On February 28, the US Department of Justice (DOJ) announced the guilty plea of Andrew Maloney, who, along with his clinical laboratory Capstone Diagnostics, pleaded guilty to conspiracy to pay health care kickbacks. As part of the guilty plea, the defendants agreed to pay $14.3 million to settle allegations that they violated the Anti-Kickback Statute (AKS) by engaging in schemes involving medically unnecessary urine drug tests. As alleged by prosecutors, between August 2017 and December 2018, Capstone collaborated with Do It 4 the Hood (D4H), a program purportedly offering mentoring services to at-risk teenagers in Georgia, to conduct fraudulent drug testing without regard to medical necessity. Maloney was allegedly aware that participants needed these tests to join the program, many of whom were covered by Medicaid. Capstone paid D4H a portion of Medicaid reimbursements, resulting in over $1 million in claims submitted and at least $400,000 paid out by Georgia Medicaid. In addition to the D4H-related allegations, prosecutors also accused Maloney and Capstone of exploiting the COVID-19 pandemic protocols by paying sales representatives to recommend unnecessary respiratory pathogen panels (RPPs) to senior communities.

Several additional individuals, including Duriel Gray, Bree’Anna Harris, Glenn Pair, and Rachel Sheats, also pleaded guilty to various charges related to these schemes. Gray, who was licensed to practice medicine in Georgia, acted as the medical director for D4H, facilitating the fraudulent drug testing claims to Medicaid without examining participants. Harris and Pair were involved in related schemes in North Carolina and South Carolina, while Sheats, Capstone’s chief operations officer, was a key contact for D4H and awaits sentencing for her role in the kickback scheme.

To resolve these allegations, Maloney and Capstone entered into a civil settlement of $14.3 million with the federal government and several states, resulting in a recovery of approximately $13.9 million for federal health care programs and $400,000 for state Medicaid programs.

A copy of the DOJ press release can be found here.

Bankrupt Opioid Manufacturer Settles Criminal and Civil Investigations into Drug Sales and Marketing

On February 29, the DOJ announced the settlement of criminal and civil investigations into Endo Health Solutions Inc. regarding its sales and marketing practices related to the opioid drug Opana ER with INTAC. Per the settlement, Endo pleaded guilty to violating the Federal Food, Drug and Cosmetic Act (FDCA) and agreed to pay over $1.5 billion in fines and forfeitures.

In the criminal portions of the settlement, Endo acknowledged that sales representatives marketed Opana ER by falsely promoting its abuse deterrence and tamper resistance, despite lacking clinical data supporting these claims. As alleged by prosecutors, Endo’s marketing scheme targeted healthcare providers prescribing Opana ER for non-medically accepted indications, leading to increased prescriptions and revenue. Similarly, the civil settlement details that Endo knowingly marketed Opana ER to prescribers engaged in abusive practices and employed aggressive sales tactics to drive up prescription rates. The proposed resolutions include a $1 billion criminal fine, $450 million in criminal forfeiture, and a civil settlement of over $475 million under the False Claims Act (FCA).

The proposed resolutions are now subject to approval by the US Bankruptcy Court in the Southern District of New York. Under its bankruptcy agreement, Endo must pay over $464 million over 10 years. As an additional condition of the resolution, Endo will cease to operate in its current form and will not emerge from bankruptcy. Instead, Endo’s assets will be sold to a group of secured lenders, who will operate the business under a new corporate structure. Finally, Endo’s affiliates agreed to a Voluntary Operating Injunction restraining opioid marketing and sales.

A copy of the DOJ press release can be found here.

Husband and Wife Sentenced for TRICARE and Medicare Fraud Scheme

On March 1, the DOJ announced the sentencing of Charles Ronald Green Jr. and Melinda Elizabeth Green to 27 months each in federal prison for defrauding TRICARE, a medical benefits program for military servicemembers and their families, and Medicare of over $125 million. As alleged by prosecutors, between May 2014 and June 2015, the Greens billed TRICARE for expensive and medically unnecessary pain creams, scar creams, and multi-vitamins, receiving kickbacks from pharmacies in exchange for referring false prescriptions. As a result, TRICARE reimbursed millions of dollars for the unnecessary creams and vitamins. Prosecutors also accused the Greens of defrauding Medicare by purchasing completed doctors’ orders for durable medical equipment (DME) from marketers and concealing the scheme through sham contracts between June 2018 and April 2019.

To resolve these allegations, the court ordered the Greens to pay $4.5 million in restitution to TRICARE and over $69 million to Medicare. Additional claims for restitution are set to be resolved at a hearing on May 24.

A copy of the DOJ press release can be found here.

Louisiana Physician Sentenced to Four Years in Prison for Tax Evasion

On February 29, the DOJ announced the sentencing of Louisiana physician, Dr. Melissa Rose Barrett, to 52 months in prison for tax evasion. As alleged by prosecutors, Dr. Barrett, who owned and operated two urgent care clinics in Baton Rouge, attempted to evade paying approximately $1.6 million in income taxes owed to the Internal Revenue Service (IRS). Despite numerous notifications and collection efforts by the IRS, including letters, phone calls, seizures of bank accounts and property, and interviews with IRS agents, Dr. Barrett allegedly engaged in various tactics to thwart the IRS’ attempts to collect the outstanding taxes. For instance, prosecutors accused her of submitting a false IRS Form 433-A to underreport her income and inaccurately detail her assets, avoiding cash deposits into banks, and using nominees to purchase millions of dollars in real estate and personal property, including a personal residence, a boat, an airplane, and farmland.

In addition to the prison sentence, US District Judge Brian A. Jackson ordered Dr. Barrett to serve one year of supervised release and pay a $200,000 fine.

A copy of the DOJ press release can be found here.