In the same timespan, the company also lied about controlled substances it supplied when it said that they were approved by the FDA and EMA and manufactured in accordance with quality standards, according to the second suit. The State Department and Air Force said that CHS lacked a Drug Enforcement Agency license for exporting the controlled substances and had its physicians in Florida send letters to a South African physician to prescribe the drugs. A South African shipping company would receive controlled substances that were not approved by the FDA or EMA and send them to CHS for distribution to patients.

The suits were brought under the qui tam or whistleblower provision of the False Claims Act, which allows a private party to sue on behalf of the U.S. government and receive a portion of the settlement if the government takes over the case and reaches an agreement with the defendant. The whistleblowers were unnamed and the portion of the proceeds they received in each case is unknown.


“The Department of the Air Force Office of Special Investigations (OSI) is undeterred in its approach to hunting down fraud within our Foreign Military Sales programs and ensuring the offenders are held accountable,” said special agent in charge Nicholas J. Groesbeck of OSI Procurement Fraud Detachment 4, Wright-Patterson AFB, OH. “We applaud the complainant for coming forward, which allowed our joint partners to protect the government's procurement process and carry out the warfighting mission.”

The settlement follows CHS’ recent disclosure of a cyber breach that compromised as many as 94,449 individuals, according to legal news site JD Supra. The company discovered fraudulent wire transfer requests in September 2020 and confirmed in November 2021 that the names and social security numbers of certain individuals employed by some of its customers were accessed or stolen by an unauthorized third-party. It began notifying those impacted in February.

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