Last week the Department Of Justice announced a settlement agreement with Nashville Pharmacy Services, LLC (“NPS”) and NPS majority owner Kevin Hartman. Under the agreement, NPS and Mr. Hartman will pay up to $7.8 million to settle a lawsuit alleging violations of the False Claims Act. The settlement agreement does not include any admission of liability on the part of NPS or Mr. Hartman.
On August 10, 2012, relator Marsha McCullough, a former order-entry technician at NPS, filed this qui tam action in the United States District Court for the Middle District of Tennessee. NPS specializes in dispensing HIV and AIDS-related medications. Beneficiaries of Medicare and TennCare (Tennessee’s Medicaid program) constitute a significant portion of the pharmacy’s revenue. The complaint includes allegations that NPS wrote off required co-payments, improperly used co-payment cards offered by pharmaceutical companies to reduce payments owed by beneficiaries of government health programs, automatically refilled prescriptions without authorization, dispensed prescriptions to deceased patients, and retaliated against Ms. McCullough. Counts were brought against NPS and Mr. Hartman for violations of the False Claims Act, the Tennessee Medicaid False Claims Act, and state and federal anti-retaliation laws.
After the complaint was filed, the United States asked for, and was granted, numerous extensions of time to consider whether to intervene. On December 9, 2015, the United States notified the court of its decision to intervene in part. Ms. McCullough’s state and federal retaliation claims were not included in the government’s intervention, nor were those claims specifically addressed in the settlement agreement.
The agreement provided for an immediate payment of $500,000 to the United States. Additional payments totaling no less than $1,250,000, but not to exceed $7,300,000, are to be made through the end of 2020. The amount of these payments will be determined by NPS’s total gross revenue and profit margin. The agreement included a statement by both defendants that they were financially solvent and would continue to be solvent after making the required payments. The federal government will keep approximately half of the recovery, with the State of Tennessee receiving approximately one third. The remainder will be paid to Ms. McCullough for her role as the relator in the suit.
In the DOJ’s press release, U.S. Attorney David Rivera hailed the settlement, noting “[p]ursuing individuals and corporations who engage in healthcare fraud remains a top priority of the U.S. Attorney’s Office.”
