Orthopedic Clinics to Pay $2M to Settle False Claims Allegations

Knoxville-based Tennessee Orthopaedic Clinics P.C. and Kingston, Tenn.-based Appalachian Orthopaedic Clinics P.C. will pay a total of $1.85 million to settle allegations that they violated state and federal False Claims Acts by billing the government for reimported osteoarthritis drugs, according to a Department of Justice news release.

Tennessee Orthopaedic Clinics will pay $1.3 million and Appalachian Orthopaedic Clinics will pay $550,000.

The two clinics allegedly bought discounted viscosupplements, FDA-approved injections used for osteoarthritis knee pain, from foreign countries and billed state and federal healthcare programs for them. Federal healthcare programs reimburse viscosupplements based on the domestic sale price, so such reimported products are not reimbursable, according to the DOJ.

The products' labeling also allegedly included additional uses for the drugs not approved in the U.S.

Additionally, since the products were reimported, the government contended there was no assurance from the manufacturers that they had not been tampered with, potentially putting patients' health at risk, according to the news release.

The whistleblower suit was filed in February 2012 by Douglas Estey, a physician assistant who occasionally spoke to medical providers about the drug Synvisc, one of the alleged reimported products.

"The Department of Justice will not tolerate the conduct of companies that impermissibly shift risks onto patients in order to increase their own profits," said Stuart Delery, Assistant Attorney General for the Justice Department's Civil Division.

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