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Whistleblower Receiveds $93,750 in False Claims Act Lawsuit Alleging Fraud Against TRICARE for Compounded Prescription Drugs

A compounding pharmacy in Lenexa, Kansas, and its owner, agreed to pay $205,000 to the federal government to resolve a whistleblower lawsuit under the False Claims Act. Patrick Sten, a former pharmacist employed by Midwest Compounders, filed the lawsuit alleging that Midwest, and its owner, Troy DeLong, had submitted fraudulent claims to TRICARE for reimbursements for compounded prescription drugs. Specifically, Mr. Sten alleged that Midwest, acting through DeLong, submitted unlawful claims for payments from TRICARE that were procured through kickbacks involving payments of commissions to marketers, and that the compounded prescriptions included redundant ingredients to inflate the reimbursements paid by TRICARE, a federal health care program for military families.

As an award for filing the False Claims Act lawsuit and providing information regarding the actions of Midwest and DeLong to the United States Department of Justice, Mr. Sten was awarded $51,250, which was 25% of the government’s recovery against Midwest and DeLong.

Mr. Sten also named two other defendants in the lawsuit who were manufacturers of ingredients that went into compounded prescriptions. Mr. Sten alleged that those defendants falsely inflated the “average wholesale price” of certain ingredients, resulting in unlawfully inflated reimbursements from TRICARE for compounded prescriptions. As to the government’s recovery from those two defendants, Mr. Sten will receive an additional amount of $42,500.

After Mr. Sten filed the lawsuit, attorneys for the United States Department of Justice investigated the matter and intervened in the case as to Midwest, DeLong and the two manufacturer defendants.

The federal False Claims Act provides incentives for private citizens with knowledge of fraud against the United States and any of its agencies to come forward. Such whistleblower lawsuits must be filed “under seal” to allow the United States Department of Justice an opportunity to investigate prior to any public disclosure of the lawsuit. If the United States Department of Justice intervenes in the case, the False Claims Act generally provides for the whistleblower to be awarded a share of between 15 percent and 25 percent of the United States’ recovery.

Mr. Sten’s attorneys in this matter, Michael Brady and Mark Kistler, can be contacted at Brady & Associates, 10985 Cody Street, Suite 135, Overland Park, Kansas 66210, or by phone, at 913-696-0925.

Department of Justice, U.S. Attorney’s Office, Northern District of Iowa on November 15, 2019: Compounding Pharmacy and Its Owner Pay More Than $200,000 to Resolve False Claims Act Allegations

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