DOJ Catch Of The Week -- Pharmasan Labs
By the C|C Whistleblower Lawyer Team
This week’s Department of Justice “Catch of the Week” goes to Wisconsin-based Pharmasan Labs, Inc. and its related billing company NeuroScience, Inc. On Tuesday, both companies and their founders, Gottfried and Mieke Kellermann, agreed to pay $8.5 million to resolve charges they violated the False Claims Act by (i) submitting false information for laboratory services, and (ii) violating Medicare rules for services referred by non-physician practitioners. See DOJ Press Release.
According to the government, and as admitted by Pharmasan under the settlement, Pharmasan falsely billed Medicare for ineligible food sensitivity testing; knew Medicare prohibited payment for such testing; and submitted false information to Medicare to disguise the type of test it was performing so Medicare would cover it. Pharmasan also admitted violating Medicare billing rules which bar payment for lab services referred by non-physicians.
Roughly $3 million of the settlement comes from amounts seized by federal agents in March 2014. The balance comes from additional payments Pharmasan, NeuroScience and the Kellermanns agreed to make. In announcing the settlement, John W. Vaudreuil, United States Attorney for the Western District of Wisconsin, stressed the importance of “ensur[ing] that health care providers who lie to the United States, and place profits ahead of their legal and ethical responsibilities, are held accountable.”
The government investigation leading to the settlement originated from a whistleblower action filed under the qui tam provisions of the False Claims Act. The whistleblower will receive a whistleblower award of roughly $1.1 million from the government’s recovery.