Attorney General Curtis Hill Announces $4.2 Million Settlement with Pharmacy that Allegedly Paid Kickbacks

(INDIANAPOLIS) – Attorney General Curtis Hill today announced that Indiana has joined with other states and the federal government to reach an agreement with National Cornerstone Health Services (NCHS) to settle allegations that NCHS violated the False Claims Act.

NCHS allegedly paid kickbacks to parents of children with hemophilia to induce purchase of NCHS’s blood-factor products. As a result, NCHS will pay the Medicare and Medicaid programs more than $4.2 million, $1.3 million of which goes to state Medicaid programs. As part of the settlement, the Indiana Medicaid program will receive $408,202.82 in restitution.

NCHS is a California-based specialty and wholesale pharmacy that provides blood-factor products, including anti-hemophilic factors and other plasma-derived therapeutic agents, to patients with hemophilia. At issue in this settlement are 12 products — NCHS’s Advate, Benefix, Eloctate, Feiba NF, Helixate FS, Humate-P, Kogenate FS, Mononine, NovoSeven RT, Recombinate, Rixubis, and Stimate.

The federal and state civil settlement resolves allegations that from January of 2009 through November of 2014, NCHS recruited certain individuals whose relatives required one or more the above-listed blood-factor products. NCHS then allegedly provided those individuals illegal remuneration to induce them or their relatives to purchase the drugs from NCHS, in violation of the Anti-Kickback Statute.

An investigation revealed that NCHS recruited parents whose children have hemophilia as marketers — paying the parents a commission each time they purchased their children’s medication through NCHS. These medications can cost tens of thousands of dollars per dose. The parents’ commission consisted of the profit NCHS made for each claim submitted to Medicare or Medicaid.

NCHS allegedly carried out these activities through its subsidiary Home Health for the Cure LLC.

“We cannot tolerate fraudulent activity on the part of companies wanting to funnel taxpayer funds for their own gains,” Attorney General Hill said. “This investigation and resultant settlement underscore our commitment to hold accountable those who would seek to circumvent our laws.”

This resolution arose from a joint investigation by the Wisconsin Attorney General’s Office, the U.S. Attorney’s Office for the Western District of Wisconsin, and the attorneys general of other affected states. 

A National Association of Medicaid Fraud Control Units Team — including representatives from the Office of the Indiana Attorney General’s Medicaid Fraud Control Unit — conducted the settlement negotiations with NCHS on behalf of the states.

The Indiana Medicaid Fraud Control Unit receives 75 percent of its funding from the U.S. Department of Health and Human Services under a federal grant. The remaining 25 percent is funded by the State of Indiana.

The executed settlement document is attached.