BioTek, its CEO, Chaitanya Gadde, and Physician, Dr. David Tabby, Agreed to Pay $20 Million to Resolve Anti-Kickback Violations
The reach of the Anti-Kickback Statute and the False Claims Act is broad. As a result, AKS liability is a real and significant risk for healthcare companies and providers. Healthcare companies and providers have to resolve such claims because of the potential consequence of exclusion from “federal health care programs,” which is essentially a death sentence for any covered company that received federal reimbursement.
In a recent resolution BioTek and its CEO, Chaitanya Gadde, agreed to pay $20 million for AKS violations stemming from illegal payments to patients and physicians.
Under the Medicare program, a beneficiary who obtains a prescription drug may be required to make a partial payment, in the form of a copayment, coinsurance or a deductible (collectively copays). Congress mandated copay requirements in the Medicare program to serve as a check on health care costs.
The AKS prohibits the offering, paying, soliciting or accepting, directly or indirectly, of any remuneration – which includes money or any other thing of value – to refer or arrange for the referral of items or services payable by any federal health care program. This prohibition extends to companies that routinely waive the copays of Medicare patients without determination of financial need. The Anti-Kickback Statute also extends to the payment of remuneration to physicians in exchange for patient referrals.
From August 2015 through May 2020, BioTek, which is a specialty pharmacy that offers drug and infusion services, reoutinly waived the copayments of Medicare and TRICARE patients to induce those patients to purchase its drugs and services. Many of the specialty drugs offered by BioTek were expensive and required patients to pay large copays. BioTek sought to enbcourage patients to purchase its drugs and services in accordance with a scheme devised by Gadde and others, to routinely waive these large copays, without regard for whether the patients were experiencing financial hardship.
Additionally, BioTek resolved separate AKS violations involving illegal remuneration paid to Dr. David Tabby, who operated a neurology practice in Bala Cynwyd, Pennsylvania, to refer patients to BioTek. Dr. Tabby accepted gifts, dinners and free administrative and clinical support services from BioTek in exchange for referring numerous patients to BioTek, and for participating in BioTek’s scheme to waive patient co-payments for BioTek drugs and services.
Dr. Tabby reached a separate resolution with DOJ and agreed to pay $480,000 to resolve the AKS charges against him.
The resolution of charges against BioTek, its CEO and Dr. Tabby resolves claims brought under the qui tam provisions of the False Claims Act by two former BioTek employees. Under the global settlement, the two whistleblowers will receive approximately $4 million as their share of the settlements.