Knoxville, Tenn. (Legal Newsline)-Tennessee Attorney General Bob Cooper has agreed to a $1.3 million settlement from a pharmaceutical company to settle claims it violated the state's False Claims Act.

Kindred Healthcare, Inc, which is based in Louisville and its partner PharMerica, will pay more than $496,000 in penalties for violating state and federal laws. Both companies have been under investigation for overcharging pharmaceuticals sold to a Tennessee-based health care provider.

The investigation began in 2003 after a billing clerk filed a complaint, alleging Kindred had overbilled multiple times over the amount. Kindred denies the allegations.

"TennCare providers should be responsive to employee concerns about fraud and abuse," Cooper said. "We hope this agreement will serve as a reminder we take these matters seriously."

The investigation was driven by the TennCare Provider Task Force, which comprised of the state's attorney general's office, the Tennessee Bureau of Investigation Medicaid Fraud Control Unit, and the TennCare Bureau.

TennCare is Tennessee's largest government operated medical assistance program designed for individuals eligible for Medicaid benefits.