Orthopedic Clinics Fined for Reimported Drugs

Two orthopedic clinics will pay a combined $1.85 million to resolve state and federal False Claims Act allegations that they knowingly billed state and federal health care programs for reimported osteoarthritis medications, known as viscosupplements. Tennessee Orthopaedic Clinics P.C., headquartered in Knoxville, Tennessee, will pay $1.3 million, and Appalachian Orthopaedic Clinics P.C., headquartered in Kingsport, Tennessee, will pay $550,000.


Viscosupplements, such as Synvisc and Orthovisc, are injections approved by the FDA for the treatment of osteoarthritis pain in the knee. Viscosupplements are reimbursed by Medicare, Medicaid and other federal health care programs at a set rate based on the average sales price of the domestic product.


The government contended that the clinics knowingly purchased deeply discounted viscosupplements that were reimported from foreign countries and billed them to state and federal health care programs in order to profit from the reimbursement system, when the reimported viscosupplements were not reimbursable by those programs. Allegedly, the reimported product included labeling in foreign languages and in English for additional uses not approved in the United States, which demonstrated that the product was reimported. Moreover, because the product was reimported, the government alleged there was no manufacturer assurance that it had not been tampered with or that it was stored appropriately.


"Attempts to increase profits by circumventing the law will not be tolerated,” said Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General in Atlanta Derrick L. Jackson. “Health care providers buying cut-rate, cheap drugs from foreign sources will end up paying a steep price.”


The allegations resolved by the settlement were first raised in a lawsuit filed against the clinics under the qui tam, or whistleblower, provisions of the False Claims Act by a physician’s assistant who was occasionally paid by Genzyme Corp. to speak to medical providers about the use of Synvisc. The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery. He will receive $323,750.


See the DOJ Announcement



See also Medical Law Perspectives, May 2013 Report: Drugs, Dosage, and Damage: Physician Liability for Prescribing or Administering Medication