A federal fraud claim involving a compounding pharmacy has concluded with a $21.4 million settlement with the U.S. Department of Justice. According to the federal fraud allegations against that pharmacy, the company and the owner were involved in a major kickback scheme with Tricare beneficiaries.

Tricare is the nationally managed healthcare program for the U.S. military and their dependents. According to the allegations in this federal fraud claim, beneficiaries of Tricare were targeted in order to receive prescriptions not medically necessary.

The company operates as Patient Care America and is also associated with the owner’s private equity firm, Riordan Lewis & Haden Inc. The compounding pharmacy named in the federal fraud allegations is Diabetic Care Rx LLC.

The lawsuit was filed under the False Claims Act, in which the government or individual citizens who have insider knowledge of fraud claims can bring litigation. If a private citizen is involved in a False Claims Act lawsuit and their knowledge and pursuit of the case leads to a payment from the accused, the citizen could even be entitled to compensation.

The payment of $21.05 million in this specific fraud claim will end the lawsuit brought against the compounding pharmacy. What makes this case unique is that it’s very rare for the government to name a private equity firm as a defendant. The government is eligible to pursue a legal case against any of the parties who might have been involved in perpetrating a fraud scheme.

The private equity firm was named in this particular suit because the government argued that the PCA business was being supported through this fraud in order to sell that business at a profit. The RLH company held a high level of control over the pharmacy’s operations and that’s why it was included in the list of defendants.

False Claims Act Cases

Under the False Claims Act
, cases are brought when they relate to defrauding the government of money. This most often comes in the context of healthcare billings under Medicaid, Medicare, and Tricare. When an employee has insider information about a fraud scheme, this might be reported both internally and externally.

In exchange for bringing forward critical information about Tricare or other forms of healthcare fraud, a whistleblower could gain protection under the law from retaliation and other forms of harassment.

Earlier this summer, the parties involved in the fraud case decided to negotiate with the government rather than continue fighting through their dismissal bids. According to the government’s arguments in the case, expensive prescriptions were fulfilled by the compounding pharmacy and charged to Tricare, but these were not necessary for the patients.

According to the lawsuit brought against the pharmacy, at least $68 million in fraudulent claims were processed under this program from 2014 to 2015. However, the scheme is said to have ended when Tricare updated their processing rules associated with the reimbursement of compounded drugs.

If you or someone you know has inside information about fraud involving the government healthcare programs, you should speak with a whistleblower lawyer about the next steps. An attorney you find through the help of Top Class Actions could assist you.

This article is not legal advice. It is presented
for informational purposes only.