The settlement in Medrano v. Diabetic Care Rx, LLC d/b/a Patient Care America ("PCA") resolved the government’s False Claims Act (“FCA”) and Anti-Kickback Statute (“AKS”) allegations which included the first time the DOJ named a private equity firm as a defendant such a matter.
The case involved whistleblower allegations that executives of the private equity firm and PCA paid illegal kickbacks to third-party marketers to secure and induce compounded drug prescriptions.
A good summary of the case and issues can be found here: https://info.dechert.com/10/13575/landing-pages/article-1.asp?sid=761ad00b-1ad3-496e-a2c4-4c1d72b00cc0.
The Dechert takeaways highlight care that private equity firms must take when they sit on the boards of portfolio companies.
...two [private equity] partners held a majority of PCA board seats and allegedly led the pain cream prescription initiative...