News
04/02/2020 | Firm News
Kirby McInerney Announces Settlement of a False Claims Act Whistleblower Suit against Compounding Pharmacy FPR Specialty Pharmacy and Its Owners
Kirby McInerney LLP has settled a significant False Claims Act case on behalf of a whistleblower client against a compounding pharmacy FPR Specialty Pharmacy, its owners Christopher Casey and Billy Rue, and affiliated business Mead Square Pharmacy, all from the Rochester, New York area. The whistleblower brought forward facts showing that these defendants had fraudulently billed government health care plans, including Medicare and Tricare, for millions of dollars for defendants' tubes of “Focused Pain Relief” pain cream that they sold for up to $2,000 a tube.
As reported by Kirby McInerney's client, Casey, Rue, and their businesses engaged in several fraudulent schemes that disqualified their sales from government coverage. First, they shipped their pain cream to states in which they did not have licenses to practice as a pharmacy. When they eventually applied for pharmacy licenses, they misled the state pharmacy boards about their prior unlicensed sales and obscured Casey's prior disqualifying personal conduct. Second, they gave illegal kickbacks to their independent sales representatives, violating anti-kickback laws by paying them on a per-prescription sold basis. They also gave illegal kickbacks to patients by automatically waiving most of the co-pays required by the government to urge patients away from high-cost drugs toward equally effective drugs. Casey and Rue recognized that patients would not use their drug if they had to pay the government-required co-pays of hundreds of dollars. Casey and Rue chose to ignore the requirement and charge as little as $15 per prescription so the patient would accept the drug and Casey and Rue could then charge the government thousands per prescription.
As the whistleblower alleged, Casey, Rue, and their businesses were well aware that they were committing fraud, even paying $1.5 million in “hush money” to quiet persons who threatened to expose them and to jeopardize the tens of millions of dollars made from selling their pain cream.
On the whistleblower's behalf, Kirby McInerney filed a qui tam action in 2016 under the False Claims Act against Casey, Rue, FPR Specialty Pharmacy, and Mead Square Pharmacy. The case was filed in the United States District Court for the Southern District of New York and it was promptly and thoroughly investigated by Assistant United States Attorney Jean-David Barnea.
Based on the whistleblower's allegations and AUSA Barnea's investigation, the government intervened in the case and settled with the defendants. In light of FPR Specialty Pharmacy's closure and the remaining defendants' reported financial status, the defendants are paying a fraction of the false billings at issue. The settlements call for Casey and the businesses to pay $365,000 and for Rue to pay $61,000. The whistleblower will receive a 21% whistleblower award.
As part of the settlements, Casey, Rue, and their businesses admitted that they made unlicensed sales of their “Focused Pain Relief” pain cream, that they did not disclose key information to state pharmacy licensing boards, and that they paid their independent sales representatives and waived patient co-pays in ways that violated the anti-kickback laws.
Kirby McInerney partner Randall Fox represented the whistleblower. “Without whistleblowers,” Fox said, “massive amounts of tax dollars will be lost to undetected frauds. In this case, a whistleblower bravely came forward with strong and credible allegations that the government was being falsely billed for exceedingly expensive tubes of compounded pain cream that were sold through misrepresentations and illegal kickbacks. It was only through the whistleblower's action and the government's resulting investigation that they have finally admitted their liability and been required to make some amends.”
Kirby McInerney applauds and expresses its gratitude to AUSA Barnea, the United States Attorneys' Office for the Southern District of New York, and the United States Justice Department for pursuing these claims and bringing them to conclusion.
As reported by Kirby McInerney's client, Casey, Rue, and their businesses engaged in several fraudulent schemes that disqualified their sales from government coverage. First, they shipped their pain cream to states in which they did not have licenses to practice as a pharmacy. When they eventually applied for pharmacy licenses, they misled the state pharmacy boards about their prior unlicensed sales and obscured Casey's prior disqualifying personal conduct. Second, they gave illegal kickbacks to their independent sales representatives, violating anti-kickback laws by paying them on a per-prescription sold basis. They also gave illegal kickbacks to patients by automatically waiving most of the co-pays required by the government to urge patients away from high-cost drugs toward equally effective drugs. Casey and Rue recognized that patients would not use their drug if they had to pay the government-required co-pays of hundreds of dollars. Casey and Rue chose to ignore the requirement and charge as little as $15 per prescription so the patient would accept the drug and Casey and Rue could then charge the government thousands per prescription.
As the whistleblower alleged, Casey, Rue, and their businesses were well aware that they were committing fraud, even paying $1.5 million in “hush money” to quiet persons who threatened to expose them and to jeopardize the tens of millions of dollars made from selling their pain cream.
On the whistleblower's behalf, Kirby McInerney filed a qui tam action in 2016 under the False Claims Act against Casey, Rue, FPR Specialty Pharmacy, and Mead Square Pharmacy. The case was filed in the United States District Court for the Southern District of New York and it was promptly and thoroughly investigated by Assistant United States Attorney Jean-David Barnea.
Based on the whistleblower's allegations and AUSA Barnea's investigation, the government intervened in the case and settled with the defendants. In light of FPR Specialty Pharmacy's closure and the remaining defendants' reported financial status, the defendants are paying a fraction of the false billings at issue. The settlements call for Casey and the businesses to pay $365,000 and for Rue to pay $61,000. The whistleblower will receive a 21% whistleblower award.
As part of the settlements, Casey, Rue, and their businesses admitted that they made unlicensed sales of their “Focused Pain Relief” pain cream, that they did not disclose key information to state pharmacy licensing boards, and that they paid their independent sales representatives and waived patient co-pays in ways that violated the anti-kickback laws.
Kirby McInerney partner Randall Fox represented the whistleblower. “Without whistleblowers,” Fox said, “massive amounts of tax dollars will be lost to undetected frauds. In this case, a whistleblower bravely came forward with strong and credible allegations that the government was being falsely billed for exceedingly expensive tubes of compounded pain cream that were sold through misrepresentations and illegal kickbacks. It was only through the whistleblower's action and the government's resulting investigation that they have finally admitted their liability and been required to make some amends.”
Kirby McInerney applauds and expresses its gratitude to AUSA Barnea, the United States Attorneys' Office for the Southern District of New York, and the United States Justice Department for pursuing these claims and bringing them to conclusion.
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