Unveiling a Multi-Million Dollar Fraud and Kickback Scheme

According to an August 18, 2023 press release from the Department of Justice (DOJ), a pharmacy operations manager and some co-conspirators have pled guilty to committing healthcare fraud and to paying illegal kickbacks for Medicare and Medicaid claims that were never dispensed to patients. The two pharmacies in New Jersey and New York, now closed, operated as “specialty pharmacies” processing expensive medications to treat Hepatitis C, Crohn’s disease, and rheumatoid arthritis.

The pharmacies in question obtained retail contracts with several PBMs, which allowed them to receive payment for the specialty medication claims that were falsely billed. In order to increase the number of prescriptions being filled, bribes were paid to doctors and their staff to steer prescriptions to their pharmacies. Some of the bribes were expensive meals, cash, checks, wire transfers and paying an employee to work inside a doctor’s office. While the pharmacies usually dispensed the initial prescriptions to the patients, they billed for refills of these same medications without ever dispensing them to the patients.

For five years, the pharmacies received tens of millions of dollars for claim reimbursement from Medicare, Medicaid and private insurances that were not only never dispensed, but never even ordered from their wholesaler. The PBMs began to investigate by conducting routine audits for these “specialty pharmacies.” One of the co-conspirators told employees to falsify records by forging shipping documents to make it appear as if the medications were being shipped to the patient when they were not. The conspiracy to commit healthcare fraud has a maximum sentence of ten years in prison and the conspiracy to pay illegal kickbacks has a maximum of five years in prison. Both counts face a $250,000 fine, or twice the gross gain or loss from the offence, whichever is greatest.

Ensure your pharmacy has a robust Fraud, Waste and Abuse Compliance Program in place for employees to understand the repercussions of violating laws and regulations such as the False Claims Act and the Anti-Kickback laws. Contact PAAS National® (608) 873-1342 for more information on PAAS’ FWA/HIPAA Compliance Program that is easy to set-up, web based and customized for your pharmacy.

Jennifer Ottman, CPhT