Reno, Chico and Redlands orthopedic clinics to pay $2.39 million settlement

A whistleblower will earn about $430,000 after leading investigators to orthopedic clinics in Reno, Chico and Redlands for their allegedly using discounted and reimported osteoarthritis medications, but billing the government for full value.

The three clinics will pay a combined $2.39 million to resolve federal and state False Claims Act allegations that they knowingly billed federal and state health care programs for the unauthorized viscosupplements.

Orthopedic Associates of Northern California, located in Chico, California, will pay $815,794; San Bernardino Medical Orthopaedic Group Inc., DBA Arrowhead Orthopaedics, headquartered in Redlands, California, will pay $971,903; and Reno Orthopaedic Clinic, headquartered in Reno, Nevada, will pay $602,335.

Viscosupplements, such as Synvisc, Orthovisc, and Euflexxa are injections approved by the Food and Drug Administration for the treatment of osteoarthritis pain in the knee. Viscosupplements are reimbursed by Medicare, Medicaid and other federal health care programs at a set rate based on the average sales price of the domestic product. The government contended that the clinics knowingly purchased deeply discounted viscosupplements that were reimported from foreign countries and billed them to state and federal health care programs in order to profit from the reimbursement system, when such reimported viscosupplements were not reimbursable by those programs. The reimported products allegedly included labeling in foreign languages and in English for additional uses not approved in the United States, which demonstrated that the product was reimported. Moreover, because the product was reimported, the government alleged there was no manufacturer assurance that it had not been tampered with or that it was stored appropriately.

“We are committed to maintaining the integrity of the health care system to ensure that patients receive drugs and devices that are safe and effective, and will take action against companies that take chances with the health of consumers in order to improve their own bottom lines.” said Acting U.S. Attorney PHillip A. Talbert.

The allegations resolved by the settlement were first raised in a lawsuit filed against the clinics under the qui tam, or whistleblower, provisions of the False Claims Act by a Senior Musculoskeletal Specialty Manager in the Biosurgery Division of Sanofi S.A., which manufactures Synvisc. The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery. The whistleblower in this matter will receive approximately $430,000 of the recovery proceeds.

This case was prosecuted by Assistant United States Attorney Catherine Swann through a coordinated effort with the Department of Health and Human Services Office of Inspector General and Office of General Counsel, the Food and Drug Administration Office of Office of Chief Counsel, the California Department of Justice, Office of the Attorney General, Bureau of Medi-Cal Fraud and Elder Abuse, and the Nevada Attorney General, Medicaid Fraud Control Unit. The claims settled by this agreement are allegations only, and there has been no determination of liability.