California provider settles allegations of billing for re-imported drugs for more than $1 million


Back in January 2014, Julie and I were the first False Claims Act attorneys to bring a successful qui tam case alleging the improper use and billing of viscosupplements by healthcare providers.

Read on to learn how these devices are used to commit healthcare fraud and contact one of our False Claims Act attorneys for additional information.

About Viscosupplementation

Viscosupplementation agents are hyaluronic acid-based devices that are injected into the knee to alleviate pain and swelling, usually from arthritis. They are sold under the brand names Synvisc, Orthovisc, Supartz, Hyalgan, and Euflexxa, among others.

Viscosupplements are regulated by the Food and Drug Administration (FDA) as devices, but they are billed with unique brand-specific codes just like drugs.

So, for example, it would be improper to bill any product except for Orthovisc using the code specifically designated for Orthovisc. Moreover, the reimbursement rates are based on the sales prices for these specific products, so billing a cheap knockoff product as if it were Orthovisc would garner a windfall for the provider.

Profit-Driven Orthopedic Clinics Cutting Corners with Reimported Viscosupplements

In our case, two orthopedic clinics were billing Synvisc and Orthovisc under their corresponding codes, but rather than purchasing the products from the manufacturers, they purchased reimported products from Turkey and elsewhere.

This was problematic for several reasons.

First, because the products left the country for a time and were reimported back into the United States, they lost their FDA approval status, a condition for coverage. This is not just a technical requirement, but it is a safety risk because the manufacturer can no longer assure that the product had not been tampered with or that it was stored properly while abroad.

Second, the FDA has strict labeling requirements – so that it is clear to providers the proper uses and risks for the products – but these products had labels in foreign languages that included additional uses not approved in the United States.

Third, reimbursement rates are based on the domestic prices for the products. Therefore, it was wrong to purchase a deeply discounted, foreign product but receive reimbursement based on the manufacturer’s pricing.

Of course, it was this profit motive that generally drives the scheme in the first place, since it is not especially difficult to obtain the products from the manufacturers.

Bracker & Marcus LLC Represents Whistleblower, Helps Obtain Settlement

Ultimately, the two orthopedic clinics caught in the scheme paid a combined $1.85 million to settle these allegations. Our client – an employee of the Genzyme Corporation, which manufactures Synvisc – received a relator’s share of $323,750.

The case is captioned United States ex rel. Estey v. Tennessee Orthopaedic Clinics P.C., Appalachian Orthopaedic Associates P.C., and Appalachian Orthopaedic Partners LLC, 3:12-cv-85 (E.D. Tenn.).

This scheme has repeated itself over the years. In 2016, three orthopedic clinics in California paid a combined $2.39 million to settle similar claims of billing for reimported Synvisc, Orthovisc, and Euflexxa. This case was filed by a Senior Musculoskeletal Specialty Manager in the Biosurgery Division of Sanofi S.A., which manufactures Synvisc.

This whistleblower received approximately $430,000 in relator’s share. The case is captioned United States ex rel. Roe v. Orthopedic Associates of Northern California et al, 2:14-CV-0917 (E.D. Cal.).

Recently, this viscosupplement scheme has hit the news again, as a San Francisco physician agreed to pay over $1 million for reimported Synvisc and Orthovisc that were billed to Medicare. The settlement included not only the cost of the drugs themselves but also factored in reimbursements for the injection procedures. There was no whistleblower in this case.

Bracker & Marcus LLC continues to litigate False Claims Act cases based on a slightly different variety of viscosupplementation fraud.

In 2015, we filed a case in the Northern District of Mississippi alleging that an orthopedic practice had purchased hyaluronic acid-based knee injections from a compound pharmacy and billed them as if they were name-brand products.

Our relator was a Euflexxa salesman who realized the medical practice was not actually purchasing any of his or his competitors’ products. Yet, he was performing hundreds of viscosupplement injections every year.

The government intervened in the case, we defeated the defendants’ motions to dismiss and summary judgment, and now the case is scheduled for trial in November. The case is captioned United States ex rel. Gray v. Mitias Orthopaedics, PLLC, 3:15-cv-127 (N.D. Miss.).

Interestingly, in all three whistleblower cases, the relator worked for a competitor and was not an insider at the orthopedic practices, as is more common for False Claims Act relators. This just goes to show that almost anyone can be a whistleblower: insiders, outsiders, competitors, victims, data miners, etc.

Do you suspect viscosupplementation fraud? Contact us.

If you are aware of healthcare providers using and billing Medicare for imported, counterfeit, or compounded hyaluronic acid products, including Synvisc, Synvisc-One, Orthovisc, Monovisc, Hyalgan, Supartz, Euflexxa, or Gel-One, or you are aware generally of providers billing for a different product than they are actually using, contact our office today for a free evaluation.