U.S. reserve fleet to expand here

The U.S. Department of Transportation’s Maritime Administration (MARAD) announced March 30 the awarding of a $34.6 million contract for the design and construction of a new facility on the Neches River near Beaumont for eight of the largest government ready reserve fleet cargo ships.

“The Neches River facility means jobs for Beaumont and improved support for our ready reserve fleet,” said U.S. Transportation Secretary Ray LaHood. “This project will help ensure that our fleet remains ready to provide national defense and disaster assistance.”

The facility is scheduled for completion in 2013. Ready Reserve Force vessels are maintained by MARAD in a reduced operating status until needed by the military. When activated, the vessels are used to rapidly move large shipments of military equipment and vehicles across the globe. The contract was awarded to McCarthy Building Companies Inc. of Houston.

Keeping eight similar vessels at one federally owned location reduces costs associated with maintaining the vessels at several privately owned sites. It also creates substantial logistics and maintenance efficiencies, providing an estimated $3.3 million annual savings to the federal government.

“This new marine facility will bolster our National Defense Reserve Fleet using American labor,” said maritime administrator David Matsuda.MARAD maintains fleets and supports U.S. military and emergency operations. Its mission is to promote the development of the American maritime industry, including its workforce. The agency also operates the United States Merchant Marine Academy at Kings Point, N.Y.

MV Transportation announces layoffs

Last December, The Business Journal reported on the impending endgame as completion neared on the Motiva Port Arthur Expansion Project in 2012. Dallas-based MV Transportation Inc. announced that on April 30 it will lay off the 125 employees who have operated the park-and-ride bus service as a Motiva vendor to ferry workers to the plant. Described as the largest construction project in North America, at its peak there were more than 5,000 contract workers on site on any given day in addition to the regular Motiva employees who kept the refinery operating throughout the lengthy construction process, which began in 2008.

Number three

PetroChina eclipses ExxonMobil

The Chinese government-owned oil company PetroChina is only 13 years old but announced it has overtaken long-time industry leader ExxonMobil. The Beijing-based company was formed by the Chinese government to secure more oil for that nation’s booming economy.In recent years, PetroChina has spent heavily to acquire proven petroleum reserves in Canada, Iraq and Qatar – to name a few. PetroChina announced March 29 it pumped 2.4 million barrels a day in 2011, surpassing Exxon by 100,000. To add international insult to injury, Exxon’s oil production also fell behind Rosneft, the Russian energy company.

PetroChina may be the new top dog among other publicly traded oil companies, but is still dwarfed by giant national oil companies like Saudi Aramco, which produces nearly 8 million barrels a day.

Unapproved drugs

Mississippi firm settles federal case for $2.8 million

Mississippi-based pharmaceutical manufacturer Cypress Pharmaceutical Inc., its subsidiary Hawthorn Pharmaceuticals Inc. and its CEO, Max Draughn, have agreed to pay $2.8 million to resolve civil allegations under the False Claims Act.

The government alleged that between 2003 and 2009, Cypress, Hawthorn and Draughn were responsible for marketing three pharmaceutical products that were not approved as safe and effective by the Food and Drug Administration (FDA). The products were Hylira, a gel used for the treatment of dry skin; and two acne treatments, Zaclir and Zacare.

The government alleged that although the drugs lacked the “safe and effective” designation, Hawthorn’s sale representatives promoted the products to physicians and state Medicaid officials using that designation. This caused TRICARE, the military’s health care program, and state Medicaid programs to improperly pay for the three products. The government also alleged that Cypress, Hawthorn and Draughn caused the submission to the Centers for Medicare and Medicaid Services (CMS) of false quarterly reports that misrepresented these products’ regulatory status and failed to advise CMS that the drugs did not qualify as outpatient drugs that were covered for payment.

Medicaid is partially funded by the federal government. The federal portion of today’s settlement, including payments due to the TRICARE program, is more than $1.61 million. The state Medicaid share of the settlement is more than $1.18 million.

The settlement resolves a False Claims Act lawsuit filed in the Eastern District of Texas by Robert Heiden, a former district sales manager for Hawthorn. The whistleblower, or qui tam, provisions of the False Claims Act permit the relator to obtain a portion of the proceeds obtained by the federal government. As part of today’s resolution, Heiden will receive more than $300,000.

“This settlement sends a strong message to those who seek to put the health of American patients at risk by marketing and promoting drugs which have not been approved by the FDA,” said Ilisa Bernstein, acting director of the Office of Compliance in FDA’s Center for Drug Evaluation and Research.

The claims settled by this agreement are allegations only; there has been no determination of liability. This case was handled by Assistant U.S. Attorney Kevin McClendon in the Eastern District of Texas and Department of Justice trial attorney Brian McCabe.

Business Journal editor James Shannon offers a weekly column of business news for readers of The Examiner. For more details, see the editions of the Business journal published monthly in Beaumont, Port Arthur and Greater Orange. Check out the blog at or e-mail james [at] beaumontbusinessjournal [dot] com.