United States Attorney Jacqueline C. Romero announced on February 16, 2024, that the former Chief Marketing Officer (CMO) of a specialty pharmacy located in New Castle, Delaware, has agreed to resolve allegations that she violated the False Claims Act by paying kickbacks to patients and physicians and waiving co-pays to protect the pharmacy’s revenue stream. The CMO agreed to a six-year federal healthcare exclusion, which will prohibit her from participating in any federally funded healthcare program, such as Medicare.
The United States alleged that, from at least August 2015 through May 2020, the specialty pharmacy routinely waived the copayments of Medicare and TRICARE patients to induce them to purchase its drugs and services. Many of the specialty drugs offered by the pharmacy were expensive and required patients to pay large copays. The government alleged that the pharmacy sought to avoid deterring patients from purchasing its drugs and services by engaging in a scheme, orchestrated and implemented by the CMO, to routinely waive these large copays, without regard for whether the patients were experiencing financial hardship.
The settlement also resolves allegations that under the CMO’s leadership, the specialty pharmacy provided remuneration in the form of gifts, dinners, and free administrative and clinical support services to physicians to induce them to refer patients to the specialty pharmacy. The government also alleged that one of these physicians in particular knowingly solicited and accepted this remuneration in exchange for referring numerous patients to the pharmacy. This physician has separately paid $480,000 to settle these allegations, based on his ability to pay. The specialty pharmacy and its chief executive officer (CEO), previously agreed collectively to pay $20 million based on their ability to pay to resolve allegations that they violated the False Claims Act by paying kickbacks to patients and physicians to protect the pharmacy’s revenue stream.
Compliance Perspective
Issue
The Federal Anti-Kickback Statute prohibits the offering, paying, soliciting, or accepting, directly or indirectly, of any remuneration—which includes money or any other thing of value—to refer or arrange for the referral of items or services payable by any federal healthcare program. This prohibition extends to companies that routinely waive the copays of Medicare patients without determination of financial need. The Anti-Kickback Statute also extends to the payment of remuneration to physicians in exchange for patient referrals.
Discussion Points
- Review policies and procedures for preventing and reporting false claims and kickback violations. Update as needed.
- Train all staff on federal and state anti-kickback statutes and what can be considered a kickback. Include information on how to report concerns and suspected violations, and make sure staff know that prompt reporting is mandatory. Document that the training occurred and place in each employee’s education file.
- Periodically audit staff understanding to ensure that they are aware of what should be done if they suspect a false claim or kickback has occurred, whether intentionally or unintentionally. Conduct audits of documentation and billing routinely to prevent and detect errors before they progress to a false claim.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
