Pharmasan Labs and NeuroScience, Inc., Settle False Claims Act Allegations

Yesterday, John W. Vaudreuil, United States Attorney for the Western District of Wisconsin, announced that Pharmasan Labs, Inc. and NeuroScience, Inc., and Gottfried Kellermann, 74, and Mieke Kellermann, 68, both of Osceola, Wis., have agreed to pay $8.5 million to the United States to resolve False Claims Act allegations.

The settlement resolves allegations that Pharmasan submitted false information for laboratory services billed to Medicare, and allegations that it violated Medicare rules pertaining to services referred by non-physician practitioners. Pharmasan is a laboratory located in Osceola, and NeuroScience is a related corporation that bills Medicare for Pharmasan’s services. The Kellermanns founded both corporations.

As part of the agreement, Pharmasan agreed that the United States could prove that: Pharmasan falsely billed Medicare for ineligible food sensitivity testing for nearly five years; Pharmasan employees knew that Medicare prohibited payment for food sensitivity testing; and Pharmasan employees submitted false information to Medicare disguising the type of test that Pharmasan was performing so that Medicare would pay for the services.

Pharmasan also agreed that the United States could prove that it knowingly submitted claims for laboratory services that violated Medicare billing rules. Pharmasan knew that Medicare billing rules prohibit payment for laboratory services referred to a laboratory by non-physician practitioners, with few exceptions for mid-level practitioners. A large portion of Pharmasan’s referrals for laboratory services came from non-physician practitioners that were not eligible to refer Medicare paid services. Pharmasan employees nevertheless billed Medicare for these services for nearly five years.

Under the terms of the agreement, Pharmasan, NeuroScience, and the Kellermanns agreed to the forfeiture of $2,852,015.81 seized by federal agents on March 12, 2014. They also agreed to pay an additional $5,669,837.58 to the United States.

You can read the FBI’s entire press release here.

If you are aware of or suspect Medicare billing fraud, contact us now.