`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF FLORIDA
`
`Civil Action No. ______________
`
`INSTITUTO MEXICANO DEL SEGURO
`SOCIAL,
`
`Plaintiff,
`
`v.
`
`TEVA PHARMACEUTICAL INDUSTRIES
`LTD.,
`
`Defendant.
`
`IMSS’ ORIGINAL COMPLAINT
`
`The Instituto Mexicano del Seguro Social (“IMSS”) complains of Teva Pharmaceutical
`
`Industries Ltd. (“Teva”) as follows:
`
`NATURE OF THE CASE
`
`1.
`
`For years, Teva used bribery as an integral part of its world-wide marketing
`
`strategy.
`
`2.
`
`Teva’s illegal conduct is well established. On December 22, 2016, Teva resolved
`
`parallel criminal and civil actions by the Department of Justice and the Securities and Exchange
`
`Commission. As part of the resolutions of those proceedings, Teva confessed to organized bribery
`
`in Russia, the Ukraine, and Mexico. Per the two agreements, Teva paid a fine of $283 million and
`
`disgorged $236 million in illicit profits garnered by its illegal conduct, for a total of $519 million.
`
`IMSS’ ORIGINAL COMPLAINT—page 1
`
`
`
`Case 1:20-cv-25181-UU Document 1 Entered on FLSD Docket 12/21/2020 Page 2 of 12
`
`3.
`
`Teva’s bribery was not limited to foreign nations. In 2014, Teva agreed to pay $27.6
`
`to the US federal government and to the state of Illinois to resolve claims that Teva paid illegal
`
`kickbacks to doctors in the United States to increase sales. Then, earlier this year, Teva agreed to
`
`pay another $54 million to the US government to resolve similar claims.
`
`4.
`
`In Mexico, Teva paid bribes to IMSS doctors practicing in IMSS hospitals. In 2011
`
`and 2012, alone, Teva admits to garnering about $18,556,000 (including interest) in illicit profits
`
`from its Mexico bribery scheme. Teva’s bribery, however, began in 2005, and Teva indirectly
`
`made far more in illicit profits than the $18.6 million Teva concedes. In fact, if IMSS had known
`
`of the illegal bribery, it could not have made any purchases from Teva from 2005 through the
`
`present.
`
`JURISDICTION AND VENUE
`
`5.
`
`This Court has jurisdiction pursuant to 28 U.S.C. § 1332 (a)(4) because this action
`
`is between a foreign state pursuant to the Foreign Sovereign Immunities Act (the FSIA) and a
`
`citizen of the United States and the amount in controversy exceeds $75,000 exclusive of costs and
`
`fees.
`
`6.
`
`This Court has venue pursuant to 28 U.S.C. § 1391(2) because a substantial part of
`
`the events and omissions giving rise to the claims presented herein occurred in this District.
`
`PARTIES
`
`7.
`
`IMSS is the Mexican Social Security Institute, a decentralized agency of the United
`
`Mexican States. IMSS is therefore a “foreign state” pursuant to the FSIA, and its officials are
`
`covered by the Foreign Corrupt Practices Act.
`
`IMSS’ ORIGINAL COMPLAINT—page 2
`
`
`
`Case 1:20-cv-25181-UU Document 1 Entered on FLSD Docket 12/21/2020 Page 3 of 12
`
`8.
`
`Teva is headquartered in Petah Tikva, Israel. At all relevant times, Teva controlled
`
`its Latin American operations, including its operations in Mexico, from its offices in Miami and
`
`receives or produces substantial income through its operations in this district, and operates an
`
`office in this district.
`
`9.
`
`Teva can be served by service on an officer at Teva’s United States headquarters,
`
`Parsippany-Troy Hills New Jersey or Miami Florida. Teva Pharmaceuticals USA is the North
`
`American arm of Teva Pharmaceuticals Industries Ltd., a global pharmaceutical company
`
`headquartered in Israel. The company has a global product portfolio of more than 1,800 molecules
`
`and a direct presence in 60 countries, including 30 locations across the U.S. and its territories.
