Tennessee Physicians Settle False Claims Act Case Over Illegally Imported Drugs

A group of three Johnson City physicians learned they will have to pay $4.25 million plus interest to settle allegations contained in a False Claims Act lawsuit. According to the government, Dr. William Kincaid, Dr. Millard R. Lamb and Dr. Charles O. Famoyin knowingly and willfully caused false claims to be submitted to both the Medicare and TennCare/Medicaid programs. Specifically, the allegations revolve around the administration of multiple misbranded cancer drugs that were provided through the McLeod Cancer and Blood Center.

Drs. Kincaid, Lamb and Famoyin are each former partners in East Tennessee Hematology-Oncology Associates, P.C., which operated as McLeod Cancer. The specialty group was based in Johnson City, Tennessee where Dr. Kincaid was the senior managing partner and Drs. Lamb and Famoyin were minority owners. Due to their lesser roles in the management of McLeod Cancer, Drs. Lamb and Famoyin did not face criminal charges in the case. Under the terms of the settlement agreement, the doctors will pay the $4.25 million claims separately. Dr. Kincaid will pay $2.55 million, while Drs. Lamb and Famoyin will each pay $850,000.

Details of the False Claims Act Violations

According to the False Claims Act lawsuit, from 2007 to 2008 and from August 2009 through February 2012, McLeod Cancer bought an astounding amount of chemotherapy medication, along with other types of drugs, from a foreign distributor located in Canada. Specifically, McLeod Cancer purchased foreign versions of Abraxane, Alimta, Avastin, Eloxatin, Gemzar, Herceptin, Rituxan, Taxotere and Zometa. The Canadian drug supplier, in turn, obtained all of its medications from other foreign sources, making it almost impossible for authorities to pinpoint where all of the drugs were originally manufactured.

The U.S. Food and Drug Administration (FDA) is responsible for enforcing the Food, Drug, and Cosmetics Act, which requires any drug manufacturer or distributor in the United States to be registered with and approved by the FDA. Medications that are labeled in a foreign language or obtained from foreign sources are, therefore, not registered with the FDA and considered misbranded. The drugs obtained by McLeod Cancer were not manufactured in FDA approved factories and were often labeled in languages other than English or devoid of any dosage information.

In the case against McLeod Cancer, the government alleged that the doctors were able to purchase illegally imported medications at a price that was much lower than what they would have paid to purchase the drugs legally. Even though they obtained the unapproved medications at a large discount, the doctors still submitted claims for full reimbursement from Medicare, TennCare/Medicaid and other health insurance providers. Since none of these insurance programs cover illegally imported drugs, the government alleged that all of the related reimbursement claims violated both the Federal and State False Claims Act.

If a medication cannot be self-administered by the patient and is considered reasonable and necessary for treatment, Medicare will reimburse doctors at a fixed rate for each medication. The Medicaid fraud scheme orchestrated by McLeod Cancer ultimately resulted in massive profits for the three doctors due to the substantial difference between the price they paid for each medication and the price they were reimbursed.

In December 2012, Dr. Kincaid pled guilty to receiving misbranded drugs with intent to defraud or mislead in violation of the Food, Drug, and Cosmetics Act. He was sentenced on June 10, 2013 and ordered to serve 24 months in federal prison.

The Original Qui Tam Relator

This case is one of many that were originated when a qui tam whistleblower chose to come forward with information of fraud, exposing a wide-spread scheme where doctors were purchasing illegally imported oncology drugs and defrauding Medicare of millions of dollars. According to the whistleblower, doctors were purchasing illegal medications as a way to cut their overall costs and boost income.

The qui tam relator, Dr. Suby Rao, was originally approached by someone who asked if he would like to purchase illegally imported cancer medications. Dr. Rao, a hematologist/oncologist practicing in Chicago, was extremely disturbed by the proposition. He chose to consult with an experienced qui tam attorney and filed a False Claims Act lawsuit on behalf of the federal government in 2004.

Dr. Rao and his qui tam lawyers worked hand-in-hand with federal investigators to help uncover the full extent of illegal drug scheme.

“I was concerned about physicians treating cancer patients with drugs whose effectiveness and safety were unknown,” Dr. Rao said in an earlier statement. “It’s a shame that some doctors decided to boost their income by taking chances with their patients’ treatment.”

Contact Us to Learn More

Do you need a Whistleblower Lawyer or want to know more information about Qui Tam Law and your rights under the False Claims Act?

There are three easy ways to contact our firm for a free, confidential evaluation with one of our whistleblower attorneys:

  1. Fill out the contact form on this page.
  2. Email quitam@bm.net
  3. Call (800) 424-6690

Your submission will be reviewed by a Berger Montague qui tam attorney and remain confidential.

By | 2018-09-24T16:09:26+00:00 July 10th, 2013|Healthcare Fraud|