Exhibit 10.32


 


SETTLEMENT AGREEMENT


 


I.                                         PARTIES


 


This
Settlement Agreement (“Agreement”) is entered into by and among the United
States of America, acting through the United States Department of Justice and
on behalf of the Office of Inspector General (“OIG-HHS”) of the Department of
Health and Human Services (“HHS”) (collectively, the “United States”); and
Biovail Corporation (“Biovail”), through their authorized representatives.
Collectively, all of the above shall be referred to as “the Parties.”


 


II.                                     PREAMBLE


 


As
a preamble to this Agreement, the Parties agree to the following:


 


A.                                   Biovail is a
Canadian company with headquarters in Mississauga, Ontario that distributes
drugs.


 


B.                                     Biovail
Pharmaceuticals LLC is a limited liability company. Biovail Pharmaceuticals LLC
was formerly known as Biovail Pharmaceuticals, Inc with headquarters in
Bridgewater, New Jersey. Biovail Pharmaceuticals LLC and Biovail
Pharmaceuticals, Inc. shall be referred to throughout the remainder of
this Agreement as “BPI”.


 


C.                                     The United
States contends that Biovail submitted or caused to be submitted claims for
payment to the Medicaid Program (Medicaid), Title XIX of the Social Security
Act, 42 U.S.C. § 1396-1396v.


 


D.                                    The United
States contends that it has certain civil claims, as specified in Paragraph 2
below, against Biovail for engaging in the following conduct during the period
from January 1, 2003 through December 31, 2004 (hereinafter the
conduct described in this paragraph and subparagraphs (1) - (2) below
will be referred to as the “Covered Conduct”):


 


(1)                                 Biovail through BPI engaged in program
known as the PLACE program whereby it paid physicians and other medical
prescribers in order to induce them to write prescriptions for the Biovail drug
Cardizem, L.A., and thereby caused false and/or fraudulent claims


 

















 


for payment for
Cardizem, L.A. to be submitted to federal health care programs.


 


(2)                                 Through the PLACE program, BPI and
Biovail and others conspired to and did knowingly and willfully make payments
to induce another party to recommend purchasing or ordering the drug Cardizem,
L.A. in violation of 42 U.S.C. § 1320a- 7b(b)(2)(B).


 


E.                                      The United
States also contends that it has certain administrative claims against Biovail
for engaging in the Covered Conduct.


 


F.                                      On or before September 15,
2009, or such other date as may be determined by the Court, BPI has agreed to
enter a plea of guilty pursuant to Fed. R. Crim. P. 11(c)(1)(C) (the “Plea
Agreement”) to an Information to be filed in the District of Massachusetts (the
“Criminal Action”) that will allege violations of 18 U.S.C. § 371 and 42 U.S.C.
§ 1320a- 7b(b)(2)(B).


 


G.                                     This Agreement
is neither an admission of liability by Biovail (with the exception of such
admissions as BPI makes in connection with its guilty plea referenced in
Preamble Paragraph F above and accepted by the Court), nor a concession by the
United States that its claims are not well founded;


 


H.                                    To avoid the
delay, uncertainty, inconvenience, and expense of protracted litigation of the
above claims, the Parties reach a full and final settlement pursuant to the
Terms and Conditions below.


 


III.                                 TERMS AND
CONDITIONS


 


1.                                       Biovail agrees to pay to the United
States two million, four hundred and four thousand, two hundred and eighty-six
dollars ($2,404,286) plus interest at the Medicare Trust Fund Rate in effect on
May 1, 2008 from May 1, 2008 until the date of payment (the “Settlement
Amount”). This sum shall constitute a debt immediately due and owing to the 


 


2

















 


United States upon
the satisfaction of the conditions of payment set forth in this paragraph.  This debt is to be discharged by payment of
the Settlement Amount by electronic funds transfer pursuant to written instructions
to be provided by the United States Attorney’s Office for the District of
Massachusetts. Biovail agrees to make this electronic funds transfer no later
than seven business days following the latest of the dates on which the
following occurs: (1) this Agreement is fully executed by the Parties and
delivered to Biovail’s attorneys; or (2) the date on which the Court
accepts a Fed. R. Crim. P. 11(c)(1)(C) guilty plea as described in
Preamble F in connection with the Criminal Action and imposes the agreed upon
sentence.


