ASD Specialty Healthcare (D/B/A Besse Medical) Agrees to Pay $1.67 Million for Allegedly Paying Kickbacks to Retina Practices

BOSTON - ASD Specialty Healthcare, LLC (ASD), doing business as Besse Medical (Besse), has agreed to pay $1.67 million to resolve allegations that it provided inventory management systems to retina practices at no cost to induce them to purchase drugs from Besse, in violation of the Anti-Kickback Statute. ASD, headquartered in Carrollton, Texas, distributes specialty medical and pharmaceutical products nationwide, including ophthalmological injections that treat neovascular age-related macular degeneration (wet AMD).

As part of the settlement agreement, ASD admitted and accepted responsibility for certain facts providing the basis of the settlement. In May 2017, ASD acquired an inventory management system known as PODIS, which was specialized for retina practices to manage inventory of, and reimbursements for, high-cost injectable medications such as drugs that treat wet AMD. Through November 2023, ASD offered PODIS at no cost to customers who entered into "prime vendor agreements" that required them to purchase a certain percentage of their specialty drugs from ASD. ASD required customers who did not enter into prime vendor agreements to pay a monthly fee for access to PODIS. Following its acquisition of PODIS, ASD then discontinued access to PODIS for non-ASD customer retina practices that had used PODIS prior to the acquisition, including customers who offered to pay a monthly fee to continue using PODIS. The government alleges that ASD caused physicians to submit false claims to Medicare, TRICARE and the Department of Veterans Affairs induced by these kickbacks.

"Pharmaceutical distributors cannot violate the law to gain a financial advantage," said United States Attorney Joshua S. Levy. "Offering improper incentives to health care customers can increase health care costs and disadvantage competitors who are playing by the rules. Our office is committed to continue pursuing these investigations with our federal law enforcement partners."

"According to the allegations in today's settlement, ASD purchased a commercially available product and leveraged it to gain business in violation of the AKS," said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division. "We will pursue kickbacks at all levels of the distribution chain to preserve the integrity of federal health care programs."

"Improper financial inducements can compromise medical judgement and threaten the integrity of the Medicare program," said Special Agent in Charge Roberto Coviello of the U.S. Department of Health and Human Services, Office of Inspector General. "We are committed to pursuing allegations of kickbacks and false claims as we work to protect the integrity of the taxpayer-funded Medicare program, and we encourage the public to come forward with information about such conduct."

"Today's settlement resolves allegations that Besse Medical paid kickbacks to medical practices treating patients with age-related macular degeneration in an effort to drum up business for the drugs they sold and increase their revenue," said Jodi Cohen, Special Agent in Charge of the FBI Boston Division. "This case highlights the FBI's commitment to rooting out health care fraud, one case at a time, and ensuring accountability for those who run afoul of the law."

"Investigating schemes that undermine the integrity of TRICARE, the healthcare system for military members and their families, is a top priority for the Department of Defense Office of Inspector General's Defense Criminal Investigative Service (DCIS)," stated Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office. "Today's announcement demonstrates our commitment to work with our partner agencies and the Department of Justice to pursue those individuals and corporations that submit false claims to the TRICARE system."

"Investigations such as these help safeguard the integrity of the healthcare industry marketplace and protect taxpayer funds," said Special Agent in Charge Christopher Algieri with the Department of Veterans Affairs Office of Inspector General's Northeast Field Office. "The VA OIG thanks the Department of Justice and our federal law enforcement partners for their collaboration in this joint investigation."

The settlement resolves, in part, claims brought under the whistleblower or qui tam provisions of the False Claims Act by former employees of Regeneron Pharmaceuticals, Inc., also a named defendant in the case, which manufactures and sells a drug to treat wet AMD. The government intervened in the qui tam and filed a complaint against Regeneron concerning separate allegations, and the parties currently are litigating that matter in U.S. District Court. Under the FCA, private parties may sue on behalf of the government for false claims for government funds and receive a share of any recovery. The whistleblowers will receive $250,705.20 from the proceeds of the settlement. The lawsuit is captioned United States ex rel. Nunnelly et al. v. Regeneron Pharmaceuticals, Inc. et al., No. 20-cv-11401-PBS (Dist. Mass.).

U.S. Attorney Levy, AAG Boynton, FBI SAC Cohen, HHS-OIG SAC Coviello, DCIS SAC Hegarty and VA-OIG SAC Algieri made the announcement today. This matter was handled by Assistant U.S. Attorneys Lindsey Ross and Diane Seol of the District of Massachusetts and Trial Attorneys Douglas Rosenthal and Samuel Lehman of the Justice Department's Civil Division.