Doctor, Wife to Pay $450K in Kickback Settlement Over False Claims and Prescription Violations

Dr. Pablo Merced and his wife, Theresa Merced, agreed to pay $450,000 to settle civil kickback allegations involving laboratory testing.Photo byTestalize.meonUnsplash

Dr. Pablo Merced, owner of St. John Neumann’s Extended Hours Clinic, and his wife, Theresa Merced, who served as the clinic's office manager, have agreed to pay $450,000 to settle civil allegations, according to the U.S. Attorney’s Office for the Eastern District of Kentucky.

As detailed in the settlement agreement, the United States alleged that Dr. and Mrs. Merced solicited kickbacks from a laboratory sales representative in exchange for Dr. Merced's referrals of lab tests to Physicians’ Medical Center, BIOTAP Medical, and Bluewater Toxicology between April 2016 and November 2021.

The Anti-Kickback Statute prohibits providing cash or in-kind payments, such as free office services, to induce medical providers' referrals for services covered by federal healthcare programs.

Medicare, Kentucky Medicaid, and TRICARE paid over $9 million for laboratory tests referred by Dr. Merced.

"Dr. Merced’s reckless behavior in this case demonstrated a clear violation of the Controlled Substances Act,” said Acting Special Agent in Charge Erek Davodowich of the DEA’s Louisville Division. “Doctors who operate outside accepted medical guidelines pose a threat to their patients and should expect the full weight of the justice system.”

The agreement also outlined that Dr. Merced pre-signed 94 blank prescriptions, allowing unauthorized individuals to issue controlled substances in his absence.

He continued to prescribe controlled substances while referring patients for lab tests to the aforementioned facilities.

“This case involved two critical principles: preventing false claims to federal programs and curbing the irresponsible distribution of addictive controlled substances,” said Carlton S. Shier IV, U.S. Attorney for the Eastern District of Kentucky.

“Eastern Kentucky has been severely impacted by the drug epidemic. With the help of our partners, this case reflects our commitment to reducing suffering and holding professionals accountable for depleting vital government resources and recklessly dispensing addictive drugs."

The settlement is part of a broader case brought under the False Claims Act's qui tam provisions, which recovered over $7.3 million for federal programs, according to the Department of Justice.