Passavant Memorial Homes and Subsidiaries Settle False Claims Act Allegations

PITTSBURGH – Passavant Memorial Homes, together with its subsidiaries Passavant Development Corporation, PDC Pharmacy Pittsburgh, PDC Pharmacy Philadelphia, and PDC Pharmacy Colorado, have agreed to pay the United States $1,850,000 to settle False Claims Act and Controlled Substances Act allegations, United States Attorney Scott W. Brady announced today.

Passavant’s pharmacies serve individuals with intellectual disabilities and other mental health needs through community residential programs, residential treatment facilities, intermediate care facilities, and other facilities. In many cases, Passavant bills federal healthcare programs, including Medicare and Medicaid, for dispensing controlled substances to these individuals.

The settlement resolves allegations that Passavant dispensed controlled substances on Schedules III, IV, and V of the DEA Controlled Substances List to patients for a legitimate medical purpose, but without a valid prescription and with only a physician order. Because Passavant submitted claims to Medicare and Medicaid for dispensing certain of these drugs without a prescription, the settlement also resolves alleged violations of the False Claims Act. Passavant voluntarily disclosed this information to the United States in 2015, cooperated with the investigation to identify the nature and scope of legal violations, and has implemented a policy change to stop the practice of prescribing with only a physician order.

This matter was investigated by the Diversion Control Division of the U.S. Drug Enforcement Administration and the Office of Inspector General of the Department of Health and Human Services. Assistant United States Attorneys Colin J. Callahan of the U.S. Attorney’s Office of the Western District of Pennsylvania, Mark J. Sherer and Anthony D. Scicchitano of the Eastern District of Pennsylvania, and Amanda Rocque of the District of Colorado handled this matter on behalf of the United States.