Middle Georgia Compounding Pharmacy Agrees To Pay $365,000 To Resolve Fraud Claims

ATHENS – A civil settlement has been reached with Lake Country Pharmacy and Compounding Center (Lake Country) and its principals Chris and Carey Vaughan, announced Charles “Charlie” Peeler, the United States Attorney for the Middle District. Lake Country agreed to pay to the United States and the State of Georgia $365,000 to resolve allegations that it violated the False Claims Act and the Georgia False Medicaid Claims Act by submitting bills for compounded medications dispensed to Medicare, Medicaid, and TRICARE beneficiaries that were made with non-reimbursable bulk powders, but were billed as if they were made from reimbursable tablets. Additionally, Lake Country has entered into an Integrity Agreement with the United States Department of Health and Human Services, Office of Inspector General.

The settlement marks the end of a 36-month investigation into Lake Country’s compounding pharmacy business that began with a lawsuit filed by a former pharmacist employed at Lake Country, under the whistleblower provisions of the False Claims Act and the Georgia False Medicaid Claims Act, which allow private citizens to bring civil actions on behalf of the Government and share in any recovery obtained. The case is captioned United States ex rel. Christopher Coleman and the State of Georgia ex rel Christopher Coleman v. Lake Country Pharmacy & Compounding Center, Chris Vaughan and Carey Vaughan, 3:16-cv-53. As a result of this investigation, on March 11, 2019, the United States and the State of Georgia chose to intervene in the complaint and litigate the case in District Court. Today’s settlement resolves the pending litigation. Lake Country fully cooperated in the investigation, after which the parties agreed to resolve the allegations described herein. The claims covered by the settlement are allegations only, and there has been no determination of liability.

“Compounding medications are necessary for many Medicare, Medicaid and TRICARE patients.  Pharmacies who choose to make and sell these medications have to play by the rules or they will face severe consequences,” said Charlie Peeler, the U.S. Attorney. “I want to thank the Department of Health & Human Services and the State of Georgia Attorney General’s Office for their hard work exposing this fraud. I also want to thank the Relator for pursuing this fraud as a citizen whistleblower.” 

The case was investigated by Special Agent Alexander Hinton of the Department of Health & Human Services, Office of Inspector General, attorney Christina McGarvey of the Department of Health & Human Services, Office of Counsel to the Inspector General, and Investigators Enedelia Bostrup and Shaketia Morgan of the United States Attorney’s Office for the Middle District of Georgia.  The United States’ civil settlement was reach by Assistant United States Attorney Todd P. Swanson. The State of Georgia’s civil settlement was reached by Assistant Attorney General Richard Tangum of the Medicaid Fraud Division (MFD).

Questions concerning this case can be directed to Pamela Lightsey, Public Information Officer, United States Attorney’s Office, at (478) 621-2603 or Melissa Hodges, Public Affairs Director (Contractor), United States Attorney’s Office, at (478) 765-2362.