`
`The Parties’ Business Relationship
`
`FACTUAL BACKGROUND
`
`10.
`
`IMSS is the main social-service agency of the Mexican government. IMSS was
`
`created in 1943 by order of the Mexican President, who continues to nominate IMSS’ General
`
`Director.
`
`11.
`
`IMSS provides health care services to tens of millions of Mexican citizens at
`
`hospitals that IMSS owns and operates throughout Mexico. The Mexican government funds IMSS
`
`with tax revenues and compulsory contributions. IMSS also manages the purchases of medical
`
`supplies for other Mexican governmental agencies, including the Instituto de Seguridad y Servicios
`
`Sociales de los Trabajadores del Estado (ISSSTE), Petroleos Mexicanos (Pemex), and the Mexican
`
`military.
`
`12.
`
`IMSS is the appropriate agency to bring the claims presented herein.
`
`IMSS’ ORIGINAL COMPLAINT—page 3
`
`
`
`Case 1:20-cv-25181-UU Document 1 Entered on FLSD Docket 12/21/2020 Page 4 of 12
`
`13.
`
`Teva is a multinational pharmaceutical corporation that specializes in generic drugs
`
`that Teva distributes worldwide.
`
`14.
`
`Teva’s distribution in Mexico is orchestrated out of Teva’s Miami office. Teva
`
`utilized a number of wholly-owned subsidiaries to sell its products in Mexico, including Sicor de
`
`Mexico, S.A., Lemery S.A. de C.V., Lemery Desarrollo y Control S.A. de C.V., Immobiliaria
`
`Lemery S.A. de C.V., Vitrium Division Farmaceutica, S.A. de C.V., Teva Pharmaceutical Mexico
`
`S.A. de C.V., and Ivax Pharmaceuticals Mexico, S.A. de C.V. (together, “Teva Mexico”). Teva
`
`Mexico’s financial statements are consolidated into the financial statements of Teva at the parent
`
`level. Teva controls Teva Mexico from its offices in Miami.
`
`Teva’s International Bribery Scheme
`
`15.
`
`For years, Teva used bribes to sell its products to governmental agents throughout
`
`the world, including within the United States and within Mexico.
`
`16.
`
`Teva’s international bribery strategy has been established in various actions
`
`brought by the Department of Justice and the Securities and Exchange Commission.
`
`17.
`
`Teva cannot deny its responsibility under United States law for its international
`
`conduct. Per Teva’s deferred prosecution agreement with the DOJ, Teva stated 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” in the government’s criminal information
`
`and as set forth in an attached Statement of Facts. In the same agreement, Teva agreed that it would
`
`not “make any public statement, in litigation or otherwise, contradicting the acceptance of
`
`responsibility” for its international bribery scheme.
`
`IMSS’ ORIGINAL COMPLAINT—page 4
`
`
`
`Case 1:20-cv-25181-UU Document 1 Entered on FLSD Docket 12/21/2020 Page 5 of 12
`
`18.
`
`Teva also consented to entry of a final judgment in the related SEC action and is
`
`therefore bound by the factual statements in the SEC’s action, including that Teva paid bribes to
`
`Mexican government officials and obtained millions in illicit profits as a result.
`
`Teva’s Conduct in Mexico
`
`19.
`
`Teva concedes that, in 2011 and 2012, alone, Teva garnered approximately
`
`$18,556,000 in illicit profits from illegal payments Teva and its agents made to IMSS doctors and
`
`officials. Teva’s actual illicit profits were much greater.
`
`20.
`
`In fact, Teva’s Mexican agents had begun to bribe Mexican government officials
`
`since at least 2005.
`
`21.
`
`Teva’s Latin American Division, headquartered in Miami, became aware no later
`
`than 2007 that its Mexican agents were illegally bribing Mexican government officials. For
`
`example, in 2007, Teva in Miami learned that one of Teva Mexico’s managers routinely
`
`entertained Mexican government officials at a Cancun hotel to increase sales of Teva drugs in
`
`Mexico.
