Dr. KEE SHUM and his wife, LI SHUM, have agreed to pay $275,000 in damages to the United States to resolve allegations that they violated the federal False Claims Act in connection with claims they submitted to the Medicare program for oncology drugs that were imported from Canada. The defendants also agreed to enter into an integrity agreement with the Department of Health and Human Services to ensure that their medical practice, located in Flushing, Queens, is operated in a lawful manner in the future.

The settlement was announced by Benton J. Campbell, United States Attorney for the Eastern District of New York, Gary Heuer, Special Agent-in-Charge, Department of Health and Human Services, Office of Inspector General, New York Regional Office (HHS-OIG), and Mark J. Mershon, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Division.

The government alleged that from October 2004 through October 2005, the defendants purchased oncology drugs that were imported from Canada, and then sought and received reimbursement from the Medicare program despite knowing that the drugs were not subject to reimbursement. The $275,000 settlement figure represents twice the amount of damages allegedly incurred by Medicare. In settling the case, the defendants have not admitted to engaging in the conduct at issue.

The government began its investigation after a physician filed suit in the Eastern District of New York on behalf of the United States. The physician alleged that doctors throughout the United States were importing oncology drugs from Canada because they could be purchased at a lower price than domestic oncology drugs. As a result, doctors who imported drugs could increase their profit margins when they sought reimbursement from federal insurance programs, with no financial benefit to their patients. As alleged in the physician’s complaint, patients were generally not informed that they were being administered an imported drug. Under the federal False Claims Act, a private individual who has uncovered fraud against the government may file a suit on behalf of the United States. If the United States is successful in resolving or litigating those claims, the person who originally made the allegations may share in part of the recovery.

“Health care providers who violate the law will be held accountable,” stated United States Attorney Campbell. “We are committed to vigorously investigating and prosecuting fraud on the Medicare program.”

“Fighting the misrepresentation of pharmaceuticals and services provided by physicians is a priority of this office,” said HHS-OIG Special Agent-in-Charge Heuer. “This investigation is a further example of our commitment to root out schemes generating inflated profits at the expense of the taxpayers and vulnerable recipients.”

FBI Assistant Director-in-Charge Mershon stated, “Billions of taxpayer dollars go to fund the government’s public health care safety net. It’s the job of the FBI, among others, to ensure that reimbursement through Medicare applies only to eligible treatments and procedures.”

The government’s case was handled by Assistant U.S. Attorneys Deborah B. Zwany and Paul Kaufman, who were assisted by Affirmative Civil Enforcement Auditor Emily Rosenthal. The Integrity Agreement was negotiated by Senior Counsel Stephen D. Solomon in the Office of Counsel to the Inspector General for the Department of Health and Human Services.

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