On February 16, 2024, the former Chief Marketing Officer (“CMO”) of BioTek reMEDys, Inc. (“BioTek”), Carla Sparkler, agreed to settle allegations of violations to the False Claims Act (“FCA”) and Anti-Kickback Statutes (“AKS”) by paying kickbacks to patients and physicians and waiving co-pays to benefit BioTek’s revenue. Specifically, Sparkler has agreed to a six-year exclusion from federally funded health care programs, including Medicare.

The AKS prohibits the offering, paying, soliciting or accepting, directly or indirectly, of any remuneration to refer or arrange for the referral of items or services payable by any federal health care program. While it is clear that AKS prohibits the payment of remuneration to physicians in exchange for patient referrals, the prohibition also extends to companies that routinely waive the copays of Medicare patients without determination of financial need.

From at least August 2015 to May 2020, Sparkler served as the CMO for BioTek, a Delaware specialty pharmacy that offers drugs and infusion services. According to the Complaint, it is alleged that BioTek engaged in a scheme, “orchestrated and implemented by Sparkler,” to routinely waive large copayments of Medicare and TRICARE patients, without regard to financial hardship, to induce those patients to purchase BioTek’s expensive drugs and services, thereby ensuring a steady revenue stream for BioTek.

The government further alleged that under Sparkler’s management, BioTek provided remuneration in the form of gifts, dinners, and free administrative and clinical support services to physicians to induce referrals from those physicians. Specifically, one such physician, Dr. David Tabby, was alleged to have knowingly solicited and accepted this remuneration in exchange for referring numerous patients to BioTek. To settle these allegations, Dr. Tabby has agreed to separately pay $480,000 to the government. BioTek and its chief executive officer, Chaitanya Gadde, also agreed to pay $20 million based on their ability to pay to resolve allegations that they violated the FCA by paying kickbacks to patients and physicians.

The U.S. Attorney for the Eastern District of Pennsylvania (“EDPA”) stated that Sparkler’s six-year exclusion reflects his office’s “commitment to holding individuals accountable for improper and corrupt business practices, [including those] who violate the law for personal gain.”

This civil settlement and resolution of claims was brought under the qui tam or whistleblower provisions of the FCA, which allows a private party to file an action on behalf of the United States and receive a portion of any recovery. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-477-8477).

If you have any questions regarding FCA and/or AKS compliance, please feel free to contact Bill Kalogredis, Esq. or Sonal Parekh, Esq.

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Vasilios J. (Bill) Kalogredis, Esq. has been advising physicians, dentists, and other healthcare professionals and their businesses as to contractual, regulatory and transactional matters for over 45 years. He is Chairman of Lamb McErlane PC’s Health Law Department. Bill can be reached by email at bkalogredis@lambmcerlane.com or by phone at 610-701-4402.

Sonal Parekh, Esq., is an associate at Lamb McErlane PC who focuses on healthcare transactional matters and a broad range of healthcare regulatory-related issues on behalf of healthcare systems, physicians, dentists, and other healthcare providers, and is a pharmacist by education and training. Sonal can be reached by email at sparekh@lambmcerlane.com or by phone at 610-701-4416.

*This alert is for educational purposes only and is not intended to be legal advice. Should you require legal advice on this topic or have any questions or concerns, please contact Vasilios J. (Bill) Kalogredis, Esq. or Sonal Parekh, Esq.