DOJ also made news in February 2018 when it named a private equity firm as a co-defendant in United States ex rel. Medrano and Lopez v. Diabetic Care Rx, LLC d/b/a Patient Care America, et al., No. 15-CV-62617 (S.D. Fla.). The case involves allegations that Patient Care America (PCA), a Florida compounding pharmacy, paid illegal kickbacks to induce prescriptions for drugs reimbursed by TRICARE.

While DOJ routinely targets company executives—particularly in recent years—the addition of a private equity sponsor of a health care company as an FCA defendant is noteworthy. Here, the United States' complaint in intervention names as defendants PCA, two of its executives, and PCA's private equity sponsor (and ultimate owner). Discovery and motion practice—and potentially a trial—will determine whether the government can prove its allegations and theories in this case.

Practice Note:  While it is too early to tell whether the inclusion of a private equity sponsor as a defendant in Medrano is an outlier or is representative of a growing trend, this case is noteworthy. We will continue to monitor this case and any others that follow.

Private Equity Sponsor Named As FCA Defendant

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