BioTek reMEDys New Castle, and its chief executive officer, Chaitanya Gadde, agreed to pay $20 million to resolve allegations that they violated the False Claims Act by paying kickbacks to patients and physicians.
When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance or deductible. Congress included copay requirements in the Medicare program in part to serve as a check on healthcare costs.
The Federal Anti-Kickback Statute prohibits the offering, paying, soliciting or accepting, directly or indirectly, of any remuneration – which includes money or any other thing of value – to refer or arrange for the referral of items or services payable by any federal health care program. This prohibition extends to companies that routinely waive the copays of Medicare patients without determination of financial need. The Anti-Kickback Statute also extends to the payment of remuneration to physicians in exchange for patient referrals.
The government alleged that, from August 2015 through May 2020, BioTek, a specialty pharmacy offering drugs and infusion services, routinely waived the copayments of Medicare and TRICARE patients to induce them to purchase its drugs and services. Many of the specialty drugs offered by BioTek were expensive and required patients to pay large copays. The government alleged that BioTek sought to avoid deterring patients from purchasing its drugs and services by engaging in a scheme, orchestrated and implemented by Gadde and others, to routinely waive these large copays without regard for whether the patients were experiencing financial hardship.
The settlement also resolves allegations that BioTek provided gifts, dinners and free administrative and clinical support services to physicians – particularly Dr. David Tabby, who operated a neurology practice in Bala Cynwyd, PA – to induce those physicians to refer patients to BioTek. The government also alleged that Tabby knowingly solicited and accepted this remuneration in exchange for referring numerous patients to BioTek. Tabby has separately paid $480,000 to settle these allegations based on his ability to pay.
“The Anti-Kickback Statute protects the financial integrity of federal healthcare programs and helps ensure that decisions about patient treatment are made on the basis of sound medical judgment rather than providers’ financial interests,” said U.S. Attorney David C. Weiss for the District of Delaware. “Kickbacks not only increase healthcare costs for all beneficiaries, they also violate the trust of patients. My office and the rest of the department will continue to pursue healthcare providers who put self-interest ahead of patient care and compliance with the law.”gram.”
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by former BioTek employees Shantae M. Wyatt and Latoya Sparrow. Under those provisions, a private party may file an action on behalf of the United States and receive a portion of any recovery. Wyatt and Sparrow will receive $4 million as their share of the settlement with BioTek and Gadde, and $91,200 as their share of the settlement with Tabby.
The resolutions obtained in this matter were the result of a coordinated effort among the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, the U.S. Attorney’s Office for the Eastern District of Pennsylvania, the U.S. Attorney’s Office for the District of Delaware, the HHS-OIG, the Office of Inspector General for the Office of Personnel Management, and the Defense Criminal Investigative Service.
The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare fraud. One tool in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800‑HHS‑TIPS (800-447-8477).
