Consumer Fraud

Ortho Clinics Settle Whistleblower Lawsuit Alleging They Charged U.S. For Reimported Drugs

Pills Stethascope on Money 435x289 Ortho Clinics Settle Whistleblower Lawsuit Alleging They Charged U.S. For Reimported DrugsThree orthopedic clinics will pay a combined $2.39 million to resolve federal and state False Claims Act allegations brought by a whistleblower who accused the clinics of buying deeply discounted pain medications from foreign countries, then billing them to Medicare, Medicaid, and other taxpayer-funded health care programs at regular domestic rates to boost profits.

According to Acting U.S. Attorney Phillip A. Talbert of the Eastern District of California, Orthopedic Associates of Northern California, located in Chico, will pay $815,794; San Bernardino Medical Orthopaedic Group Inc., doing business as Arrowhead Orthopaedics, headquartered in Redlands, will pay $971,903; and Reno Orthopaedic Clinic, headquartered in Reno, Nevada, will pay $602,335.

The whistleblower allegations involve the clinics’ use of viscosupplements, such as Synvisc, Orthovisc, and Euflexxa, which are FDA-approved injections used to treat osteoarthritis knee pain. These viscosupplements are reimbursed by Medicare, Medicaid, and other federal health care programs at a set rate based on the average U.S. sales price of the products.

The whistleblower complaint alleged that the clinics knowingly bought the pain medications from foreign countries at significantly lower prices than they would have cost in the U.S., then unlawfully billed government health care programs for the reimported drugs when those products weren’t reimbursable.

According to the complaint, labeling on the viscosupplements included instructions in foreign languages for uses not approved by the FDA, which indicated the drugs had been obtained outside the U.S.

Moreover, because the drugs were reimported, there was no manufacturer assurance that they had not been tampered with or properly stored, potentially putting patients at risk of injury or illness.

Acting U.S. Attorney Talbert said the federal government would “take action against companies that take chances with the health of consumers in order to improve their own bottom lines.”

“Medicare will not put the health of its beneficiaries at risk by paying for items that have been ‘reimported’ to this country by foreign suppliers,” said HHS OIG SAC Steven J. Ryan, Health and Human Services Department Special Agent. “Once a product leaves the U.S., there is no accountability for whether it is the actual medication being billed, whether it has been properly stored or whether it could be too old to be useful. We will vigorously pursue providers who use and bill for these substances.”

The Justice Department said that the allegations resolved by the settlement were first raised in a lawsuit filed under the whistleblower provisions of the False Claims Act by a senior musculoskeletal specialty manager in the Biosurgery Division of Sanofi S.A., which manufactures Synvisc. The whistleblower will receive about $430,000 of the total settlement as a whistleblower award.

Source: U.S. Department of Justice