David J. Caputo

In March 2015, after a whistleblower complaint against Teva Pharmaceuticals was unsealed, David J. Caputo joined the lawyers preparing to pursue it. The government had declined to intervene. Two former sales representatives, Charles Arnstein and Hossam Senousy, alleged that payments to physicians through sham speaker programs had induced prescriptions for Copaxone and Azilect. Caputo would help carry their case toward trial.

He had previously handled health-care fraud from the defense and prosecution sides. After Harvard Law School and a clerkship with Judge J. Curtis Joyner of the Eastern District of Pennsylvania, Caputo joined Dechert, where his civil and criminal work included health-care fraud defense. He moved to Kline & Specter in 2002 to represent people with catastrophic injuries. In 2008, he became an Assistant United States Attorney in the Eastern District’s government, environmental, and health-care fraud section. He helped prosecute the Synthes medical-device case, which ended in corporate penalties of $23.2 million.

When Caputo returned to Kline & Specter as a partner in 2010, he started its whistleblower practice while continuing to litigate injury cases. His work for relators—the people bringing fraud claims on the government’s behalf—combined developing documentary evidence, working with investigating agents, and preparing for government review and trial.

Prepared to Try It

In the Teva litigation, the whistleblowers’ legal team reviewed millions of pages, took scores of depositions, and developed expert evidence. The physicians’ payments were described as honoraria for speaking about the drugs. The evidence included sales representatives’ tracking of speakers’ prescribing and their use of that information in deciding whom to retain as paid speakers. Program attendance records also showed physicians returning repeatedly to presentations about the same drug, sometimes alternating between speaking and sitting in the audience.

The case survived dismissal and then Teva’s motion for summary judgment. In a seventy-page opinion issued in February 2019, Chief Judge Colleen McMahon of the Southern District of New York found factual disputes requiring trial. Caputo prepared to try the case with lead counsel James Miller and fellow trial lawyer Heidi Wendel. After further motions and trial preparation, the parties reached an agreement shortly before trial was to begin. Announced in January 2020, the settlement required Teva to pay $54 million, nearly $40 million of it to federal and state governments.

Caputo’s trial preparation drew on a continuing plaintiffs’ practice. More than fifty of his clients have obtained seven-figure or larger verdicts or settlements. Those results include a $21.8 million medical-malpractice verdict in 2015. Medical records, expert testimony, and the calculation of damages were part of his injury work as well as the health-care matters he pursued for whistleblowers.

Arizona’s Largest

At Carondelet Health Network, the disputed payments concerned who qualified for inpatient rehabilitation. Caputo served as lead counsel for whistleblower Jacqueline Bloink, whose allegations involved St. Joseph’s and St. Mary’s hospitals in Tucson. The government said the hospitals had billed Medicare and other public programs for intensive rehabilitation services provided to patients who did not meet the coverage requirements. Carondelet’s $35 million resolution in 2014 was Arizona’s largest False Claims Act settlement at the time. Bloink received approximately $5.9 million.

Gregory Kuzma brought a different kind of hospital knowledge. A former chief financial officer of Northern Arizona Healthcare, he learned of the transactions underlying his case while working for a nonprofit that operated a clinic. His allegations concerned a Medicaid disproportionate-share payment to Flagstaff Medical Center. The payment came from a program intended to support hospitals serving uninsured patients, but the financing depended on the source of the money used to obtain federal matching funds.

Kuzma alleged that Williams Hospital District transferred $2.2 million to Arizona’s Medicaid agency, securing about $4.775 million in federal funds for Flagstaff Medical Center. A related foundation then granted the district $6 million, allegedly returning its contribution along with part of the federal money. The suit challenged that arrangement as an unlawful provider-related donation. Caputo served as lead counsel with Nathan Zipperian as co-counsel. Northern Arizona Healthcare, Flagstaff Medical Center, and the foundation agreed to pay $4.5 million in 2022.

Where the Statute Reaches Next

In New York, Caputo represented a tax-services provider whose information concerned Lantheus Medical Imaging, formerly Bristol-Myers Squibb Medical Imaging. The companies’ New York business included sales of medical-imaging products to hospitals and clinics and work training customers and servicing equipment. The whistleblower alleged that the companies had failed to pay taxes owed on that activity. New York’s False Claims Act allowed the case to reach tax obligations.

Caputo served as lead counsel, connecting the transactions and their tax treatment to the state-law obligations and the whistleblower statute’s requirements. The attorney general’s investigation found more than $2.2 million in unpaid taxes for 2002 through 2006. The $6.2 million settlement in 2014 resolved state franchise, New York City corporation, and Metropolitan Transportation Authority tax claims. His client received approximately $1.137 million.

The CareMed specialty-pharmacy case concerned the information supplied to obtain coverage for expensive drugs and the claims submitted afterward. CareMed admitted that some employees seeking prior authorization had posed as staff from prescribing physicians’ offices. Some answered clinical questions from their knowledge of coverage criteria instead of obtaining the patient’s actual information. The government also alleged that the pharmacy had restocked and rebilled unused Procrit and Rituxan and sought payment for refills that patients and doctors had not received.

An audit overseen by the government found that CareMed had received payment for quantities of certain dosages exceeding what it had purchased. Caputo was lead counsel for the whistleblower in the $10.19 million resolution; the government’s claims accounted for $10 million paid to the United States and New York. His client received a $1.85 million share. The inquiry required following both the representations used to secure approval and the quantities purchased, supplied, and billed.

Building Youman & Caputo

In January 2017, Caputo and Andrew Youman founded their Philadelphia firm with both whistleblower and catastrophic-injury practices, including medical-malpractice litigation. The combination kept medical evidence and damages analysis within the same practice as health-care billing, hospital finance, kickback, specialty-pharmacy, and state-tax claims. Its lawyers work with whistleblowers through investigations, case strategy, and litigation.

Caputo has taught as an adjunct professor at Drexel’s law school, served on the Supreme Court of Pennsylvania’s Civil Procedural Rules Committee, and sat on the board of the Public Interest Law Center of Philadelphia. A Delaware County native, he lives there with his wife and three children and coaches youth baseball.

His whistleblower clients have included sales representatives, finance officers, and health-care professionals. Their cases can require years of confidential investigation and sealed proceedings while their employment and reputations are at stake. Caputo’s responsibilities include pursuing the public recovery and protecting the relator’s interests throughout that process. When the Teva case settled, he identified the patient’s interest, too: “physicians’ prescription drug choice must remain free from financial influence.”