CareMed pays $10 million to settle whistleblower case for fraudulent sales practices

The United States Department of Justice and the New York Attorney General have
reached a $10 million settlement in a newly unsealed health care fraud case against Sorkin’s Rx, Ltd.
a/k/a CareMed Pharmaceutical Services (“CareMed”), a national specialty pharmacy based in Nassau
County, New York. 
The whistleblower’s complaint alleged that CareMed engaged in a number of fraudulent practices in
connection with its sale of expensive prescription medications to Medicare and Medicaid beneficiaries.
In order for certain medications to be covered under Medicare Part D plans and New York Medicaid,
prescribing physicians must obtain “prior authorization” by providing information establishing that
medical necessity criteria have been met. The whistleblower was represented by Kline & Specter.

The whistleblower’s complaint alleges that, in order to secure fast and favorable prior authorization determinations, CareMed trained its employees to pose as if they were calling from the prescribing physicians’ offices and to provide fabricated patient clinical information

that satisfied coverage criteria. The complaint also alleged that CareMed re-stocked and re-sold unused
medications and failed to reverse claims submitted for unused or unnecessary prescription refills.
The whistleblower’s suit was filed in 2012 and led to an investigation by the United States Attorney’s
Office for the Southern District of New York, the United States Department of Health and Human
Services, and the New York Attorney General’s Medicaid Fraud Unit. The investigation culminated in
the settlement agreement announced today in which CareMed admits, among other things, that from
January 2009 through December 2012, some representatives falsely stated that they were calling from
prescribing physician’s office and provided clinical information based on their understanding of the
coverage criteria rather than the patient’s actual clinical information.

Jeffrey Newman represents whistleblowers