31 December 2024. A qui tam lawsuit involving ASD Specialty Healthcare LLC (ASD) illustrates the importance of whistleblowers in revealing fraudulent practices in the healthcare industry. ASD, operating under the name Besse Medical, recently reached a $1.67 million settlement with the U.S. Department of Justice to resolve allegations of violating the Anti-Kickback Statute and False Claims Act. Two whistleblowers, former employees of pharmaceutical company Regeneron, came forward with insider knowledge of the alleged fraud scheme. Under the qui tam provisions of the False Claims Act, private citizens can report fraud and earn between 15-25% of what the government recovers from the perpetrator of the fraud. For their role in exposing the scheme, the whistleblowers will receive $250,705.20 from the settlement.

Key Allegations:
Kickbacks Through Free Inventory Management Systems

ASD provided a commercially available inventory management system, PODIS, at no cost to retina practices. These practices were incentivized to purchase ophthalmological drugs from ASD for patients with neovascular age-related macular degeneration (wet AMD). Providing the inventory management system for “free” to medical practices, in exchange for prescribing ASD’s wet AMD drugs to patients, constituted a kickback scheme.

False Claims Submitted to Federal Healthcare Programs

The government alleged that ASD’s kickbacks led physicians to submit false claims to Medicare, TRICARE, and the Department of Veterans Affairs.

Why Whistleblowers Are Essential in Healthcare Fraud Cases

Protecting Patients

Illegal kickbacks can lead to compromised patient care. When purchasing decisions are influenced by financial incentives rather than medical necessity, patients may receive suboptimal treatments.

Ensuring Fair Competition

The healthcare market operates best when providers compete based on service quality, efficacy, and cost efficiency—not unethical backroom deals.

Securing Taxpayer Funds

Fraudulent practices increase costs for federally funded healthcare programs, ultimately burdening taxpayers. By exposing such fraud, whistleblowers help curtail wastage and protect public funds. The U.S. Attorney for the District of Massachusetts said about this case, “Pharmaceutical distributors cannot violate the law to gain a financial advantage. Offering improper incentives to health care customers can increase health care costs and disadvantage competitors who are playing by the rules.”

The Anti-Kickback Statute plays a critical role in preventing corruption by prohibiting any form of remuneration to induce the purchase of products or services covered by federal healthcare programs.

For whistleblowers, understanding how to report illegal kickbacks is important in protecting patients and ensuring taxpayer dollars are not misused. Consulting an experienced lawyer who specializes in whistleblower (qui tam) lawsuits is a first step to ending misconduct. They can help you identify whether the conduct violates the Anti-Kickback Statute or Stark Law.