 


If BPI’s agreed-upon guilty plea pursuant to Fed. R. Crim. P. 11(c)(1)(C) in
the Criminal Action described in Preamble Paragraph F is not accepted by the
Court or the Court does not impose the agreed-upon-sentence for whatever
reason, this Agreement shall be null and void at the option of either the
United States or Biovail. Whether the United States or Biovail exercises this
option, which option shall be exercised by notifying all parties, through
counsel, in writing within five(5) business days of the Court’s decision,
the Parties will not object and this Agreement will be rescinded. If this
Agreement is rescinded, Biovail and its subsidiary BPI, will not plead, argue
or otherwise raise any defenses under the theories of statute of limitations,
laches, estoppel or similar theories, to any civil or administrative claims,
actions or proceedings arising from the Covered Conduct that are brought by the
United States within 90 calendar days of rescission.


 


2.                                       Subject to the exceptions in Paragraph 4
below, in consideration of the obligations of Biovail set forth in this
Agreement, conditioned upon Biovail’s full payment of the Settlement Amount,
and subject to Paragraph 12 below(concerning bankruptcy proceedings commenced,
within 91 days of the effective date of this Agreement), the United States (on
behalf of itself, its officers, agents, agencies, and departments) agrees to
release Biovail, together with its current and former divisions, parents,
direct and indirect subsidiaries, successors and assigns and their current and
former directors, officers and employees, from any civil or administrative
monetary claim the United States has or may have under the False Claims Act, 31
U.S.C. §§ 3729-3733; the Civil Monetary Penalties Law, 42 U.S.C. § 1320a-7a;
the Program Fraud Civil-


 


3

















 


Remedies Act, 31
U.S.C. §§ 3801-3812; or the common law theories of payment by mistake, unjust
enrichment, and fraud for the Covered Conduct.


 


3.                                       In consideration of the obligations of
Biovail set forth in this Agreement and the Corporate Integrity Agreement (CIA)
entered into between OIG-HHS and Biovail, conditioned upon Biovail’s full
payment of the Settlement Amount, and subject to Paragraph 12, below
(concerning bankruptcy proceedings commenced within 91 days of the effective
date of this Agreement), OIG-HHS agrees to release and refrain-from
instituting, directing or maintaining any administrative action seeking
exclusion from the Medicare, Medicaid, or other Federal health care programs
(as defined in 42 U.S.C. § 1320a-7b(f)) against Biovail under 42 U.S.C. §
1320a-7a (Civil Monetary Penalties Law), or 42 U.S.C. § 1320a-7(b)(7) (permissive
exclusion for fraud, kickbacks, and other prohibited activities), for the
Covered Conduct, except as reserved in Paragraph 4, below, and as reserved in
this Paragraph. The OIG-HHS expressly reserves all rights to comply with any
statutory obligations to exclude Biovail from the Medicare, Medicaid, and other
Federal health care programs under 42 U.S.C. § 1320a-7(a)(mandatory exclusion)
based upon the Covered Conduct. Nothing in this Paragraph precludes the OIG-HHS
from taking action against other entities or persons, or for conduct and
practices, for which claims have been reserved in Paragraph 4, below.


 


4.                                       Notwithstanding any term of this
Agreement, specifically reserved and excluded from the scope and terms of this
Agreement as to any entity or person (including Biovail) are the following:


 


(a)                                  Any, civil, criminal or administrative
liability arising under Title 26 of the United States Code (Internal Revenue
Code);


 


(b)                                 Any criminal liability;


 


(c)                                  Except as explicitly stated in this
Agreement any administrative liability, including mandatory exclusion from
Federal health care programs;


 


(d)                                 Any liability to the United States (or
its agencies) for any conduct other than the Covered Conduct;


 


4

















 


(e)                                  Any liability based upon such obligations
as are created by this Agreement;


 


(f)                                    Any liability for express or implied
warranty claims or other claims for defective or deficient products or
services, including quality of goods and services;


 


(g)                                 Any liability for personal injury or;
property damage or for other consequential damages arising from the Covered
Conduct;


 


(h)                                 Any liability for failure to deliver
items or services due; or


 


(i)                                     Any liability of individuals (including
current or former directors, officers, employees or agents of Biovail) who have
received or receive written notification that they are the target of a criminal
investigation, are criminally indicted or charged, or are convicted, or who
have entered into or in the future enter into a statute of limitations waiver
or tolling agreement with the United States relating to the Covered Conduct.


