Cooley Medical Agrees to Settlement to Resolve Allegations of False Claims Act Violations

Cooley Medical Equipment, Inc., an eastern Kentucky medical equipment supplier headquartered in Prestonsburg, Kentucky, has agreed to pay $5,254,912 to resolve allegations that it violated the False Claims Act by submitting false or fraudulent claims that misrepresented the ingredients used in certain compounded medical creams. Cooley previously operated a pharmacy in Prestonsburg that in 2015 began making compounded medical creams. Cooley billed these prescriptions to government insurers and was required to obtain prior authorization in order to use bulk powder forms of Lidocaine and Prilocaine as ingredients in its compounded creams or they would not be reimbursed. The pharmacy allegedly misrepresented the nature of these ingredients to insurers, leading to the submission of thousands of false claims between January 2015 and December 2016, and millions of dollars in reimbursement. Cooley voluntarily self-disclosed this misconduct to the United States Attorney’s Office, took proactive steps to resolve the problem, and no longer operates a compounding pharmacy. Under the terms of the settlement, Cooley will be allowed to pay back the $5,254,912, plus interest, over a period of 6 years. Additionally, due to their self-disclosure, they will not be excluded from participating from government insurer programs in the future.

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