Southeast Florida Hematology and Oncology Group (SEFHOG), a now-defunct specialty medical practice in Fort Lauderdale, Fla., has agreed to pay $130,000 to resolve allegations that it violated the False Claims Act by receiving “upfront discounts” from its specialty pharmaceutical distributor, Cardinal Health, in violation of the Anti-Kickback Statute. In January 2022, Cardinal Health entered into a $13.125 million settlement to resolve allegations concerning these and other upfront discounts.
The Anti-Kickback Statute prohibits pharmaceutical distributors from offering or paying any compensation to induce physicians to purchase drugs for use on Medicare patients. When a pharmaceutical distributor sells drugs to a physician practice for administration in an outpatient setting, the distributor may legally offer commercially available discounts to its customers under certain circumstances prescribed by the Office of Inspector General for the Department of Health and Human Services (HHS-OIG). HHS-OIG has advised that upfront discount arrangements present significant kickback concerns unless they are tied to specific purchases and distributors maintain appropriate controls to ensure that discounts are clawed back if the purchaser ultimately does not purchase enough product to earn the discount.
According to admissions contained in the settlement agreement, the payments that SEFHOG received were not attributable to identifiable sales. Under the terms of this agreement, SEFHOG is paying $65,000 to the federal government and $65,000 to the State of Florida. This matter was handled jointly with the Office of the Attorney General for the State of Florida.
