Medical Practice to Pay $425,000 to Settle False Claims Act Allegations

            Montgomery, AL – On Monday, March 16, 2020, Mulberry Medical Associates, P.C. agreed to pay $425,000 in a civil settlement to resolve allegations that it violated the False Claims Act, announced Acting United States Attorney Sandra J. Stewart. The alleged false claims involved the importation and distribution of foreign, non-Food and Drug Administration (FDA) approved pharmaceutical products prohibited under the Food, Drug, and Cosmetic Act.

            Mulberry Medical Associates, P.C. is a group medical practice in Montgomery, Alabama, which specializes in internal medicine.

            The government’s investigation revealed that Mulberry Medical Associates purchased and administered certain unlicensed and foreign-made pharmaceutical products, or “subject products,” that were meant to be distributed only in foreign markets. These subject products were less expensive than their FDA counterparts marketed in the United States and included versions of Orthovisc, Supartz, Prolia, and Aclasta, which are used to treat patients with osteoarthritis and osteoporosis.

            The settlement addresses allegations that, from September 2011 through March 2017, Mulberry Medical Associates knowingly submitted false claims for and related to the use of the subject products to Medicare, Medicaid and the Federal Employees Health Benefits Program (FEHBP). Federal health care programs reimburse for prescription drugs at a set rate based on the average sales price of the respective FDA approved, physician-administered drug in the United States. Therefore, Mulberry Medical Associates was able to profit from the margin between the reimbursement rates received based on FDA approved drugs, and the lower amounts paid for the unauthorized subject products. The United States contends that the subject products were not eligible for reimbursement by the federal health care programs because they had not received final marketing approval from the FDA.

            “This settlement shows that the United States government is working to identify companies that place profit ahead of patient safety, and hold them accountable,” stated Acting U.S. Attorney Stewart. “Maximizing revenues by skirting regulations that are designed to protect patients has no place in our healthcare system. Companies should never allow financial considerations to influence their decision-making process when the health and welfare of the American citizen is at stake.”

            “Doctors are entrusted with caring for their patients and obtaining and using safe, U.S. approved drugs on their patients,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “Mulberry Medical Associates put their financial gain above the health and safety of local residents. HHS-OIG continues to focus resources on those who obtain and use unapproved drugs on patients. Patient safety is a top priority.”  

            “The OPM OIG will always prioritize protecting patients from harm,” said Thomas W. South, Deputy Assistant Inspector General for Investigations, OPM OIG. “The use of unapproved drugs on patients will not be tolerated and we will always devote our resources to holding these unscrupulous providers accountable.”

            This Affirmative Civil Enforcement (ACE) matter was investigated by the U.S. Department of Health and Human Services-Office of Inspector General, the U.S. Office of Personnel Management-Office of Inspector General, the U.S. Food and Drug Administration-Office of Criminal Investigations, and the Health Care Fraud Investigator of the U.S. Attorney’s Office. The United States was represented by Assistant United States Attorney Stephen D. Wadsworth of the Office’s Civil Division.

            The claims resolved by the settlement are allegations only, and there has been no determination of liability.