`
`22.
`
`In addition, in February 2007, a Teva internal auditor received an anonymous letter
`
`stating that Teva Mexico was making illicit payments to government officials to increase sales. In
`
`response, Teva initiated an internal investigation, which was completed in 2008. Teva’s
`
`investigation uncovered credible evidence of illegal payments by Teva Mexico to government
`
`officials in Mexico to influence regulatory and formulary approvals, drug purchase decisions, and
`
`prescription decisions.
`
`23.
`
`Following completion of its internal corruption investigation, Teva terminated
`
`eleven employees of Teva Mexico, but Teva never stopped the illegal conduct or enforced Teva’s
`
`anti-bribery policy within Mexico.
`
`IMSS’ ORIGINAL COMPLAINT—page 5
`
`
`
`Case 1:20-cv-25181-UU Document 1 Entered on FLSD Docket 12/21/2020 Page 6 of 12
`
`24. More importantly, Teva never informed IMSS of the bribes it had paid and did not
`
`correct its prior false representations to IMSS that Teva was complying with Mexican law.
`
`25.
`
`As a result, Teva’s misconduct in Mexico continued, and IMSS officials continued
`
`to receive bribes from Teva Mexico for prescribing Teva drugs. For example, on November 6,
`
`2008, a Mexican government official emailed a Teva employee responsible for Mexico to
`
`complain about Teva Mexico’s failure to make certain promised payments. The Mexican
`
`government official wrote Teva, “Teva Mexico was promises promises & promises and there was
`
`never any interest in order to improve our relationship.” [sic] The Mexican Official also told Teva
`
`that he thought the failure to make the promised (and illegal) payments was “really strange when
`
`I’m your best client in Mexico.” The official noted that he was prescribing Teva’s Copaxone (one
`
`of Teva’s few non-generic drugs) to approximately 170 patients, making the official one of the
`
`largest prescribers in the region. The email was forwarded to a Teva executive on November 12,
`
`2008.
`
`26.
`
`Instead of stopping the illegal conduct, the Teva executive chose instead to ensure
`
`the government official got his bribes. The Teva executive instructed a senior Teva Mexico
`
`executive to keep the Mexican government official happy: “I’d appreciate having your good inputs
`
`and trust that [Mexican Official’s] problem can be resolved. After all, [it’s] not every day we get
`
`a complaint from a professor that has 170 Copaxone patients.”
`
`27.
`
`The senior Teva Mexico executive responded to the Teva Executive in December
`
`and explained that the level of Copaxone sales in Mexico, “until very recently, was not due to
`
`scientific/academic support but mostly to other incentives.” (emphasis added)
`
`28.
`
`Teva went so far as to instruct its managers not to enforce Teva’s purported anti-
`
`corruption policies in Mexico. In January 2011, at a meeting of Teva’s compliance team, Teva’s
`
`IMSS’ ORIGINAL COMPLAINT—page 6
`
`
`
`Case 1:20-cv-25181-UU Document 1 Entered on FLSD Docket 12/21/2020 Page 7 of 12
`
`Regional Compliance Officer responsible for Mexico opined that “Compliance[’s] role will be [to]
`
`not interfere with the ultimate decision made by Business Heads.”
`
`29.
`
`During this same time period, Teva’s Regional Compliance Officer “emphasized
`
`that the compliance program, current local policy and Sales and Marketing guidelines were not
`
`relevant for the [Latin American] region and were to be ignored.”
`
`30.
`
`In April 2011, a Teva employee responsible for implementing Teva’s purported
`
`anti-corruption program emailed a senior executive responsible for overseeing compliance in Latin
`
`America, explaining that Teva Mexico was “specifically instructed not to implement a robust
`
`system that will enable us to monitor and assure that the same doctor wasn’t invited to a meal more
`
`than three times (for example)” and that “the purpose of the global FCPA tool under development
`
`is mainly to automate the manual forms; get a more organized and easy process of authorizations
`
`with less paper work.”
