New York Attorney General Eric Schneiderman announced a $6.2 million settlement last Friday with Lantheus Medical Imaging Inc. and Bristol-Myers Squibb (BMS), its former parent company, for allegedly failing to pay New York State and City taxes.

Schneiderman claimed that the medical imaging company and its former parent company knowingly did not pay more than $2.2 million in New York State business franchise taxes, New York City corporation taxes, or Metropolitan Transportation Authority surcharges from 2002 to 2006.

During that time, Lantheus supposedly made a profit by selling medical imaging products to clinics, hospitals and other facilities and providing servicing and training activities related to its sales.
"Lantheus' failure to pay these taxes was indefensible," Schneiderman said in a written statement. "It's simple — corporations doing business in New York are obligated to pay taxes on their earnings, and those companies that fail to do so will be held accountable."

Neither Lantheus nor BMS have admitted any liability.

"Bristol-Myers Squibb denies the allegations made by the state and has decided to settle to avoid the uncertainty and expense of protracted litigation," Laura Hortas, executive director of corporate and financial communications at BMS, told DOTmed News in an email.

The claims arose during the period from January 1, 2002 through December 31, 2006, which predated the equity firm Avista Capital Partners' purchase of BMS' medical imaging business — now Lantheus — on January 8, 2008, Linda Lennox, senior director of investor relations and corporate communications at Lantheus, told DOTmed News in an email.

BMS is required to pay the settlement and not Lantheus.

"In connection with the acquisition, BMS had agreed to indemnify Lantheus for certain liabilities relating to the period prior to the acquisition, including all payments, penalties and expenses arising from this matter," she added.

The action began in May 2012 when a tax service provider who knew about Lantheus' alleged failure to pay the taxes filed a whistleblower complaint in State Supreme Court in Manhattan. Schneiderman began an investigation along with Assistant Attorney General Daniel Smirlock, legal support analyst Devin Gould, deputy bureau chief Scott Spiegelman, and former bureau chief Randall Fox of the Attorney General's Taxpayer Protection Bureau.

"This settlement demonstrates the enormous good that private whistleblowers, their counsel and our partners in the government can accomplish together for the taxpaying public," David Caputo of the law firm of Kline & Specter, P.C., which represents the whistleblower, said in a statement. "It took courage for our client to come forward, and we applaud the Attorney General's Office for acting on our client's information as promptly and effectively as it did in this case."

This is the most recent tax-related recovery following an action filed under the New York False Claims Act. The act allows whistleblowers and prosecutors to take legal action against companies or individuals that defraud the government.

Those who are found liable are required to pay triple damages, penalties and attorneys' fees. As a result of the information they offer, whistleblowers may be entitled to up to 30 percent of the money from the settlement. In this case, the whistleblower will be given $1,137,814.80 and the City of New York will get $693,143.04.

To date, 30 states and the federal government have passed the act but New York is the only state that explicitly covers tax fraud. In 2011, Schneiderman developed a Taypayer Protection Bureau that serves to work with whistleblowers and enforce the act in tax and other government fraud cases.

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