Healthcare Compliance Perspective:
Fraud, based upon kickbacks, always involves an emphasis on providing care based upon reimbursement rather than medical necessity.
The U.S. Department of Justice has filed a complaint in intervention against a compounding pharmacy located in Pompano Beach, Florida, alleging that the pharmacy paid illegal kickbacks to induce prescriptions for compounded drugs that were reimbursed by TRICARE-a federally-funded healthcare program for military personnel and their families. Claims were also brought against two pharmacy executives and a private equity firm based in Los Angeles that owns the pharmacy for their involvement in the alleged kickback scheme.
The defendants are accused of paying kickbacks to marketing companies to target TRICARE beneficiaries for prescriptions for compounded pain creams, scar creams, and vitamins, without regard to the patients’ medical needs. The compound formulas were manipulated by the defendants and the marketers to ensure the highest possible reimbursement from TRICARE. Telemedicine doctors were also paid to prescribe the creams and vitamins without seeing the patients, and sometimes paid the patients themselves to accept the prescriptions. The scheme generated tens of millions of dollars in reimbursements from TRICARE in a matter of months, and the defendants and marketers allegedly split the profits from the scheme.
The lawsuit was originally filed in the U.S. District Court for the Southern District of Florida by two former employees of pharmacy under the qui tam or whistleblower provisions of the False Claims Act, which permits private parties to sue for false claims against of the United States and to receive a share of any recovery. The Act permits the United States to intervene in such lawsuits, as the United States has done in this case. There has been no determination of liability.
