Drug Makers’ Feared Enemy Switches Sides, as Their Lawyer

He racked up numerous convictions and mega-settlements in nearly a quarter-century, using whistle-blowers and secret grand juries to pressure major pharmaceutical and health companies into ending illegal practices like kickbacks to doctors and misuse of blockbuster drugs.

Once described as a cross between a firebrand preacher and a charismatic litigator, Mr. Loucks burnished a reputation aptly captured in a Fortune magazine headline: “Why Do Drug Companies Fear This Man? Maybe because he’s declared all-out war on cheats in the drug industry.”

But a year and a half ago, Mr. Loucks, a Republican, left the United States attorney’s office in Boston after he was passed over for the top post and President Obama appointed a Democrat. Instead, Mr. Loucks joined Skadden, Arps last July, and has startled former allies by emerging in recent months as zealous a corporate defender as he was a prosecutor, complete with proposals seeking more lenient treatment for the medical companies he once vilified.

In a six-page memo last month to clients in his portfolio, which may include some of the very same corporations he prosecuted repeatedly, Mr. Loucks bemoaned strategies he had embraced.

“The government and the whistle-blower have an advantage,” he wrote, complaining that federal investigators were now using the law unfairly. “While prosecutors often assert the company has engaged in ‘serious’ misconduct, they keep the company in the dark, often for years, as to the specific allegations.”

Those who have known him are quick to recall that his crowning achievement was a $2.3 billion settlement against Pfizer that capped a four-year secret investigation.

“We’re all disappointed that he’s gone over to the dark side because it seemed that he was a good prosecutor,” said Shelley R. Slade, a whistle-blowers’ lawyer in Washington and a former senior counsel for health care fraud at the Justice Department.

“I looked upon it with sadness,” Patrick Burns, spokesman for the whistle-blower advocacy group Taxpayers Against Fraud, said of Mr. Loucks’ change. “He’s a good and honorable person. He did great work in the Boston office. He’s a good lawyer. It’s just too bad.”

Federal ethics rules prohibited Mr. Loucks from any dealings with the United States attorney’s office in Boston for a year after his resignation, and he can never be involved in cases he investigated directly. But he is not barred from representing clients he once prosecuted on other matters, and his law firm’s roster includes some of the biggest companies he once investigated, including Pfizer, Merck, Schering-Plough, Bristol-Myers Squibb and Medtronic.

He defends his newfound friendship with former foes, and notes that he’s still wearing cowboy boots native to his Oklahoma childhood even though he’s now working in the white-collar division of a prestigious law firm.

“While everyone calls it ‘the other side,’ I’m doing the same thing I’ve always done, which is zealously representing my clients,” he said.

And while he used to call some of those people’s actions “evil,” today he argues that drug and medical device companies are making strides in complying with federal billing, fraud and kickback laws. “They make products that have huge benefits to a number of people,” he said. Skadden, a 2,000-lawyer firm, has made several hires in recent years to amplify its health care practice.

In interviews and a lengthy e-mail exchange, Mr. Loucks said his views on the whistle-blower law had evolved.

The False Claims Act, with its triple damages, has been the government’s most powerful weapon against health care fraud since Congress in 1986 increased the rewards for whistle-blowers. Since then, taxpayers have recovered an estimated $28 billion from medical companies.

As a federal prosecutor in Boston, Mr. Loucks created a health care fraud unit and used the law, as well as the tools of secrecy and surprise, to reap major awards. The unit’s victories are renowned, starting with an $875 million payment in 2001 by TAP Pharmaceuticals. Whistle-blowers shared $95 million in that case, alerting companies and informants to the stakes involved.

For years, Mr. Loucks has argued that whistle-blowers are paid far much in health care fraud cases — bounties up to 30 percent, totaling $650 million in just the last two years, he said. These people would blow the whistle for less, he argued both inside the prosecutor’s office and more recently in a paper titled “the Great American Giveaway.” While that hostility toward what he considers the greed of some whistle-blowers is old news, Mr. Loucks’ views on unsealing their complaints are new.

In his May 12 memo to clients, Mr. Loucks urged some companies to press judges to unseal complaints more quickly. That way, he says, they can learn the scope of complaints sooner, identify witnesses and fight back harder.

“If Mike was still with the Justice Department, he could give you 10 reasons why this is a bad idea,” said Suzanne E. Durrell, a whistle-blowers’ lawyer in Boston who worked with Mr. Loucks when she was chief of the civil division for the United States attorney in Massachusetts.

Mr. Loucks says more openness would let companies clean up their own acts, even if it meant adverse publicity.

He points to new statistics that he says support his argument. The Justice Department reported to Congress that 885 False Claims Act cases involving health care fraud were pending under seal at the beginning of this year, with only about 200 prosecutors to juggle them. On average, a case was sealed for more than a year, and some much longer.

