Qui Tam Whistleblowers Initiate $7.4 Million Penalty Against Florida Pharmacies

Pharmacy Whistleblower

On June 15, the Department of Justice announced that two Jacksonville, Florida pharmacies and their owner agreed to pay $7.4 million at a minimum to resolve allegations that they violated the False Claims Act (FCA). The government alleges that Smart Pharmacy Inc., SP2, LLC, and their owner Gregory Balotin added crushed pills of the antipsychotic drug aripiprazole to topical pain creams in order to increase their reimbursements from Medicare Part D and TRICARE, the federal health care program for active duty military personnel, retirees, and their families. The government alleges the involved parties knew that there was not an adequate clinical basis for adding aripiprazole, an antipsychotic drug approved to treat schizophrenia and Tourette’s disorder.

The government’s allegations stemmed from lawsuits filed by Amy Sanchez and Ashok Kohli, two former employees of Smart Pharmacy. Sanchez and Kohli filed a civil suit under the qui tam provision of the FCA. Qui tam claims enable private citizens to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. Qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery. Their award share has not yet been determined.

“When pharmacies inflate their revenue with medically unsupported prescription ingredients, they compromise the quality of patient care and waste taxpayer dollars,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department will hold accountable those who undermine the integrity of federal healthcare programs for personal profit.”

“We are grateful to the U.S. Department of Justice, the U.S. Attorney’s Office, and other state and federal officials for their unwavering commitment to protect taxpayer dollars and safeguard the TRICARE pharmacy benefit,” said Chief Edward C. Norton Jr. of the Defense Health Agency’s Pharmacy Operations Division. “Their efforts ensure our service members, veterans, and their families continue to receive the highest-quality pharmacy benefit commensurate with the service and sacrifice they make for our nation.”

In recent weeks, the U.S. Supreme Court has issued two decisions in False Claims Act whistleblower cases. On June 16, the Supreme Court issued an 8-1 ruling in United States, ex rel. Polansky v. Executive Health Resources, Inc. The decision grants the DOJ the authority to dismiss qui tam whistleblower lawsuits in cases in which it chose not to intervene.

On June 1, the U.S. Supreme Court issued an unanimous decision in U.S. ex rel. Schutte v. SuperValu Inc. The decision, heralded as a major victory by whistleblower advocates, overturns U.S. Court of Appeals rulings which allowed fraudulent companies to escape liability under the False Claims Act if they could prove their fraudulent actions could be based on a “reasonable interpretation of the law” regardless of whether or not the company intended to commit fraud.

Further Reading:

Two Jacksonville Compounding Pharmacies and Their Owner Agree to Pay at Least $7.4 Million to Resolve False Claims Act Allegations

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