 


5.                                       Biovail waives and shall not assert any
defenses Biovail may have to any criminal prosecution or administrative action
relating to the Covered Conduct that may be based in whole or in part on a
contention that, under the Double Jeopardy Clause in the Fifth Amendment of the
Constitution, or under the Excessive Fines Clause in the Eighth Amendment of
the Constitution, this Agreement bars a remedy sought in such criminal
prosecution or administrative action. Nothing in this Paragraph or any other
provision of this Agreement constitutes an agreement by the United States
concerning the characterization of the Settlement Amount for purposes of the
Internal Revenue laws, Title 26 of the United States Code.


 


6.                                       Biovail fully and finally releases the
United States, its agencies, employees, servants, and agents from any claims
(including attorney’s fees, costs, and expenses of every kind and however
denominated) which Biovail has asserted, could have asserted, or may assert in
the future against the United States, its agencies, employees, servants, and
agents, related to the Covered Conduct and the United States’ investigation and
prosecution thereof.


 


5

















 


7.                                       The Settlement Amount will not be
decreased as a result of the denial of claims for payment now being withheld
from payment by any government entity, Medicare carrier or intermediary or any
State payer, related to the Covered Conduct; and Biovail agrees not to resubmit
to any government entity, Medicare carrier or intermediary or any State payer
any previously denied claims related to the Covered Conduct, and agrees not to
appeal any such denials of claims.


 


8.                                       Biovail agrees to the following:


 


(a)                                  Unallowable Costs Defined: 
that all costs (as defined in the Federal Acquisition Regulations (FAR)
§ 31.205-47 and in Titles XVIII and XIX of the Social Security Act, 42 U.S.C.
§§ 1395-1395hhh and 1396-1396v, and the regulations and official program
directives promulgated thereunder) incurred by or on behalf of Biovail, its
present or former officers, directors, employees, shareholders, and agents in
connection with the following shall be “Unallowable Costs” on Government
contracts and under the Medicare Program, Medicaid Program, TRICARE Program,
and Federal Employees Health Benefits Program (“FEHBP”):


 


(1)                                  the matters covered by this Agreement and
any related Plea Agreement,


 


(2)                                  the United States’ audit(s) and
civil and any criminal investigation(s) of the matters covered by this
Agreement,


 


(3)                                  Biovail’s investigation, defense, and
corrective actions undertaken in response to the United States’ audit(s) and
civil and any criminal investigation(s) in connection with the matters
covered by this Agreement (including attorney’s fees),


 


(4)                                  the negotiation and performance of this
Agreement and any Plea Agreement,


 


6

















 


(5)                                  the payment Biovail makes to the United
States pursuant to this Agreement, including any costs and attorneys fees, and


 


(6)                                  the negotiation of, and obligations
undertaken pursuant to the CIA to;


 


(i)                                     retain an independent review organization
to perform annual reviews as described in Section III of the CIA; and


 


(ii)                                  prepare and submit reports to the
OIG-HHS. However, nothing in this paragraph 8(a)(6) that may apply to the
obligations undertaken pursuant to the CIA affects the status of costs that are
not allowable based on any other authority applicable to Biovail.


 


(b)                                 Future Treatment of Unallowable Costs: 
These Unallowable Costs shall be separately determined and accounted for
by Biovail, and Biovail shall not charge such Unallowable Costs directly or
indirectly to any contracts with the United States or any State Medicaid
Program, or seek payment for such Unallowable Costs through any cost report,
cost statement, information statement, or payment request submitted by Biovail
or any of its subsidiaries to the Medicare, Medicaid, TRICARE, or FEHBP
Programs.


 


(c)                                  Treatment of Unallowable Costs Previously
Submitted for Payment:  Biovail further agrees that
within 90 days of the effective date of this Agreement it will identify to
applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or
contractors, and Medicaid, and FEHBP fiscal agents, any Unallowable Costs (as
defined in this Paragraph) included in payments previously sought from the
United States, or any State Medicaid Program, if any, including, but not
limited to, payments sought in any cost reports, cost statements, information
reports, or payment requests already submitted by Biovail or any of its
subsidiaries or affiliates, and will request, and agree that such cost reports,
cost statements, information reports, or payment requests, even if already
settled, be adjusted to account for the effect of the inclusion of the
Unallowable Costs. Biovail agrees that the United States, at a 


 


7

















 


minimum, will be
entitled to recoup from Biovail any overpayment plus applicable interest and
penalties as a result of the inclusion of such Unallowable Costs on
previously-submitted cost reports, information reports, cost statements, or
requests for payment.


