Mexican Government Alleges Teva Pharmaceutical Engaged in Bribery

Instituto Mexicano Del Seguro Social, or the Mexican Social Security Institute, (IMSS) filed a complaint against Teva Pharmaceutical Industries LTD in the Southern District of Florida on Monday, alleging multiple claims related to bribery.

IMSS is the “main social-service agency of the Mexican government” that provides “health care services to tens of millions of Mexican citizens at hospitals that IMSS owns and operates.” Teva Pharmaceutical Industries LTD “specializes in generic drugs.” Teva orchestrates its Mexico distribution from “(its) Miami office,” and IMSS claimed that Teva “utilized a number of wholly-owned subsidiaries to sell its products in Mexico.”

IMSS alleged claims of fraud as well as inducement of and participation in breach of fiduciary duties. The complaint also alleged claims under Mexican law for Breach of Contract and Violation of Articles 50 and 60 of the Law of Acquisitions, Leases, and Services of the Public Sector.

The plaintiff stated that “Teva confessed to organized bribery in Russia, the Ukraine, and Mexico” in prior “criminal and civil actions by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).” IMSS asserted that Teva conceded that it “admits, accepts, and acknowledges that it is responsible under United States law for the acts of its former officers, directors, employees, and agents as charged” per its ”deferred prosecution agreement with the DOJ.” IMSS noted in the complaint that Teva agreed to pay the U.S. government and the state of Illinois to resolve claims that “Teva paid illegal kickbacks to doctors in the United States to increase sales” and that “Teva agreed to pay another $54 million to the US government to resolve similar claims” earlier this year.

IMSS alleged that “(i)n Mexico, Teva paid bribes to IMSS doctors practicing in IMSS hospitals,” garnering about $18.56 million in illicit profits. The plaintiff purported that Teva terminated 11 employees after the “completion of (an) internal corruption investigation,” but “never stopped the illegal conduct or enforced (their) anti-bribery policy in Mexico.” The complaint declared that “a Teva employee with responsibility for Teva Mexico” wrote a memo concluding that the company “cannot guarantee that (it is) not” “executing payments that would violate FCPA anti-bribery provisions.” The plaintiff also argued that “Teva Mexico mischaracterized its payments to Mexican officials as legitimate business expenses in its books and records, which were consolidated into Teva’s financial statements filed with the SEC.”

IMSS stated that the court has jurisdiction under the “Foreign Sovereign Immunities Act (the FSIA)” because the action is between a foreign state and a United States citizen. The plaintiff also requested a jury trial.

The plaintiff asked the court to require Teva to “return all proceeds received from IMSS” as relief, “retaining at most the actual production cost of the medicine.” The plaintiff also claimed that it is “entitled to” avoid “all contracts approved by” compromised IMSS officials. 

Instituto Mexicano Del Seguro Social is represented by Valcourt & Associates LLC.