Attorney General Kathy Jennings announced on May 11 that the State of Delaware had reached a multistate agreement with Mallinckrodt ARD LLC to settle allegations that Mallinckrodt violated the federal False Claims Act and the Delaware False Claims Act by underpaying Medicaid rebates.

“Medicaid is a precious resource, and fraud that wastes that resource harms both taxpayers and Medicaid recipients,” said Jennings. “We will continue to hold companies accountable and ensure the integrity of Delaware’s Medicaid program.”

The action returns nearly $800,000 to Delaware, including restitution toward the State’s share of Medicaid funding. Mallinckrodt, which is a subsidiary of the Irish pharmaceutical company Mallinckrodt PLC, sells and markets pharmaceutical products throughout the United States. The total value of the nationwide settlement is nearly $234 million to resolve various civil fraud allegations.

The settlement resolves allegations that, from January 2013 through June 2020, Mallinckrodt knowingly underpaid Medicaid rebates due for its drug H.P. Acthar Gel. The government alleged that that resulted in false claims being made to the Delaware Medicaid program, thus violating both the federal False Claims Act and the Delaware False Claims & Reporting Act.

The settlement resulted from a whistleblower lawsuit. The federal government, Delaware and 25 other states, the District of Columbia and Puerto Rico intervened in the civil action in 2020. The settlement, which is based on Mallinckrodt’s financial condition, required final approval of the U.S. Bankruptcy Court for the District of Delaware, the Bankruptcy Court of the Republic of Ireland and the United States District Court for the District of Massachusetts, which approved the settlement on May 11.

The Attorney General’s Medicaid Fraud Control Unit receives 75 percent of its funding from the U.S. Department of Health & Human Services under a grant award totaling $2,023,800 for the 2022 federal fiscal year. The remaining 25 percent, totaling $674,595 for the 2022 fiscal year, is funded by Delaware.

The matter was handled by Deputy Attorney General Edward Black, assistant director of DOJ’s Medicaid Fraud Control Unit.