAM rate increases resulted in significant leader in civil consumer protection taxpayer savings. actions against pharmaceutical computer chips and obtained RISIS C settlements with seven international In defense of various agencies, companies including Merck, Eli manufacturers for their role in the the zealous advocacy of AGO staff Lilly, and Pfizer, Inc. AGO attorneys DDRESSING A FINANCIAL conspiracy. Compensation will be yielded savings that can be quantified successfully led the nation with paid to the Commonwealth in an mostly by what the Commonwealth complex investigations into amount to be determined. did not have to pay in damages as a pharmaceutical and medical device result of claims of negligible merit. In company conduct resulting in a $33 ENT IC M PM CONO E EVELO D 2 Fiscal Year 2010 Annual Report PROTECTING T AX P A YERS million national settlement with tooth and ordered by the Court Pfizer Inc. to resolve allegations to pay over $36,000 in restitution; of improper marketing of the in another matter, the owner of a roofing company plead guilty antipsychotic drug, Geodon. S MONEY Recognizing the significant cuts to failing to pay over $119,000 in AVING to the vital local programs that workers’ compensation insurance serve Massachusetts residents, premiums; finally, in a third case, the AGO has delivered over $3.5 the Court sentenced a Revere man million in grant funding, all obtained to State Prison and ordered him to PROTECTING through pay over $164,000 in restitution for C judgments and settlements, ONSU throughout our communities. The fraudulently using others’ identities M Prescription Drug Assistance Grant to collect unemployment benefits. ERS provided over $1 million to 14 community health centers to help defray the cost of drugs and/or the co- pays for some of Massachusetts’ most C O BUILDING vulnerable residents. MM In FY10, the AGO secured over UNITIES $769,000 in restitution orders to the Commonwealth and private insurers.