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June 11, 2009

Department of Justice

United States Attorney William C. Killian Eastern District of Tennessee


Settlement Reached with Tenncare Provider for Drug Overbilling

KNOXVILLE, TENNESSEE — United States Attorney Russ Dedrick announced today that Louisville-based company Kindred Healthcare, Inc. and its successor PharMerica Healthcare Pharmacy, LLC, have agreed to a settlement to pay over $1.3 million to settle claims that Kindred violated state and federal laws regarding over-billing TennCare and the Medicaid program for pharmaceuticals.

Kindred provides medications to TennCare patients in group homes and long-term care facilities throughout Tennessee. U.S. Attorney Dedrick alleged that from 2003 through 2006, Kindred's Knoxville facility billed for a higher number of drugs than were actually administered. In some cases, the over-billing was for multiple times the proper amount. There was no allegation that any patient at the facility received an improper dosage.

This settlement resulted from a comprehensive investigation which began as a result of allegations brought by a former billing clerk employee of Kindred in a lawsuit filed on behalf of both the United States and the State of Tennessee under the qui tam provisions of the federal False Claims Act and the Tennessee Medicaid False Claims Act. Under the terms of the settlement agreement, the former employee will receive over $200,000 from the proceeds of the settlement for her role in filing the complaint and cooperating with the investigation.

The joint investigation was conducted by the TennCare Provider Fraud Task Force, which consists of the Tennessee Attorney General's Office, the Tennessee Bureau of Investigation Medicaid Fraud Control Unit (TBI) , TennCare, and the U.S. Department of Health and Human Services Office of Inspector General, and the United States Attorney’s Office, Eastern District of Tennessee. “Coordinated efforts such as this investigation and settlement play an important role in protecting the TennCare and Medicaid trust funds to ensure these programs remain available for those who need them,” said U.S. Attorney Dedrick. In addition, he noted: “Deterrence of fraud, waste, and abuse in the nation’s healthcare programs is a top priority of the Justice Department.”

U. S. Attorney Dedrick specifically recognized the dedicated efforts of TBI Special Agent Dave Slagle for his lead role in the investigation as well as Senior Counsel Peter Coughlan with the State Attorney General’s Office and Assistant United States Attorney Elizabeth Tonkin.

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