“That the government doesn’t have adequate resources to handle the cases is not a good cause to keep them under seal,” Mr. Loucks said in an interview, comparing it to a sports game where only one team is allowed to try to score. In these cases, that would now be his former team.

“I knew what I was doing on behalf of the government,” he said. “I don’t know if lawyers on the other side felt they were not able to adequately represent their clients while the case was under seal.”

Nicholas C. Theodorou, chairman of Foley Hoag’s business crimes defense group in Boston, said Mr. Loucks’ argument made sense from a corporate defense standpoint, and possibly would sit well with some federal judges who have questioned why cases remain under seal so long.

For his part, Mr. Loucks uses a baseball reference. Johnny Damon left his beloved Boston Red Sox in late 2005 to sign with “the evil empire, the New York Yankees,” Mr. Loucks said. Both teams won World Series with help from Mr. Damon.

Asked whether the “evil empire” analogy fit the Justice Department or Skadden, Mr. Loucks said, “One man’s evil empire is another’s home team.”

View the original article here

Balloon-Borne Messages to North Korea Have Detractors on Both Sides of Border

 

IMJINGAK, SOUTH KOREA — On a pleasant spring day, with the wind breezing up from the south, the quirky little tourist outpost of Imjingak — with its Peace Land amusement park, some souvenir sheds and a Popeye’s chicken stand — hardly seemed like a possible flash point for violent hostilities between North and South Korea.

Imjingak, the site of a ferocious battle during the Korean War, has become a favored launching site for some of the South Korean activists who send propaganda balloons northward. The balloon campaign has so angered North Korea that its military has threatened — as recently as last Friday — to “mercilessly” shell Imjingak and other border towns if the launchings continue. North Korean artillery units are dug in a few kilometers away, just across the world’s most heavily militarized border.

It is flying season now, with robust winds blowing through the Korean Peninsula, and the activists are eager to get their balloons and leaflets in the air. Some of the balloonists are political agitators, others are Christian proselytizers, most are North Korean defectors. If the wind is at their backs, they say, millions of leaflets will be sent aloft in the coming weeks.

“North Korea has said they would fire surgical strikes at those of us sending up balloons, so this highly allergic reaction clearly shows what we’re doing is working,” said Park Sang-hak, 43, the son of a former North Korean spy who defected along with his family in 1999.

Mr. Park now heads Fighters for a Free North Korea, a human rights group in Seoul that has become the most aggressive balloon-launching outfit in the South.

Mr. Park and other balloonists do have their domestic political opponents, principally the organizations that seek a return to South Korea’s so-called sunshine policy, which favors a conciliatory approach to the North. Some of these groups occasionally try to sabotage the showier balloon events, and Mr. Park, who has had 24-hour police protection since 2008, once fired a tear gas pistol during a violent melee at Imjingak.

“We get threats against him quite often now,” said a plainclothes police officer who was guarding Mr. Park before a recent launching.

For much of the previous decade, the South Korean government tried to block the balloon launchings, which pushed the activists to work clandestinely. But the policy changed dramatically in the spring of last year after the sinking of a South Korean warship, the Cheonan, and the deaths of 46 sailors. The South has blamed a North Korean torpedo attack; the North says it was not involved.

“Previously we tried to persuade the balloon guys not to do anything because it badly affected inter-Korean relations,” said a senior official in the Unification Ministry, speaking anonymously because he was not authorized to comment publicly on the matter. “But after the Cheonan, our position changed,” the official said. “We don’t block them now. It’s a matter we leave to the local police.”

Police officials have allowed the balloon launchings to continue at Imjingak — no special permit is necessary — and they intervene only if there is violence.

Mr. Park, an engaging and energetic man, honed his technique alongside Lee Min-bok, an evangelical Christian and the other leading figure in the balloon campaign. Beginning in 2003, looking for a way to poke the North Korean regime, they started out by tying a few handwritten leaflets to some tiny children’s balloons bought at a party store.

Once devoted colleagues, the men are now bitter rivals.

“I’m the original,” said Mr. Lee, who had been an agricultural scientist in North Korea. He said he fled in 1995 after his suggestions about economic reforms were not well received by his superiors.

His operation is financed by donations from churches and conservative Christians. He said he launched 1,500 balloons a year and accounted for 90 percent of all propaganda leaflets being sent into the North, about 250 million so far.

Mr. Lee, who uses various covert launching sites along the border, ridiculed Mr. Park’s launchings at Imjingak as little more than publicity stunts. He said the wind conditions were so unfavorable that Mr. Park’s balloons often ended up floating back into South Korea.

Mr. Park, for his part, called Mr. Lee “a Christian zealot” who was voted out of their secular group several years ago because he wanted to emphasize religion in their leaflets.