United States Announces New Round Of Compound Pharmacy Settlements Expected To Result In More Than $30 Million In Fines And Repayments

Jacksonville, Florida – United States Attorney A. Lee Bentley, III announces that the United States has settled allegations against several pharmacies and their owners for fraudulently billing TRICARE, the military’s healthcare program. These settlements reflect a wide range of conduct targeting military personnel and the healthcare programs they depend on. The allegations resolved included liability under the False Claims Act. In addition to those detailed below, the United States has also reached settlements with additional individual owners and physicians totaling more than $6 million. 

MedMatch Pharmacy, based in Jacksonville, has agreed to pay more than $4.7 million to resolve concerns that it paid kickbacks to marketers, that it filled prescriptions it knew or should have known were not legitimate, and that it sent prescriptions to states in which it did not have a valid license. 

Auburndale-based OHM Pharmacy has agreed to pay $4.1 million to resolve allegations that it knew, or should have known, that it was filling prescriptions from a doctor who was writing them outside the ordinary course of practice.  The United States contends that OHM knew, or should have known, this because the sheer magnitude and volume of prescriptions exceeded any other provider. In addition, the prescriptions were for the same compounded prescription substance, despite the patient’s age, condition, or health record.

Jacksonville-based WELL Health Pharmacy and its owner have agreed to pay more than $3 million, as well as 50% of its net profits for five years, to resolve concerns that it knowingly filled prescriptions that were written by referral sources that had a financial interest in the prescriptions.  While these referring physicians were purportedly participating in a “research study” related to compounded prescriptions, the government contends that this research study was a sham and that the compensation far exceeded fair market value.

Topical Specialists, a pharmacy based in Jacksonville, Florida, has agreed to pay the government more than $2.2 million for its role in submitting prescriptions that were tainted by so-called “research fees,” which was an elaborate guise for paying physicians to write prescriptions. This settlement is directly related, and in addition to, the WELL Health settlement described above.   

Durbin Pharmacy, based in Jacksonville, has agreed to pay $2.1 million, plus 50% of its net profits for five years, for submitting prescriptions that were tainted by kickbacks.  The government also contends that Durbin knew, or should have known, that the prescriptions it was filling from three local physicians were not legitimate because there was no bona fide patient/physician relationship.

North Beaches Pharmacy, also based in Jacksonville, has agreed to pay $10,000, plus 50% of its net profits for five years, for filling compound prescriptions that the government contends were tainted by illegal kickbacks. North Beaches’ top prescriber – a doctor in Fort Wayne, Indiana who wrote more than $600,000 in prescriptions–was paid over $70,000 in speaker’s fees that the government contends were nothing more than kickbacks for prescriptions. 

“The United States Attorney’s Office is committed to tackling healthcare fraud and protecting the TRICARE program,” said U.S. Attorney Bentley. “We will use every tool in our arsenal to hold accountable those who seek to profit by taking unfair advantage of military families.”

These settlements involve false claims submitted to the TRICARE program.  These cases were developed as part of a broader effort to identify and target unscrupulous compounding pharmacies. The Middle District of Florida has collected more than $40 million in recoveries related to compounded pharmacies since March 2015.

"I applaud the Department of Justice and the U.S. Attorney for the Middle District of Florida's office for holding these pharmacies and physicians accountable for their actions," said Vice Admiral Raquel Bono, director of the Defense Health Agency. "Their egregious actions targeted American service members, veterans and their families, and in many cases offered them products with little or no substantiated evidence that they would improve health outcomes. The Defense Health Agency will continue working closely with the Justice Department and other state and federal agencies to investigate all those who participated in these nefarious, fraudulent practices."

"The Defense Criminal Investigative Service is committed to protecting the integrity of TRICARE, the U.S. military health care program, so that it continues to provide quality medical care to America's Warfighters and their families, while ensuring that health care facilities and providers comply with Federal laws and regulations," said John F. Khin, Special Agent in Charge, Defense Criminal Investigative Service - Southeast Field Office.  "Through joint investigations with our law enforcement partners, DCIS will fully pursue both civil remedies to recover taxpayer dollars and criminal prosecutions to bring violators to justice."

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered more than $26.2 billion through False Claims Act cases, with more than $16.4 billion of that amount recovered in cases involving fraud against federal health care programs.

These cases were investigated by the Defense Criminal Investigative Service, the Federal Bureau of Investigation, the Department of Health and Human Services - Office of Inspector General, the Office of Personnel Management, and the Department of Veterans Affairs. They were prosecuted by Assistant United States Attorney Jason Mehta. 

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