Missouri court cuts physician's narcotics prescription violation penalties from $304,000 to $36,000

This material originally appeared in the December 5, 2008, issue of Health Lawyers Weekly, a publication of the American Health Lawyers Association (www.healthlawyers.org).

A federal district court in Missouri imposed substantially lower penalties than those requested by the federal government against a physician after a jury found his prescribing practices violated the False Claims Act (FCA) and Controlled Substances Act (CSA).

The court weighed the defendant’s willfulness, as well as his ability to pay, among other factors, in concluding that the penalty amounts should be on the low-end of the permissible range.
A jury in July 2008 found in favor of the United States on claims against defendant Seth Paskon pursuant to the FCA and the CSA.

The government contended that Paskon issued medically unnecessary prescriptions for narcotic medications and caused improper claims for those prescriptions to be presented to Medicaid for payment.

The government sought an award of $79,113 under the FCA and an award of $225,000 under the CSA.

Defendant contended the penalties sought by the government were excessive and he lacked the ability to pay them.

The U.S. District Court for the Eastern District of Missouri concluded the government was entitled to $29,256 in penalties on its FCA claim and $7,000 in penalties on its CSA claim.

Based on jury interrogatories, the court concluded defendant was liable for penalties in connection with seven violations of the CSA and five violations of the FCA.

The court noted defendant was liable for up to $25,000 for each of the seven CSA violations and a penalty of not less than $5,500 and not more than $11,000, plus three times the amount of actual damages, for each of the five FCA violations.

After weighing several factors (the level of defendant’s culpability or willfulness; the public harm caused by the violations; defendant’s profits from the violations; and his ability to pay), the court set the penalty amounts at the low-end of the range.

Specifically, the court held a penalty of $5,500 per violation of the FCA and $1,000 per violation of the CSA was appropriate.

United States v. Paskon, No. 4:07-CV-1161 (E.D. Mo. Nov. 10, 2008).