"The worst frauds are those that go beyond individual harm to institutionalized systemic fraud, and the opioid scheme is no exception," Governor Cuomo said in a statement. (Photo: John Moore/Getty Images)
New York Governor Andrew Cuomo announced that the New York State Department of Financial Services has initiated administrative proceedings and filed charges against Mallinckrodt PLC and its subsidiaries. These proceedings are reportedly the first to be filed in the Department of Financial Services' (DFS) ongoing investigation into the entities that created and perpetuated the opioid crisis.
The Statement of Charges alleges that Mallinckrodt produced approximately 39% of the opioid pills that overwhelmed New York from 2006 to 2014. Mallinckrodt supplied around 5 million New Yorkers who had commercial health insurance with over one billion opioid pills.
The statement also alleges that Mallinckrodt knew how addictive and dangerous the drugs were, downplayed the risks to prescriber's and patients, and used that knowledge to create a business model for financial gain, which cost thousands of human lives and billions of dollars.
Two New York insurance laws: Section 403, which prohibits fraudulent insurance acts, and Section 408 of financial services law, which prohibits intentional fraud or intentional material misrepresentation of a material fact with a financial product or service, including health insurance, were cited in the charges. Although both of these sections only carry a $5,000 penalty, those penalties are assessed per violation, and the DFS alleges that each fraudulent prescription is a separate violation of the above sections.
A hearing will be held on August 24, 2020.
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