PHILADELPHIA, PA — Kang Haggerty LLC said it represented a whistleblower in a federal False Claims Act case that resulted in a $2 million settlement with Recovery Centers of America, resolving allegations tied to controlled substances handling and improper government billing.
The settlement, announced by U.S. Attorney David Metcalf for the Eastern District of Pennsylvania, addressed claims that Recovery Centers of America violated the Controlled Substances Act through unlawful dispensing practices, missing medications, and deficient recordkeeping at facilities in Pennsylvania and Maryland between 2019 and 2024. Federal authorities also alleged the company improperly billed the Federal Employees Health Benefits Program and Medicaid from 2017 through 2019 for treatment services that were not adequately provided or documented.
The resolution followed coordinated investigations involving the Drug Enforcement Administration, the Department of Health and Human Services Office of Inspector General, and the Office of Personnel Management Office of Inspector General. The matter was handled by Assistant U.S. Attorneys Peter Carr and Charlene Keller Fullmer.
The whistleblower, a former outcomes supervisor at the company’s corporate headquarters in King of Prussia, Pennsylvania, brought the case under the qui tam provisions of the False Claims Act, which allow private individuals to sue on behalf of the government. As part of the settlement, the whistleblower will receive $230,000 from the federal recovery.
In a related agreement, the whistleblower also resolved an anti-retaliation claim under the False Claims Act for an additional $450,000, plus litigation costs and attorneys’ fees.
Kang Haggerty attorneys Edward Kang, Kandis Kovalsky, and Ross Wolfe represented the whistleblower. The firm said the case highlights the role of internal reporting in exposing misconduct at healthcare providers that rely heavily on federal reimbursement programs.
The case is captioned U.S. ex rel. McLoyd v. TRC-OC, Trading as Recovery Centers of America Holdings, LLC, No. 17-cv-5164, in the U.S. District Court for the Eastern District of Pennsylvania.
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