BioTek reMEDys, a Delaware-based pharma company and its Indian American CEO Chaitanya Gadde, have agreed to pay $20 million to settle charges of paying kickbacks to patients and physicians to protect its revenue stream.
BioTek, a specialty pharmacy that offers drugs and infusion services, routinely waived the copayments of Medicare and TRICARE patients from at least August 2015 through May 2020 to induce them to purchase its drugs and services, according to Justice department charges.
Many of the specialty drugs offered by BioTek were expensive and required patients to pay large copays. The government alleged that BioTek sought to avoid deterring patients from purchasing its drugs and services by engaging in a scheme, orchestrated and implemented by Gadde and others, to routinely waive these large copays, without regard for whether the patients were experiencing financial hardship.
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The settlement announced Oct 2 also resolves allegations that BioTek provided remuneration in the form of gifts, dinners and free administrative and clinical support services to physicians – in particular Dr David Tabby, who operated a neurology practice in Bala Cynwyd, Pennsylvania – to induce those physicians to refer patients to BioTek.
The justice department also alleged that Dr Tabby knowingly solicited and accepted this remuneration in exchange for referring numerous patients to BioTek. Dr Tabby has separately paid $480,000 to settle these allegations.
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by former BioTek employees Shantae M. Wyatt and Latoya Sparrow.
Under those provisions, a private party may file an action on behalf of the United States and receive a portion of any recovery. Wyatt and Sparrow will receive $4 million as their share of the settlement with BioTek and Gadde, and $91,200 as their share of the settlement with Dr Tabby.
“Participants in federal health care programs may not offer improper inducements to physicians or patients to generate business,” said Principal Deputy Assistant Attorney General Brian M Boynton, head of the Justice Department’s Civil Division.
“This settlement reflects the government’s continuing commitment to protect the integrity of these programs and the healthcare decisions made by and on behalf of beneficiaries.”
“BioTek allegedly provided improper physician inducements and covered up kickbacks for patient referrals by waiving co-pays,” said US Attorney Jacqueline C. Romero for the Eastern District of Pennsylvania (EDPA).
“These improper and corrupt business practices will not be tolerated in this District. BioTek’s alleged scheme, orchestrated and implemented by Gadde, Dr Tabby, and others, to routinely waive these copays – without regard for whether the patients were experiencing financial hardship – ensured a steady revenue stream for BioTek and undermined patient care to citizens of this District. EDPA will continue to invest itself in the pursuit of health care providers who violate the law for personal gain.”