 


Any payments due after the adjustments have been made shall be paid to
the United States pursuant to the direction of the Department of Justice,
and/or the affected agencies. The United States reserves its rights to disagree
with any calculations submitted by Biovail or any of its subsidiaries on the
effect of inclusion of Unallowable Costs (as defined in this Paragraph) on
Biovail or any of its subsidiaries’ cost reports, cost statements, or information
reports. Nothing in this Agreement shall constitute a waiver of the rights of
the United States to examine or reexamine the Unallowable Costs described in
this Paragraph.


 


9.                                       Except as otherwise expressly stated,
this Agreement is intended to be for the benefit of the Parties only. The
Parties do not release any claims against any other person or entity, except to
the extent provided for in Paragraph 2, 6 and 10 of this Agreement.


 


10.                                 Biovail agrees that it waives and shall
not seek payment for any of the health care billings covered by this Agreement
from any health care beneficiaries or their parents, sponsors, legally
responsible individuals, or third party payors based upon the claims defined as
Covered Conduct.


 


11.                                 Biovail warrants that it has reviewed its
financial situation and that it currently is solvent within the meaning of 11
U.S.C. §§ 547(b)(3) and 548(a)(1)(B)(ii)(I), and will remain solvent
following its payment to the United States of the Settlement Amount. Further,
the Parties warrant that, in evaluating whether to execute this Agreement, they
(a) have intended that the mutual promises, covenants, and obligations set
forth constitute a contemporaneous exchange for new value given to Biovail,
within the meaning of 11 U.S.C. § 547(c)(1); and (b) conclude that these
mutual promises, covenants, and obligations do in fact, constitute such a
contemporaneous exchange. Further, the Parties warrant that the mutual
promises, covenants, and obligations set forth herein are intended to and do,
in fact, represent a reasonably equivalent exchange of value which is not
intended to hinder, delay, or defraud any 


 


8

















 


entity to which
Biovail was or became indebted, on or after the date of this transfer, all
within the meaning of I 1 U.S.C. § 548(a)(1).


 


12.                                 If, within 91 days of the effective date
of this Agreement, Biovail commences, or a third party commences, any case,
proceeding, or other action under any law relating to bankruptcy, insolvency,
reorganization, or relief of debtors, (a) seeking to have any order for
relief of Biovail’s debts, or seeking to adjudicate Biovail as bankrupt or
insolvent; or (b) seeking appointment of a receiver, trustee, custodian,
or other similar official for Biovail or for all or any substantial part of
Biovail’s assets, Biovail agrees as follows:


 


(a)                                  Biovail’s obligations under this
Agreement may not be avoided pursuant to 11 U.S.C. §§ 547 or 548, and Biovail
will not argue or otherwise take the position in any such case, proceeding, or
action that: (I) Biovail’s obligations under this Agreement may be avoided
under 11 U.S.C. §§ 547 or 548; (ii) Biovail was insolvent at the time this
Agreement was entered into, or became insolvent as a result of the payment made
to the United States hereunder; or (iii) the mutual promises, covenants,
and obligations set forth in this Agreement do not constitute a contemporaneous
exchange for new value given to Biovail.


 


(b)                                 If Biovail’s obligations, under this
Agreement are avoided for any reason, including, but not limited to, through
the exercise of a trustee’s avoidance powers under the Bankruptcy Code, the
United States, at its sole option, may rescind the releases in this Agreement,
and bring any civil and/or administrative claim, action, or proceeding against
Biovail for the claims that would otherwise be covered by the releases provided
in Paragraphs 2-3, above. Biovail, agrees that (i) any such claims,
actions, or proceedings brought by the United States (including any proceedings
to exclude Biovail from participation in Medicare, Medicaid, or other Federal
healthcare programs) are not subject to an “automatic stay” pursuant to 11
U.S.C. Section 362(a) as a result of the action, case, or proceeding
described in the first clause of this Paragraph, and that Biovail will not
argue or otherwise contend that the United States’ claims, actions, or
proceedings are subject to an automatic stay; (ii) that Biovail will not
plead, argue, or otherwise raise any defenses under the theories of statute of
limitations, laches, estoppel, or similar theories, to any such civil or
administrative claims, actions, or proceeding 


 


9

















 


which are brought
by the United States within 90 calendar days of written notification to Biovail
that the releases herein have been rescinded pursuant to this Paragraph, except
to the extent such defenses were available on August 20, 2004; and (iii) the
United States has a valid claim against Biovail in the amount of $2,404,286 plus
applicable penalties under the False Claims Act and the United States may
pursue its claim in the case; action, or proceeding referenced in the first
clause of this Paragraph, as well as in any other case, action, or proceeding.


