Attorney General Bonta Combats Medi-Cal Fraud, Announces a $47 Million Settlement Against QOL Medical

OAKLAND — California Attorney General Rob Bonta today announced a settlement against pharmaceutical manufacturer QOL Medical (“QOL”) and Frederick E. Cooper, the company’s Chief Executive Officer for submitting false claims to the Medicaid program and other government healthcare programs. The settlement resolves allegations that QOL engaged in a kickback scheme between 2018 and 2022, by providing free Carbon-13 (“C13”) test kits to providers then using the test results to sell their drug, Sucraid. This resulted in some patients taking Sucraid even though it wasn't medically necessary. As a part of the settlement, QOL and Cooper, will pay a total of $47 million to resolve federal and state violations of various fraud and kickback statutes, with the State of California receiving $384,406.
 
“Decisions impacting patients' health must be guided exclusively by what is best for the patient,” said Attorney General Bonta. “Kickback schemes putting profit before patients are not only immoral, they are also illegal. My office is dedicated to holding accountable those who would defraud California’s critically important Medi-Cal program. I am grateful for the collaboration of our local, state, and federal partners in this important mission.”
 
The settlement resolves allegations that QOL paid remuneration to induce the purchase of Sucraid, a drug that treats the symptoms associated with sucrose ingestion in patients with a rare gastrointestinal genetic disease called congenital sucrase-isomaltase deficiency (CSID). This is a violation of the Anti-Kickback Statute, the federal False Claims Act and state law False Claims Act corollary statutes. QOL admitted that beginning in 2018, it distributed free C13 test kits to health care providers and asked them to give these kits to their patients with common gastrointestinal symptoms. They claimed that the C13 test could “rule in or rule out” CSID, for which Sucraid is the only FDA-approved therapy. QOL paid a clinical laboratory to analyze patients’ C13 tests and received aggregate weekly results, which its commercial team used to find potential Sucraid patients. Between 2018 and 2022, QOL paid the laboratory for over 75,000 C13 tests and disseminated the results to the QOL sales force, so that the sales force would make Sucraid sales calls to health care providers whose patients had positive C13 test results. This conduct allegedly caused the submission of false claims to both Medicare and Medicaid, including California’s Medicaid program, Medi-Cal.
 
The California Department of Justice’s DMFEA protects Californians by investigating and prosecuting those who defraud the Medi-Cal program as well as those who commit elder abuse. These settlements are made possible only through the coordination and collaboration of governmental agencies, as well as the critical help from whistleblowers who report incidences of abuse or Medi-Cal fraud at oag.ca.gov/dmfea/reporting.
 
The Division of Medi-Cal Fraud and Elder Abuse receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $69,244,976 for Federal fiscal year (FY) 2025. The remaining 25 percent is funded by the State of California. FY 2025 is from October 1, 2024 through September 30, 2025.
 
A copy of the settlement can be found here.