Leiner proposes $10 million settlement with Department of Justice

New York, May 9 - Leiner Health Products Inc. said it has asked the U.S. Bankruptcy Court for the District of Delaware to approve a settlement with the Department of Justice under which it will plead guilty to one count of mail fraud and pay $10 million in lieu of a fine.

The agreement would resolve an investigation into the production, control and distribution of over-the-counter drug products at the company's now defunct Fort Mill, S.C., facility.

The agreement is subject to approval and acceptance by the United States District Court in Columbia, S.C.

Leiner has subsequently closed Fort Mill and said the investigation related to activities before the arrival of the company's current quality control team.

"Leiner took immediate action to correct this situation," said Robert K. Reynolds, chief executive officer and president of Leiner, in a news release. "In addition to the closure of the affected facility, we also restructured our quality control systems, including top to bottom personnel changes and implementation of strengthened compliance programs to ensure that all products conform to Leiner's rigorous standards."

The guilty plea and payment affect Leiner's subsidiary Leiner Health Products, LLC.

Leiner is a Carson, Calif.-based manufacturer of store-brand vitamins, minerals and nutritional supplements. The company filed for bankruptcy on March 10. Its Chapter 11 case number is 08-10446.

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