`
`31.
`
`In November 2011, a Teva employee with responsibility for Teva Mexico wrote a
`
`memo concluding: “We cannot guarantee that we are not (1) executing payments that would violate
`
`FCPA anti-bribery provisions and (2) properly accounting for any such payments under the books
`
`and records provisions of the FCPA.”
`
`32.
`
`Accordingly, with the agreement of Teva in Miami, Teva Mexico continued to pay
`
`IMSS doctors to prescribe Teva products, including Copaxone. The IMSS doctors being bribed
`
`worked at IMMS-owned and thus state-controlled hospitals, working under the direction and
`
`control of the Mexican government.
`
`33. Most of the doctors who were paid bribes 2011 and 2012 had received illegal
`
`payments since at least 2007.
`
`IMSS’ ORIGINAL COMPLAINT—page 7
`
`
`
`Case 1:20-cv-25181-UU Document 1 Entered on FLSD Docket 12/21/2020 Page 8 of 12
`
`34.
`
`In particular, Teva Mexico through its distributor paid Mexican officials between
`
`$9,600 and $30,000 each per year to influence their Copaxone prescription decisions.
`
`35.
`
`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.
`
`36.
`
`Teva knew and approved of the illegal activities of its wholly-owned subsidiaries
`
`and its agents throughout the world and specifically within Mexico.
`
`37.
`
`In the alternative, Teva acted with willful ignorance of the bribery scheme
`
`organized by its wholly-owned subsidiaries that benefited Teva.
`
`38.
`
`To control the international scheme, Teva personnel communicated with Teva
`
`personnel around the world, including within Mexico. Teva personnel would also travel to and
`
`from Mexico in support of the scheme.
`
`Effect on IMSS
`
`39.
`
`According to Mexican government procurement laws, to obtain IMSS contracts,
`
`Teva had to represent that it was complying with all legal requirements for the sale of medicine to
`
`IMSS and within Mexico.
`
`40.
`
`41.
`
`Teva made the required representations, but its statements were false.
`
`IMSS relied on Teva’s false, material statements and omissions to consummate
`
`business transactions with Teva. IMSS’ reliance lasted longer than the bribes themselves. With
`
`each additional contract, Teva had to represent that it had and would comply with Mexican law.
`
`Following the first bribes, those representations were false. Absent the false representations, IMSS
`
`would have been legally barred from contracting with Teva. Therefore, IMSS relied on Teva’s
`
`IMSS’ ORIGINAL COMPLAINT—page 8
`
`
`
`Case 1:20-cv-25181-UU Document 1 Entered on FLSD Docket 12/21/2020 Page 9 of 12
`
`representations when approving contracts for the purchase of Teva products well after the
`
`expressly illicit conduct set out above.
`
`42.
`
`Teva concedes that in two years it made at least $18,556,000 in illicit profits from
`
`its Mexican bribery scheme. Teva’s actual gains from its illegal bribery is far greater since Teva’s
`
`scheme began in 2005 and extended at least through December 2016, when Teva finally publicly
`
`disclosed its bribery scheme.
`
`43.
`
`Teva’s fraud and breaches of Mexican procurement laws voids Teva’s contracts
`
`with IMSS from 2005 through at least December 2016, and therefore, Teva should be required to
`
`return all proceeds received from IMSS, retaining at most the actual production cost of the
`
`medicine it sold.
`
`CLAIMS FOR RELIEF
`
`44.
`
`Based on the foregoing facts, IMSS raises the following claims for relief:
`
`First Claim for Relief – Fraud
`
`45.
`
`46.
`
`Teva’s false, material statements and omissions to IMSS were fraudulent.
`
`IMSS relied on Teva’s false, material statements and omissions in order to
`
`consummate business transactions with Teva. Absent the false claims, IMSS would have been
`
`barred from contracting with Teva.
