Bryan Cohen Mar. 13, 2014, 3:00pm

CHICAGO (Legal Newsline) - Illinois Attorney General Lisa Madigan announced a $27.6 million federal and state settlement on Tuesday with Teva Pharmaceuticals USA and its subsidiary to resolve allegations of false billing.

Teva Pharmaceuticals and IVAX LLC allegedly violated the federal False Claims Act by making payments to Michael Reinstein, a Chicago physician, in return for prescribing an anti-psychotic medication to thousands of Medicare and Medicaid patients.

"Teva Pharmaceuticals pushed its drug onto thousands of vulnerable patients without regard to their health and at the expense of the state Medicaid program and Illinois taxpayers," Madigan said.

Reinstein allegedly promoted generic clozapine, a rarely used anti-psychotic medication with serious potential side effects. The drug is typically considered a last resort, particularly among elderly patients. Clozapine has been shown to be effective for treatment-resistant forms of schizophrenia, but it can cause seizures, a significant decrease in white blood cells, inflammation of the heart muscle and increased mortality in elderly patients.

Reinstein allegedly accepted a $50,000 one-year consulting agreement from IVAX and other benefits for switching his patients to generic clozapine, in violation of the federal Medicare and Medicaid Anti-Kickback statute.

The alleged scheme resulted in the submission of more than 100,000 false claims to Illinois Medicaid and Medicare Part D.

Under the terms of the settlement, Teva must pay the federal government close to $15.5 million and the state of Illinois more than $12.1 million, plus interest from September onward.

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