False Claims Counsel

The Department of Justice announced on November 26, 2019 that a Texas orthopedic surgeon had agreed to pay $300,000 to settle civil allegations that he accepted kickbacks in exchange for writing prescriptions to a compounding pharmacy. The Press Release states:

Dr. Ian Reynolds, 71, of Friendswood, Texas, agreed to pay the United States $300,000 to resolve False Claims Act allegations that he accepted illegal kickback payments from OK Compounding, LLC, announced U.S. Attorney Trent Shores. This is the twelfth kickback settlement involving OK Compounding, LLC, since November 2018.

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This civil settlement resulted from an investigation into numerous health care providers writing prescriptions for pain creams compounded and sold by OK Compounding in return for the kickback payments.
From April 2013 through September 2015, Dr. Reynolds prescribed pain creams to his patients, facilitating the sale and distribution of the creams. As compensation for his services, OK Compounding paid Dr. Reynolds what was characterized by the parties as “medical director fees” based upon an hourly rate; however, the payments Dr. Reynolds received from OK Compounding were, in actuality, “kickbacks.”  Because some of the patients were federally insured by Medicare, TRICARE, the Veterans Health Administration and the Federal Employees Compensation Act Program (FECA), the kickbacks were in violation of the False Claims Act.

From April 2013 through September 2015, Dr. Reynolds prescribed pain creams to his patients, facilitating the sale and distribution of the creams. As compensation for his services, OK Compounding paid Dr. Reynolds what was characterized by the parties as “medical director fees” based upon an hourly rate; however, the payments Dr. Reynolds received from OK Compounding were, in actuality, “kickbacks.”  Because some of the patients were federally insured by Medicare, TRICARE, the Veterans Health Administration and the Federal Employees Compensation Act Program (FECA), the kickbacks were in violation of the False Claims Act.

It is illegal to pay or receive “kickbacks” in conjunction with federal health care insurance.  Prohibitions against kickbacks are crucial to insure that financial motives do not undermine the medical judgment of physicians and other health care providers.  The civil False Claims Act is an important tool used to protect the integrity of taxpayer-funded health care programs.

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