Memphis Orthopedic Clinic Agrees to Pay $540,000 to Settle False Claim Allegations Related to Compound Drug Injections

NASHVILLE- The owner and operator of a network of orthopedic clinics in the Memphis area has agreed to pay the State of Tennessee more than $540,000 to resolve allegations that it improperly billed TennCare, the state’s Medicaid program, for the use of compounded steroids at its practices.

“In the past few years, Tennessee has seen increasing numbers of clinics using fraudulent billing rates for compounded drugs. This office will hold fraudulent medical billers accountable and will continue to protect the financial integrity of the TennCare system,” said Attorney General Jonathan Skrmetti.

TennCare requires providers to go through a prior-authorization process to use and bill for compounded drugs. To ensure patient safety, TennCare also requires providers to document the medical necessity for using compounded drugs and the ingredients used to formulate them.

Tennessee alleges that from February 6, 2019, through November 17, 2021, Tri-State Orthopaedics, LLC, under the direction of Dr. Apurva Dalal, purchased a compounded version of Triamcinolone Acetonide from compounding pharmacies, injected them into TennCare patients, and billed TennCare for the higher cost, FDA-approved, commercially available version of Triamcinolone Acetonide.

Tri-States violated TennCare’s required process for the use and submission of claims for compounded drugs. Tri-States also received a higher reimbursement rate from TennCare than it was entitled to receive.

As the chief law enforcement officer of the state, the Tennessee Attorney General’s Office investigates and prosecutes civil violations of the Tennessee Medicaid False Claims Act, Tenn. Code Ann. §§ 71-5-181, et seq. The Attorney General’s Office contends that Tri-States’s use of the FDA billing codes, rather than the compounded drug codes, violated the Medicaid False Claims Act. Tri-States agreed to pay the sum above to resolve these allegations.

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