Medical equipment company will pay $5.2M to settle false billing allegations

Prestonsburg, Ky.-based Cooley Medical Equipment agreed to pay $5.25 million to resolve allegations it violated the False Claims Act, according to the Department of Justice.

Cooley Medical Equipment previously operated a pharmacy in Prestonsburg that began making compounded medical creams in 2015. Cooley billed Medicare, Medicaid, and the Civilian Health and Medical Program of the Department of Veterans Affairs for these prescriptions.

Cooley was required by Kentucky's Medicaid program and CHAMPVA to obtain their prior authorization to use bulk powder forms of lidocaine and prilocaine as ingredients in its compound creams. Medicare Part D does not cover bulk powder ingredients.

Rather than face limited reimbursement from Medicare Part D or go through the prior authorization processes, Cooley falsely stated in claims to federal insurers that its compound medical creams were made with cream-based lidocaine and prilocaine instead of bulk powder.

Cooley allegedly submitted thousands of false claims between January 2015 and December 2016 and received millions of dollars in improper reimbursements.

Cooley voluntarily disclosed the misconduct to the U.S. Attorney's Office, took proactive steps to resolve the problem and no longer operates a compounding pharmacy, according to the Justice Department.

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