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Increasing Prosecutions of Pharmacists and Pharmacy Owners for Medicare Fraud

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January 22, 2019

Medicare fraud is nothing new. Billions of dollars are falsely billed to the program each year for unnecessary services, services not rendered, and medications not provided. Increasingly, pharmacists and pharmacy owners are among those, often physicians and clinic owners, who are being charged with health care fraud.

In 2007, in order to address this problem, the Medicare Fraud Strike Force was formed as a joint investigative and prosecutorial effort between the Department of Justice (DOJ) and the Department of Health and Human Services (HHS). Miami, FL was the site of the first Medicare Fraud Strike Force, and this served as a model for the 14 Strike Forces now operating in other areas around the country, including: Los Angeles, CA; Detroit, MI; Houston, TX; Brooklyn, NY; New Orleans, LA; Chicago, IL; Washington, DC; and Dallas, TX. The most recent Strike Force, the Appalachian Regional Strike Force, formed in October 2018, focuses on illegal opioid prescriptions.

In addition to the DOJ and HHS, the Drug Enforcement Agency (DEA), Office of the Inspector General (OIG), Internal Revenue Service (IRS), Federal Bureau of Investigations (FBI), and Centers for Medicare and Medicaid Services (CMS) are working with the Strike Forces to increase accountability and decrease fraud. According to the DOJ, since its inception in 2007, the Medicare Fraud Strike Force has charged nearly 4,000 defendants who have collectively falsely billed the Medicare program for over $14 billion.   

The 2018 Health Care Fraud Takedown

In late June of 2018, HHS announced the largest ever health care fraud enforcement action in which over 600 people were charged with over $2 billion in fraud. Many of these cases involved fraudulent prescriptions for opioids, as well as fraudulent Medicare billings. Examples include:

  • A pharmacy chain owner, managing partner, and lead pharmacist charged with a drug and money laundering conspiracy involving the use of fraudulent prescriptions for bulk orders of opioids which the pharmacy then sold to drug couriers.
  • A compounding pharmacy case alleging that kickbacks were paid to two podiatrists in exchange for prescriptions written on pre-printed prescription pads, regardless of the medical need for the prescriptions. Once the prescriptions were filled, $250 million in fraudulent claims were submitted to federal, state, and private insurers for the compounded medications.
  • A pharmacist/pharmacy owner charged with paying kickbacks to marketers in exchange for patient referrals from facilities that treated Medicare patients.
  • A pharmacy owner who was indicted for submitting $2.9 million in claims to Medicare Part D for prescription drugs that were neither ordered nor dispensed to patients.

One case recently made headlines when a pharmacy owner was found guilty after trial. The defendant was charged with a Medicare scam involving more than $1.3 million in fraudulent claims for prescription drugs. Evidence introduced at the trial of the pharmacy owner, Tamar Tatarian, revealed that Tatarian’s pharmacy submitted claims to Medicare Part D for prescription drugs that had never been ordered from wholesalers, and were never dispensed to Medicare beneficiaries. Evidence showed that Tatarian had attempted to conceal the fraud by creating fake invoices reflecting wholesale drug purchases that had never taken place. After a two-day trial in front of a federal jury, Tatarian was convicted of one count of healthcare fraud and two counts of wire fraud. She is scheduled for sentencing at the end of February 2019.

The Takeaway

The Department of Justice and HHS are extremely serious about prosecuting Medicare fraud cases. The results can be devastating and career ending for those found guilty. In addition to having to pay restitution and fines, a conviction can carry prison time. In December 2018, a Miami pharmacy owner was sentenced to 46 months in prison as well as ordered to pay $2.5 million in restitution and to forfeit the same amount after pleading guilty to fraudulently billing Medicare for drugs never purchased or dispensed. The defendant also admitted to paying kickbacks to patient recruiters for the referral of Medicare beneficiaries.

In another similar case, also in Florida, a pharmacy owner pled guilty to his involvement in a Medicare scheme and admitted that he paid kickbacks to Medicare beneficiaries to encourage them to fill their prescriptions at his pharmacy. In addition, he also confessed to having the pharmacy submit claims to Medicare for high-cost prescriptions that were never provided to beneficiaries. The defendant estimated that over $8 million in medications were never dispensed. Upon pleading guilty, he was sentenced to over 7 years in prison, as well as over $8 million in restitution and a fine in the same amount.

It should go without saying – doing anything illegal regarding the billing for and dispensing of medications can result in losing your pharmacy license, losing your pharmacy, paying huge amounts of restitution, and potentially going to prison. Worth the risk? Absolutely not.  

Ann W. Latner, JD, is a freelance writer and attorney based in New York. She was formerly Director of Periodicals at the American Pharmacists Association.

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