Tennessee Clinics Settles False Claims Allegations

Two Tennessee orthopedic clinics have agreed to settle allegations asserted by a whistleblower in a qui tam action that the clinics violated the False Claims Act. Tennessee Orthopaedic Clinics P.C. in Knoxville has agreed to pay $1.3 million to settle the whistleblower’s allegations. Appalachian Orthopaedic Clinics P.C. in Kingsport will pay $550,000 to settle the claims made by the whistleblower. According to its website, Tennessee Orthopaedic Clinics operates 9 clinics in the eastern part of Tennessee. Appalachian Orthopaedic Clinics operates clinics in Tennessee and Virginia.

A qui tam case was filed against Tennessee Orthopaedic Clinics and Appalachian Orthopaedic Clinics alleging that the clinics knowingly billed Medicare, Medicaid, and other government health care programs for medications that were imported from countries outside the United States. However, Medicare and other government prescription drug plans do not cover medications purchased outside of the United States.

Orthopedic physicians often use injectable osteoarthritis medications known as viscosupplements for the treatment of osteoarthritis pain in the knee. According to the government, viscosupplements, such as Synvisc and Orthovisc, are reimbursed by federal health care programs at a fixed rate based on the average sales price of the product. The whistleblower, Douglas Estey, is a physician’s assistant who was paid by Genzyme Corp. to speak to medical providers about the use of certain viscosupplements.

According to the whistleblower, Tennessee Orthopaedic Clinics and Appalachian Orthopaedic Clinics purchased deeply discounted viscosupplements that were imported from outside of the United States and then submitted claims for reimbursement to the federal government in order to wrongfully profit from the difference between the price they paid and the government reimbursement rate.

The government contends that the viscosupplements from foreign countries were not reimbursable by federal and state health care programs because the labels contained additional uses not approved by the Food and Drug Administration in the United States, and because there was no assurance by the manufacturer that the medications had not been tampered with or that they had been stored properly.

The whistleblower will receive approximately $323,750 as his reward under the qui tam provisions of the False Claims Act.

For information on how to initiate a qui tam case as a whistleblower, click here.