2 East Tenn. clinics agree to pay $1.85 million

KNOXVILLE, Tenn. (AP) — Two orthopedic clinics serving patients in Tennessee and Virginia have agreed to pay a combined settlement of $1.85 million to resolve claims that they purchased medications overseas at cut-rate prices and then billed the government at much higher rates.

Bill Killian, U.S. attorney for the eastern district of Tennessee, announced the agreement on Friday. Under the settlement, Tennessee Orthopaedic Clinics, which is headquartered in Knoxville, will pay $1.3 million and Kingsport, Tenn.-based Appalachian Orthopaedic Clinics will pay $550,000.

The government said the drugs, used to treat osteoarthritis, were sometimes labeled in foreign languages and there was no guarantee that they had not been tampered with or that they were stored properly.

The claims against the clinics were first brought by a whistleblower. The whistleblower will receive almost $324,000 of the settlement.

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