Yesterday the U.S. Attorney for the Southern District of Florida announced the indictment of 25 Miami area defendants in three separate cases for their alleged involvement in submitting more than $26 million in false claims through the Medicare Part D program.  The defendants are owners of numerous Miami area pharmacies and/or were “patient recruiters” engaged by the pharmacies.

“These cases build on our recent efforts to focus on Medicare prescription drug benefit fraud, targeting those who take advantage of the fastest-growing component of the Medicare program,” said Assistant Attorney General Leslie R. Caldwell.  “Working with our partners in the Medicare Fraud Strike Force, the Criminal Division uses cutting-edge data analysis techniques to identify emerging fraud schemes and to stay ahead of the criminal curve.”

In United States v. Antonio Hevia et al., eighteen defendants were charged for their participation in a scheme to defraud Medicare Part D through the submission of false claims by eight Miami area pharmacies.  The alleged fraud was spearheaded by Pedro Torres and Antonio Hevia, who recruited individuals to be owners of pharmacies in Miami-Dade County.  Hevia and Torres allegedly controlled pharmacies that were used to facilitate the fraudulent scheme, including:  Sun View Pharmacy, K.A.R. Pharmacy, Lola Pharmacy, Latin Quarters Drug Store, Lily and Rosy Pharmacy, Norton Pharmacy, Health Star Pharmacy and Supply, Ultra Medical Services and OMG Pharmacy Discount.  In all, six of the eighteen indicted were defined as owners and fourteen acted as “patient recruiters.”  Hevia and Torres are alleged to have instructed pharmacy staff to submit claims for prescriptions that were not medically necessary and in most cases, not provided to the Medicare Part D beneficiaries.  The pharmacy owners cashed checks and made withdrawls from pharmacy bank accounts to pay patient recruiters kickbacks for referring business and providing beneficiary information.  The payments were made by check and sometimes in cash.  As a result of the fraudulent claims, Medicare and through PBMs made approximately $16.7 million in payments. Click here to view the indictment.

In United States v. Kenia Gonzalez et al., four were charged with soliciting and receiving kickbacks and bribes to recruit Medicare beneficiaries for OMG Pharmacy, one of the pharmacies included in United States v. Antonio Hevia et al. case. The actions of the defendants in this case led to the submission of $3,506,713 in false claims to Medicare Part D. Click here to view the indictment.

In United States v. Ronald Diaz, et al., three were charged with conspiracy to commit health care fraud, health care fraud and money laundering.  Ronald Diaz is the named owner of Total Pharmacy, New Life Community Pharmacy, La Botica Pharmacy, La Botica Pharmacy No 02, Solutions Drug Store, M & P Pharmacy, La Roca Pharmacy and Richard’s Pharmacy Discount, all located in Miami-Dade County.  Diaz along with co-conspirators, Mercedes Maya and Gladys Cabrera, allegedly submitted false claims via interstate wires, which falsely and fraudulently represented that prescription drugs were medically necessary, prescribed by a physician, and were provided by one the pharmacies.  The money laundering charge is a result of a wire transfer in the amount of $10, 948 from a bank account to HD Smith LLC.  The indictment alleges the transfer involved criminally derived property of a value greater than $10,000.  As a result of these claims, Medicare prescription drug plan sponsors, through their pharmacy benefit managers, made approximately $10,428,019 in payments that were funded by the Medicare Part D program to the pharmacies.  Click here to view the indictment.

The cases were investigated by the U.S. Department of Justice, the Miami division of the FBI, and the U.S. Department of Health and Human Services – Office of the Inspector General (HHS-OIG) in tandem with the Medicare Strike Force.  In working with the Pharmacy Benefit Manager’s (PBMs) who administer Medicare Part D programs and using sophisticated data analysis techniques, the government’s investigative prowess is impressive and should serve as a deterrent for false claims submissions.

The PBMs involved in these cases include United, Coventry, Silverscript, Stonebridge, Humana, Simply, Blue Cross Blue Shield of Florida, LINet, CIGNA, First Health, WellCare, and MEDCO, among others.

The Southern District of Florida is well known for prosecuting Medicare fraud and to date, has charged nearly 900 individuals for their involvement in more than $2.5 billion in fraudulent Medicare billings.  In our practice we have seen a significant increase in the number of Civil Investigative Demands being issued in the Southern District to pharmacies and more specifically, their marketing/sales representatives.  This tells us the government is keenly focused on the sales component of the pharmacy industry as a means to combat false claims and kickback violations. Also, this month HHS-OIG published new criteria regarding when a person or entity will be barred from participating in federal health care programs.

Now is the time to review and assess your pharmacy’s overall compliance picture.  The government expects compliance programs to effective, robust and regularly tested to ensure adherence with all federal guidelines.