Patient Care America and RLH: Financing the Referrals, Billing TRICARE

In the Patient Care America and RLH case, the Department of Justice announced a $21.36 million civil settlement over alleged kickbacks for compounded prescriptions billed to TRICARE. The government’s account connected the formulas, the referrals and the apparent patient payments to an arrangement allegedly financed by the pharmacy’s private-equity manager. If you worked in marketing or reimbursement, the records passing through your department could explain how that arrangement reached the government’s bill.

Patient Care America, also called Diabetic Care Rx LLC, was the compounding pharmacy. Riordan, Lewis & Haden Inc., known as RLH, managed it on behalf of investors. The government alleged that RLH knew of, agreed to and financed the marketer payments.

Two former pharmacy employees brought the qui tam case under the False Claims Act, and the United States joined it in part. The department announced the settlement on September 18, 2019.

How the Alleged Referrals Became TRICARE Claims

The government alleged that Patient Care America paid outside marketers to generate prescriptions for expensive pain creams, scar creams and vitamins, regardless of patient need. The marketers targeted military members and their families, whose health care TRICARE covers. The pharmacy allegedly formulated the products to obtain the highest possible reimbursement from that program.

Patient need was supposed to explain the prescription. In the government’s account of this compounding pharmacy fraud case, reimbursement helped explain the product.

The department also alleged that marketers paid telemedicine doctors who prescribed without seeing the patients and, in some instances, without even speaking to them. The pharmacy then sought payment for the resulting prescriptions.

We find that a remarkable way to describe patient care: pay for the referral, select the formula for reimbursement and sometimes skip the conversation with the patient. That is the sequence the government alleged.

The Copayments Disguised as Charity

Patient Care America and a marketer allegedly paid the copayments owed by patients the marketer referred, then disguised those payments as assistance from a charity affiliated with that same marketer. The government said they routinely did so without verifying the patients’ financial needs.

The pharmacy was allegedly helping pay the patient’s share of its own sale. Calling the money charity did not change who supplied it.

The same operational question appears in Fusion Rx’s criminal case. Criminal court documents described in the Department of Justice’s guilty-plea announcement show that Fusion Rx’s owner directed pharmacy funds to cover patient copayments, after which the pharmacy submitted claims falsely representing that patients had paid them. That account makes the comparison concrete: a payment recorded against a patient’s account can conceal money supplied by the pharmacy itself.

Patient Complaints Reached the Pharmacy

The government alleged that Patient Care America continued claiming reimbursement despite regularly receiving complaints revealing that prescriptions had been generated without patient consent or a valid patient-prescriber relationship.

That allegation connects the referral business to what the pharmacy learned after prescriptions arrived. A complaint about consent could tell the pharmacy something the order itself did not reveal. Continued claims then raised a question about the business’s response to that information.

For an employee who handled those calls or the affected accounts, the important connection may be the complaint, the prescription it concerned and the later billing. We examine that sequence with the person who understands how the pharmacy handled it.

What the Pharmacy Represented to Get Paid

Express Scripts processed the claims described in the whistleblowers’ account. For a reimbursement employee, that puts the processor’s response alongside what the pharmacy knew about the prescription. The government’s allegations concerned claims that continued despite patient complaints, not just how referrals first arrived.

Patient Care America’s alleged prescriptions without patient contact raise a question also seen in false prior authorizations: whose clinical judgment does the paperwork represent? In its civil settlement agreement, Benzer Pharmacy Holding admitted using unauthorized signatures, substituted fax details and false clinical assertions.

Walgreens’ uncollected-prescription settlement concerned another break between a prescription and its billing. The government alleged that unsold or undeleted orders left local work queues for a central status without a separate resolution process. The order’s status and the claim’s payment history could diverge. Here, the allegation concerned what Patient Care America learned from patients while continuing to bill.

What RLH’s Management Role Adds

The government’s allegation against RLH concerned management, agreement and financing. The department described the investment firm as managing Patient Care America for its investors, knowing of and agreeing to the plan to pay outside marketers, and financing the kickback payments.

The pharmacy’s chief executive and former vice president of operations allegedly executed the scheme.

For someone in finance or management, the relevant account may concern what a payment approval meant, what the requested funding was for or how the referral arrangement was explained inside the business. We connect those decisions to the marketer payments and prescriptions they supported.

What Marketing and Reimbursement Employees Could See

The whistleblowers’ first amended complaint identifies a marketing director and a reimbursement services manager who had also worked as an IV lead technician. Their jobs exposed different sides of the pharmacy’s business: arrangements generating prescriptions and the work obtaining payment for them.

The complaint’s allegations connected commission arrangements and reimbursement work. A marketing employee may know the arrangement behind an incoming prescription, while a reimbursement employee may understand what happened when it reached billing. Together, they can explain the prescription’s commercial history.

What Patient Care America, RLH and Two Executives Agreed to Pay

Patient Care America and RLH agreed jointly to pay $21,050,000. The chief executive separately agreed to pay at least $300,000, and the former vice president of operations agreed to pay at least $12,788. The Department of Justice said the settlement amounts reflected the defendants’ ability to pay.

We see a striking gap between the companies’ commitment and the much smaller minimum payments from executives accused of carrying out the scheme.

How Much Can a Whistleblower Receive?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know How the Prescriptions Reached Billing

If you saw who funded referrals, supplied apparent copayments or approved claims after patient complaints, talk with our whistleblower experts about the arrangement you know. We develop the case with you and bring in pharmacy fraud whistleblower lawyers who understand compounding reimbursement and referral financing. You have someone on your side who can follow the business decisions from the marketer’s payment to the government’s bill and stay with you through the case.