Pharmacy Owner Settles Medicare Fraud Allegations for $600K in False Claims Act Case

Federal investigation found illegal kickbacks for prescriptions; whistleblower to receive portion of settlement.

A California businessman has agreed to pay $600,000 to resolve allegations that he violated federal law by paying kickbacks to obtain prescriptions reimbursed by Medicare, federal prosecutors announced this week.

According to Acting U.S. Attorney and Special Attorney Alina Habba, Andrew Do, of Orange County, operated three mail-order pharmacies between 2016 and 2020 and was accused of engaging in fraudulent billing practices that violated the False Claims Act and the Anti-Kickback Statute.

The U.S. government alleges that Do paid financial incentives to secure prescriptions for compounded topical creams, filled them at his pharmacies, and then billed Medicare for reimbursement. These actions, according to the government, constituted knowingly submitting false claims to a federal program.

The $600,000 settlement was reached after an assessment of Do’s finances, and reflects his documented inability to pay a higher amount.

Whistleblower

Part of the case was initiated under the qui tam provisions of the False Claims Act, which allow private individuals to file lawsuits on behalf of the federal government. One of Do’s pharmacies—Family Care Investments, doing business as Value Pharmacy—was specifically named in a whistleblower lawsuit filed by Daniel Toellner, who will receive up to $100,000 from the settlement under the statute’s relator provisions.

The federal investigation was conducted by the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) and the Defense Criminal Investigative Service (DCIS) of the Department of Defense. The case was prosecuted by Assistant U.S. Attorney David V. Simunovich from the U.S. Attorney’s Office in Newark, part of the Health Care Fraud & Opioid Abuse Prevention Unit.

Enforcement

The resolution highlights ongoing federal efforts to curb healthcare fraud, particularly schemes involving Medicare and other federal health programs. The False Claims Act remains a central tool in prosecuting such fraud, allowing not only government-led investigations but also whistleblower-initiated claims that can result in financial recoveries.

As is common in civil settlements under the False Claims Act, the allegations resolved are considered claims only. There has been no admission or finding of liability against Do or his pharmacies.

Members of the public can report suspected fraud, waste, or abuse in federal health programs by contacting the Department of Health and Human Services at 1-800-HHS-TIPS (1-800-447-8477).

The case underscores the federal government’s ongoing vigilance in identifying and prosecuting healthcare fraud involving Medicare billing and financial kickbacks.