`
`47.
`
`IMSS is entitled to avoid the contracts fraudulently obtained and to a return of the
`
`compensation it paid to Teva. IMSS’ remedies are the same under either United States or Mexican
`
`law.
`
`IMSS’ ORIGINAL COMPLAINT—page 9
`
`
`
`Case 1:20-cv-25181-UU Document 1 Entered on FLSD Docket 12/21/2020 Page 10 of 12
`
`Second Claim for Relief –Inducement of, and Participation in, Breach of Fiduciary Duties
`
`48.
`
`Teva conspired with, and induced, IMSS officials to breach their fiduciary duties
`
`to IMSS. Teva unduly benefited from those breaches of duties.
`
`49.
`
`IMSS is entitled to the avoidance of all contracts approved by a compromised IMSS
`
`official and a return of all consideration paid to Teva apart from any proven quantum meruit
`
`benefits to IMSS. IMSS’ remedies are the same under either United States or Mexican law.
`
`Third Claim for Relief – Violation of Articles 50 and 60 of the Law of Acquisitions, Leases and
`Services of the Public Sector (under Mexican law)
`
`50.
`
`Articles 50 and 60 of the Mexican Law of Acquisitions, Leases and Services of the
`
`Public Sector prohibit bribes to public sector officials and misrepresentation made to induce
`
`issuance of government contracts.
`
`51.
`
`IMSS is entitled to avoidance of the underlying contracts and return of all
`
`compensation paid to Teva.
`
`Fourth Claim for Relief – Breach of Contract (under Mexican law)
`
`52.
`
`Teva breached its contractual duties to IMSS by failing to disclose its corrupt
`
`payments.
`
`53.
`
`Specifically, Teva contractually represented that it was in compliance with
`
`Mexican law; namely, Articles 50 and 60 of the Law of Acquisitions, Leases and Services of the
`
`Public Sector.
`
`54.
`
`Teva breached the terms of the IMSS contracts by paying bribes to corrupt officials,
`
`in violation of these laws. This was a material representation in the contract that IMSS relied on
`
`in order to approve the contract.
`
`IMSS’ ORIGINAL COMPLAINT—page 10
`
`
`
`Case 1:20-cv-25181-UU Document 1 Entered on FLSD Docket 12/21/2020 Page 11 of 12
`
`55.
`
`Further, by bribing IMSS officials and misrepresenting that activity in its contracts
`
`and invoicing practices, Teva violated Article 8 of the Mexican Civil Code, which expressly
`
`prohibits fraud in business contracts.
`
`JURY TRIAL DEMAND
`
`56.
`
`IMSS requests a trial by jury.
`
`PRAYER FOR RELIEF
`
`57.
`
`IMSS prays that this Court award it all the relief to which it is entitled under law or
`
`equity.
`
`Respectfully submitted this 21st Day of December, 2020.
`
`s/Matthew J. Valcourt
`Matthew J. Valcourt
`Fla. Bar No. 0088791
`Email: mvalcourt@vlacourtlaw.com
`VALCOURT AND ASSOCIATES LLC
`850 NE Third St Suite 208
`Dania FL 33004
`Telephone: (305) 763-2891
`Facsimile: (305) 470-7484
`Attorneys for Plaintiff IMSS
`
`and
`
`IMSS’ ORIGINAL COMPLAINT—page 11
`
`
`
`Case 1:20-cv-25181-UU Document 1 Entered on FLSD Docket 12/21/2020 Page 12 of 12
`
`By: /s/ Mark Maney
`Mark Maney
`Attorney-in-Charge
`Maney & González-Félix PC
`(pro hac vice admission pending)
`Texas Bar No. 12898200
`Federal ID: 11815
`712 Main Street
`Suite 2100
`Houston, Texas 77002
`Telephone: 713.806.2500
`mmaney@maneylaw.com
`ATTORNEYS FOR IMSS
`
`IMSS’ ORIGINAL COMPLAINT—page 12
`
`