Patient Care America and RLH: Financing Telemedicine Prescriptions

Patient Care America, RLH, and two pharmacy executives agreed to pay $21.36 million in a telemedicine settlement over alleged kickbacks that generated TRICARE prescriptions. The government alleged that the pharmacy paid marketers to produce prescriptions, the marketers paid doctors, and the private equity manager financed the marketer payments. For someone inside the business, that puts the funding decisions in the same story as the signed prescriptions.

Patient Care America, also known as Diabetic Care Rx, was the compounding pharmacy. Riordan, Lewis & Haden managed it on behalf of investors. The pharmacy’s chief executive officer and former vice president of operations also settled separately. In its September 18, 2019 announcement, the Justice Department alleged that the executives carried out the scheme.

Two former pharmacy employees brought the False Claims Act qui tam case, and the government joined part of it. Their case reached the people running and financing the operation as well as the pharmacy seeking payment. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Telemedicine Kickbacks Turned Marketing Into Prescriptions

The alleged telemedicine kickbacks bought prescriptions for expensive compounded pain creams, scar creams, and vitamins, regardless of patient need. Outside marketers targeted military members and their families, whose health care program, TRICARE, reimbursed the products.

The government alleged that the creams and vitamins were formulated to secure the highest possible reimbursement. The choice of product could determine what the government paid, while the marketer’s job was to generate prescriptions for that product. Patient need was supposed to drive the prescription. The alleged arrangement put reimbursement first, with taxpayers paying for the result.

According to the Justice Department, the marketers paid telemedicine doctors who prescribed without seeing the patients and, in some cases, without even speaking to them. The allegation reached the medical decision itself: a prescription generated through paid recruitment could reach the pharmacy without the patient ever having a conversation with the doctor.

The ordinary remote-care workflow separates patient intake, consent, clinical information, assessment, and the eventual prescription. Those steps leave different records. A patient account of the contact answers a different question from a signed prescription, and the prescription answers a different question from the pharmacy’s reimbursement claim.

The Charity That Paid the Copays

The government also alleged that Patient Care America and a marketer jointly paid the copayments owed by patients the marketer referred. They allegedly did so routinely, without checking the patients’ financial needs, and disguised the payments as coming from a sham charitable organization affiliated with the marketer.

That allegation put the pharmacy’s money on both sides of the prescription. It allegedly paid for the referrals and helped cover the patients’ share of the resulting bill. The charitable label hid who was paying. We compare the assistance patients were told they received with where the copay money came from.

Patient Complaints Kept Reaching the Pharmacy

Patient Care America allegedly kept seeking reimbursement despite regularly receiving patient complaints revealing that prescriptions were being generated without consent or a valid patient-prescriber relationship. A signed order and a patient complaint can tell sharply different stories about the same prescription. We connect the patient’s account, the encounter record, the order, and the pharmacy’s response. Dated complaints can also connect what employees knew about patient contact to the later decision to seek reimbursement.

Patient Care America, RLH and Telemedicine Investment Oversight

The Patient Care America and RLH telemedicine investment oversight allegations concerned knowledge, agreement, and financing. The government alleged that RLH knew of and agreed to the plan to pay outside marketers to generate prescriptions, and financed those payments.

The alleged financing paid the marketers who generated the prescriptions for which the pharmacy claimed reimbursement. An employee who saw the funding approvals could therefore know something central to the case without reviewing a patient’s chart.

Remote-care businesses can divide work among a management company, a professional practice, a platform, a marketer, and a pharmacy. Management agreements can cover staffing, scheduling, billing, collections, technology, and marketing. The clinical records and the records showing who pays for the operation can sit with different organizations.

A clinician’s contract may explain who retained the doctor. The marketer’s compensation terms may explain what triggered payment. Management agreements and financing records may explain who approved and funded the arrangement. The relevant connections run across the companies involved in producing the prescription.

The HHS Office of Inspector General’s July 2022 telemedicine alert describes the broader business pattern: companies recruit patients and practitioners, pay for reviews or signatures, and transfer the resulting orders to buyers downstream. The payer for the practitioner’s work can therefore be different from the patient or the patient’s insurer.

The Patient Care America allegations give that pattern a specific funding source. RLH allegedly financed the marketer payments, while TRICARE reimbursed the prescribed products. For investment and management insiders, the important knowledge may be how spending was approved, what it was intended to produce, and what the people approving it understood about the prescriptions.

The Pharmacy, Investor and Executives Had Separate Obligations

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

What Evidence Is Needed to Prove Fraud?

For an alleged prescription-financing scheme, the useful evidence connects the payment, the patient contact, the signed prescription, the pharmacy claim, and the decisions that funded them. We examine how the marketer earned its fee, what the prescriber actually assessed, what patients reported, and how those facts reached the people managing the business.

The 2024 Rutgers University Law Review paper Plausible Cause: Connecting the FCA and AKS in the Context of Health Care Fraud examines the connection between kickbacks and false claims. It makes a practical point about evidence: companies hold their own billing records and understand their own billing processes. Their internal analyses can connect payments to the claims that followed.

Applied to prescription financing, that directs attention to what the business itself measured. A payment approval, a report connecting spending to prescriptions, or a patient complaint reaching management can explain the transaction in ways the final claim cannot. For a healthcare insider, knowledge of why the business made a payment may be as valuable as knowledge of what the pharmacy billed.

You Know Why the Prescriptions Were Funded

If you saw who approved the marketer payments, funded the copays, or received the patient complaints, speak with our whistleblower experts about the prescription business you know. We work with you to build the case around those decisions, bring in healthcare fraud whistleblower lawyers who understand pharmacy kickbacks and investor involvement, and stay beside you throughout the case.