Indiana has joined several states and the federal government to reach an agreement with National Cornerstone Health Services to settle allegations that the company violated the False Claims Act.
NCHS, a California-based specialty and wholesale pharmacy that provides blood-factor products, allegedly paid kickbacks to parents of children with hemophilia to induce purchase of NCHS’s blood-factor products, according to Indiana Attorney General Curtis Hill.
As a result, NCHS will pay the Medicare and Medicaid programs more than $4.2 million, $1.3 million of which will go to state Medicaid programs. Indiana’s Medicaid program will receive $408,202.82 in restitution as part of the settlement.
Twelve of NCHS’s blood factor products, which include anti-hemophilic factors and other plasma-derived therapeutic agents, are at issue in the settlement, including NCHS’s Advate, Benefix, Eloctate, Feiba NF, Helixate FS, Humate-P, Kogenate FS, Mononine, NovoSeven RT, Recombinate, Rixubis, and Stimate.
The federal and state civil settlement resolves allegations that from January of 2009 through November of 2014, NCHS recruited certain individuals whose relatives required one or more the listed blood-factor products, the AG’s office said.
NCHS then allegedly provided those individuals illegal remuneration to induce them or their relatives to purchase the drugs from NCHS, in violation of the Anti-Kickback Statute, the AG’s officer said.
“An investigation revealed that NCHS recruited parents whose children have hemophilia as marketers — paying the parents a commission each time they purchased their children’s medication through NCHS. These medications can cost tens of thousands of dollars per dose. The parents’ commission consisted of the profit NCHS made for each claim submitted to Medicare or Medicaid. NCHS allegedly carried out these activities through its subsidiary Home Health for the Cure LLC,” the statement says.
“We cannot tolerate fraudulent activity on the part of companies wanting to funnel taxpayer funds for their own gains,” Hill said in a statement. “This investigation and resultant settlement underscore our commitment to hold accountable those who would seek to circumvent our laws.”
The resolution arose from a joint investigation by the Wisconsin Attorney General’s Office, the U.S. Attorney’s Office for the Western District of Wisconsin, and the attorneys general of other affected states.
A National Association of Medicaid Fraud Control Units Team — including representatives from the Office of the Indiana Attorney General’s Medicaid Fraud Control Unit — conducted the settlement negotiations with NCHS on behalf of the states.