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Press Release

San Diego Laboratory Phamatech Agrees to Pay $3 Million to Settle Fraudulent Medicare Billing Case

For Immediate Release
U.S. Attorney's Office, Southern District of California

Assistant U. S. Attorney Paul Starita (619) 546-7701

NEWS RELEASE SUMMARY – September --, 2020

San Diego – San Diego-based Phamatech, Inc. and its CEO and founder, Tuan Pham, have agreed to pay $3,043,484 to resolve allegations that they violated the False Claims Act by submitting false claims to Medicare for laboratory drug-testing services. Phamatech is a medical technology company that manufactures diagnostic devices and provides laboratory testing including for drugs and alcohol.

The United States alleged that Phamatech improperly paid a medical clinic to induce it to refer orders for laboratory drug-testing to Phamatech and consequently received government reimbursement for those tests in violation of the federal Anti-Kickback Statute and the False Claims Act. Specifically, the United States alleged that Phamatech paid kickbacks to Imperial Valley Wellness (“IVW”), a medical practice group, to induce IVW to order laboratory testing for its patients enrolled in Medicare. For about two years, Phamatech allegedly paid IVW a per-specimen fee in exchange for IVW’s referral of urine samples from Medicare beneficiaries.  The government further alleged that many of the samples that IVW referred to Phamatech for testing under this arrangement were not medically necessary and therefore not lawfully eligible for Medicare reimbursement.  

“We are committed to protecting the integrity of the Medicare program and ensuring accountability under the False Claims Act. This settlement meets these goals,” said U.S. Attorney Robert Brewer. Brewer praised Assistant U.S. Attorney Paul Starita and federal agents from FBI and Health and Human Services, Office of Inspector General, for their excellent work on this case.

“Paying to secure business increases costs—ultimately, leaving taxpayers to pick up the bill,” said Timothy B. DeFrancesca, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “With our law enforcement partners, we will continue pursuing potential threats to our health programs.”

“The FBI is committed to rooting out fraud within the healthcare industry and works with the U.S. Attorney’s Office and law enforcement partners to find a just result in each case,” said FBI SAC Suzanne Turner. “We urge anyone with information about suspected healthcare fraud to contact their local FBI Field Office.”

The False Claims Act allegations being resolved were originally brought in a lawsuit filed by a former employee of Phamatech, John Polanco, under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens with knowledge of fraud against the government to bring suit on behalf of the government and to share in any recovery. Mr. Polanco will receive $517,392 from the settlement proceeds.

The investigation was conducted by the U.S. Attorney’s Office for the Southern District of California, the Department of Health and Human Services Office of Inspector General, and the Federal Bureau of Investigation. This case is captioned United States, et al., ex rel. John Polanco v. Phamatech, Inc. and Tuan Pham, 16CV1835-L-NLS, and the matter was handled by Assistant U.S. Attorney Paul Starita of the Affirmative Civil Enforcement Unit of the U.S. Attorney’s Office. The claims resolved by the settlement are allegations only, and there has been no determination of liability.


Phamatech, Inc.                                                                      San Diego, CA

Tuan Pham                                                                              San Diego, CA


Federal Bureau of Investigation

Health and Human Services, Office of Inspector General

Updated October 2, 2020

False Claims Act
Press Release Number: CAS20-1002-Phamatech