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July 2, 2013

Department of Justice

United States Attorney William C. Killian Eastern District of Tennessee


Johnson City Physicians To Pay $4.25 Million To Resolve Civil False Claims Allegations Re Unapproved Foreign Drugs

GREENEVILLE, Tenn.– William R. Kincaid, M.D., Millard R. Lamb, M.D., and Charles O. Famoyin, M.D., former partners in East Tennessee Hematology-Oncology Associates, P.C., d/b/a McLeod Cancer and Blood Center (McLeod Cancer) in Johnson City, Tenn., have agreed to pay via separate settlement agreements $4.25 million, plus interest, to resolve allegations that they violated the False Claims Act by knowingly submitting or causing the submission to the Medicare and TennCare/Medicaid programs of false claims for misbranded, unapproved chemotherapy drugs that were administered through the McLeod Cancer clinic.

Dr. Kincaid, the managing partner of McLeod Cancer, pleaded guilty in December 2012 to receiving misbranded drugs with intent to defraud or mislead in violation of the Food, Drug and Cosmetics Act and was sentenced on June 10, 2013, to serve 24 months in federal prison. Dr. Kincaid will also be excluded from federal health care programs for a period of 10 years. Drs. Lamb and Famoyin were minority owners and were not criminally charged. Dr. Kincaid’s portion of the civil settlement is $2.55 million; Drs. Lamb and Famoyin are each responsible for payments of $850,000.

During 2007 to early 2008 and from August 2009 to February 2012, McLeod Cancer purchased a substantial amount of chemotherapy and other drugs, specifically versions of Abraxane®, Alimta®, Avastin®, Eloxatin®, Gemzar®, Herceptin®, Rituxan®, Taxotere®, and Zometa®, from a foreign drug distributor in Canada that obtained these drugs from foreign sources. The drugs, sometimes with labeling in foreign languages or without dosage information, were not manufactured in establishments that were registered with the U.S. Food and Drug Administration (FDA). The FDA, which has responsibility for enforcing the Food, Drug and Cosmetics Act to ensure the health and safety of the American public, requires that any manufacturer or distributor of drugs in the United States be registered with and approved by the FDA. Drugs with labeling in a language other than English or from foreign sources not registered with the FDA are considered “misbranded.”

McLeod Cancer purchased the foreign drugs for amounts substantially below what drugs from legitimate U.S. drug manufacturers and distributors would have cost. Drs. Kincaid, Lamb and Famoyin administered these drugs to their patients and submitted claims for the drugs to the Medicare, TennCare, and other government health benefit programs. Since these programs do not cover such drugs, the government has alleged all of these claims violated the Federal and State False Claims Acts.

“Medical practices that administer prescription drugs from non-FDA approved foreign sources are putting patients at risk of exposure to counterfeit, contaminated, ineffective and potentially dangerous medications. This case is an example of the efforts the government will continue to make to minimize the chance of patients receiving such unsafe medication as well as to ensure that Medicare and other health benefit programs do not pay for unapproved drugs,” said U.S. Attorney Bill Killian. Attorney General Robert Cooper added: “These settlements are a product of cooperation by state and federal agencies working together to ensure that Tennesseans are protected from possibly unsafe or ineffective misbranded drugs.”

Mr. Killian noted that these settlements, as well as the earlier conviction of Dr. Kincaid, resulted from a comprehensive parallel civil and criminal investigation conducted by the FDA Office of Criminal Investigation (FDA-OCI), the Federal Bureau of Investigation (FBI), the Tennessee Bureau of Investigation (TBI), the U.S. Attorney’s Office and the Tennessee Attorney General’s Office. He commended the efforts of all who played a role in the complex investigation, including FDA-OCI Special Agent Bob West, FBI Special Agent Letitia Jones, TBI Special Agent Denise Morrissey Woodby, FBI Forensic Accountant LeAnn Lanz, Assistant U.S. Attorneys Neil Smith and Betsy Tonkin, Special Assistant U.S. Attorney Ben Cunningham, and Assistant Tennessee Attorney General Eli Swiney.

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