A network of South Carolina-based pain treatment clinics is closing after five of its former employees "blew the whistle" and alleged an elaborate scheme to cheat federal health insurance programs.
Pain Management Associates, which has its corporate office in Easley, notified its patients last week that it will fold by the end of the month.
The closure comes a few months after a federal judge unsealed documents unveiling allegations that the company stole millions from the Medicare, Tricare and Medicaid programs by fraudulently billing for prescriptions and drug tests.
Pain Management Associates has operated mostly in South Carolina, with nine clinics primarily in the Midlands and Upstate and one in North Carolina.
"Despite considerable efforts to continue its business operations, PMA will be shutting down its nine clinics in South Carolina and one in North Carolina due to mounting financial challenges," the business said in a statement to its patients last week.
Local TV stations reported in early August a closure could be coming.
Daniel McCollum, a chiropractor based in Greenville, owned and ran most of the companies named in the lawsuit, including Oaktree Medical Center, which laid off 76 employees.
A group of whistleblowers, some of whom allege they were fired for trying to put a stop to the billing practices, say the network of companies defrauded in the government in a few ways.
Mainly, McCollum made money off of the drug tests his employees gave to patients, the government alleges. Urine screenings are commonly used to make sure patients aren't misusing or selling a prescription. Physicians and physician assistants were required to send all of their tests to lab McCollum owned.
Physicians were also paid illegal kickback bonuses for those referrals, encouraging them to conduct more, the lawsuit alleges. Sales representatives for the lab McCollum owned were promising physicians they could make $125,000 every month by participating, according to court documents.
Doctors also filled an excessive number of prescriptions for opioids, many of which weren't medically necessary, according to the lawsuit.
"We are committed to protecting taxpayer dollars from fraudulent billing practices and to holding accountable those in the medical community who have fueled the opioid crisis through abusive prescribing habits," Sherri Lydon, U.S. Attorney for South Carolina, said in a statement. "Through False Claims Act cases like this one, we will continue to bring these bad actors to justice."
On its own, Oaktree Medical Center in Easley allegedly billed Medicare, Medicaid and Tricare roughly $31 million for the urine tests in eight years.
The case was unsealed in March. Typically, whistleblowers file their own lawsuits first, which become public once the U.S. Attorney's Office decides to sign on. Whistleblowers are entitled to part of the settlement that results, if there is one, and stand to make millions.
It is unclear how much the defendants could be liable for, but lawyers for the government are asking for a settlement triple the amount the companies purportedly stole.