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Whistleblower Awarded $27 Million for J&J Settlement with Texas

Allen Jones, the person who sued Johnson & Johnson on behalf of the state of Texas for allegedly defrauding the state’s Medicaid program, will receive 17%, or $27 million, of the $158 million settlement the company has agreed to pay state and federal regulators to settle the lawsuit.

Travis County District Judge John Dietz approved the $158 million settlement agreement between J&J and the state of Texas to settle claims that the pharmaceutical company fraudulently marketed its Risperdal anti-psychotic drug for uses not approved by U.S. regulators, including for children with psychiatric disorders.

“This settlement represents a resolution to claims brought by the State in 2004 for alleged Medicaid overpayment during the years 1994-2008, and will circumvent potentially lengthy and costly appellate activities,” Teresa Mueller, a company spokeswoman, said in an e-mail.

Under the agreement, J&J and Janssen will pay $158 million, with 40 percent going to the state, 31 percent to the U.S., 17 percent to whistle-blower Allen Jones, who brought the lawsuit, and the rest to his attorneys, Tommy Jacks, one of Jones’s lawyers, said in an interview. Both sides agreed on final allocation last night, Jacks said.

“We know the Texas taxpayers are getting more,” said Tom Kelley, spokesman for the Texas attorney general. The settlement is the largest in a Texas case under the state’s Medicaid fraud act, Kelley said.

The settlement, reached during trial, was the first time J&J and its Janssen unit settled a state’s claims over Risperdal. The company lost jury trials in South Carolina and Louisiana over Risperdal marketing. Opening statements in a trial in Arkansas began today.

The settlement “provides for full payment within 10 days,” Tom Melsheimer, another Jones attorney, said today. “Allen is very pleased to put this all to rest.”

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