 


(c)                                  Biovail acknowledges that its agreements
in this Paragraph are provided in exchange for valuable consideration provided
in this Agreement.


 


13.                                 Biovail represents that Rolf Reininghaus
has resigned as an officer, director or employee of Biovail. Biovail agrees
that it will not employ or otherwise permit Rolf Reininghaus, directly or
indirectly, to provide any services to or have any affiliation with Biovail.


 


14.                                 Each Party to this Agreement will bear
its own legal and other costs incurred in connection with this matter, including
the preparation and performance of this Agreement.


 


15.                                 Biovail represents that this Agreement is
freely and voluntarily entered into without any degree of duress or compulsion
whatsoever.


 


16.                                 This Agreement is governed by the laws of
the United States. The Parties agree that the exclusive jurisdiction and venue
for any dispute arising between and among the Parties under this Agreement will
be the United States District Court for the District of Massachusetts, except
that disputes arising under the CIA shall be resolved exclusively under the
dispute resolution provisions in the CIA.


 


17.                                 This Agreement and the Plea Agreement
referenced in Preamble F constitutes the complete agreement between the
Parties. This Agreement may not be amended except by written consent of the
Parties.


 


10

















 


18.                                 The individuals signing this Agreement on
behalf of Biovail represent and warrant that they are authorized by Biovail to
execute this Agreement. The United States signatories represent that they are
signing this Agreement in their official capacities and that they are
authorized to execute this Agreement.


 


20.                                 This Agreement
may be executed in counterparts, each of which constitutes an original and all
of which constitute one and the same agreement.


 


21.                                 This Agreement
is binding on Biovail’s successors, transferees, heirs, and assigns.


 


22.                                 All parties
consent to the United States’ disclosure of this Agreement, and information
about this Agreement, to the public.


 


23.                                 This Agreement
is effective on the date of signature of the last signatory to the Agreement.
Facsimiles of signatures shall constitute acceptable, binding signatures for
purposes of this Agreement.


 


24.                                 For purposes of
construction, this Agreement shall be deemed to have been drafted by all
Parties to this Agreement and shall not, therefore, be construed against any
Party for that reason in any subsequent dispute.


 


THE UNITED STATES OF AMERICA


 


	
  DATED:

  	
  September 14,
  2009

  	
   

  	
  BY:

  	
  /s/
  Sara Miron Bloom

  
	
   

  	
   

  	
   

  	
   

  	
  Sara
  Miron Bloom

  
	
   

  	
   

  	
   

  	
   

  	
  Assistant
  United States Attorney

  
	
   

  	
   

  	
   

  	
   

  	
  District
  of Massachusetts

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATED:

  	
  9/11/09

  	
   

  	
  BY:

  	
  /s/
  Gregory E. Demske

  
	
   

  	
   

  	
   

  	
   

  	
  Gregory
  E. Demske

  
	
   

  	
   

  	
   

  	
   

  	
  Assistant
  Inspector General for Legal Affairs 

  
	
   

  	
   

  	
   

  	
   

  	
  Office
  of Counsel to the Inspector General United States Department of Health and
  Human Services

  



 


11

















 


Biovail Corporation —
DEFENDANT


 


	
  DATED:

  	
  September 11, 2009

  	
   

  	
  BY:

  	
  /s/ Jennifer Tindale

  
	
   

  	
   

  	
   

  	
   

  	
  Jennifer Tindale

  
	
   

  	
   

  	
   

  	
   

  	
  Vice President, Associate General Counsel

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATED:

  	
  9/11/09

  	
   

  	
  BY:

  	
  /s/ Geoffery Hobart

  
	
   

  	
   

  	
   

  	
   

  	
  Geoffrey
  Hobart

  
	
   

  	
   

  	
   

  	
   

  	
  Counsel
  for Biovail Corporation

  



 


12