A total of 48 people have been charged with participating in a widespread prescription drug Medicaid fraud scheme. The fraud created a circuit, so that patients obtained expensive prescription drugs paid for by Medicaid, some costing as much as $1,600 per bottle. They then sold those drugs to sidewalk collectors, who in turn sold them to prescription drug wholesalers. Finally, the medications were redistributed to pharmacies to be sold all over again.
As a result of the fraud scheme, approximately $500 million in false claims were submitted to the Medicaid program, according to the New York Times. Some pharmacies may have sold these secondhand bills to new Medicaid patients, so that Medicaid could have reimbursed different patients twice for the very same drugs. During the sweep, the Federal Bureau of Investigation (FBI) seized over 33,000 bottles and over 250,000 loose pills worth more than $16 million.
In addition, patients who bought secondhand medications from the pharmacies at the end of the fraud circuit may have received drugs that were no longer effective. For example, some HIV medications must be stored between 25 and 30 degrees, but the drugs allegedly being moved in the scheme would not have been properly stored. Defendants also are alleged to have replaced labels to change the expiration date on some medications. For patients with serious illnesses, the consequences of receiving compromised medications are deadly serious.
The charges include health care fraud, wire fraud, conspiracy to commit wire fraud, conspiracy to misbrand and adulterate drugs, narcotics conspiracy, conspiracy to traffic in counterfeit goods, and unlawful wholesale distribution of prescription drugs. Residents of several different states were involved in the conspiracy, from New York to Alabama to Utah.
Even a widespread Medicaid fraud scheme like this can be difficult to identify and stop. Whistleblowers who know about health care fraud or other fraud against the government can be extremely valuable in the prosecution of these cases. Because the help of whistleblowers is so important, the False Claims Act provides incentives for whistleblowers to come forward. Under the False Claims Act’s qui tam provisions, an individual whistleblower can bring a lawsuit on behalf of the government and receive a share of any recovery.
Waters & Kraus is a national firm with highly skilled lawyers practicing qui tam litigation in four offices, including Dallas, Los Angeles, San Francisco, and Baltimore. Our attorneys have decades of experience successfully representing whistleblowers in a variety of fraud cases. Contact us or call our attorneys at 800.226.9880 to learn more about our practice and how we can assist.