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August 13, 2013

 

DiNapoli: Long Island Pharmacy Swindled State Out Of $235,000

Fraudulent Prescriptions Billed to State Insurance Program and Medicaid

A Long Island pharmacy improperly collected at least $235,000 from Medicaid and the New York State Health Insurance Program (NYSHIP) over a four-year period, primarily through payments for phony prescriptions that were never delivered to patients, according to audits released today by New York State Comptroller Thomas P. DiNapoli.

Several investigations of Davis Ethical Pharmacy, based in Rockville Centre, and former owner William Davis are currently underway by the Nassau County District Attorney and the state Department of Financial Services (DFS). DiNapoli’s auditors coordinated their work with these agencies. The improper payments were identified when auditors randomly sampled 840 of 59,538 claims paid to Davis Ethical by Medicaid and NYSHIP valued around $7 million.

“Davis Ethical Pharmacy and its former owner appear to have been anything but ethical, defrauding the NYSHIP and Medicaid programs of a significant amount of money,” DiNapoli said. “Davis even went so far as falsifying prescriptions from a deceased physician. My office will continue to work with law enforcement to get this money back and make sure those that committed this blatant fraud are punished to the full extent of the law.”

NYSHIP provides health insurance coverage to active and retired state, participating local government and school district employees and their dependents. The Empire Plan is the primary health benefits plan for NYSHIP and includes prescription drug coverage. The Department of Civil Service contracts with United HealthCare to administer the prescription drug benefit portion of the plan. During the audit period, Jan. 1, 2008 through Dec. 13, 2011, Civil Service paid United more than $6.2 million for 52,485 claims submitted by Davis Ethical.

Separately, the New York State Medicaid Program, run by the Department of Health (DOH), provides prescription drug coverage for enrollees. During the audit period, Medicaid paid Davis Ethical $776,849 for 7,053 claims. Davis Ethical was owned and operated by William Davis, a licensed pharmacist who sold the business in December 2011.

In an examination of NYSHIP payments, DiNapoli’s auditors and investigators found that United overpaid Davis Ethical $139,796 for 148 of 573 selected prescriptions tested. The improper payments included $56,392 for 58 prescriptions where NYSHIP members were not patients of the supposed prescribing physicians.

In one case, United paid Davis Ethical $2,688 for a prescription of Aciphex, a medication for acid reflux disease. According to pharmacy records, Davis prepared the related phoned-in prescription form for Aciphex in February 2010. However, the office of the physician who allegedly prescribed this drug told auditors that the member was not his patient. The drug was never delivered to any patient.

The improper payments also included $71,462 for 67 other prescriptions that were not authorized by the prescribing physicians, although the members in question were patients of the physicians. Again, the prescriptions were never delivered to any patients. Davis Ethical also billed excessive quantities for 23 other prescriptions, overcharging NYSHIP $11,942 for them.

In a separate report, DiNapoli’s auditors and investigators determined the state’s Medicaid program overpaid Davis Ethical $94,460 for 169 of 267 selected prescriptions examined. The improper payments included $68,307 for 136 prescriptions for medications purportedly dispensed to Medicaid recipients who were not patients of the prescribing physicians. In one instance, the prescribing physician was deceased when the prescription was written.

For example, Medicaid paid Davis Ethical $2,502 for a prescription, including 5 refills, for Pulmicort, an asthma medication. According to records, Davis prepared the related phoned-in prescription form for Pulmicort in May 2009. The office of the physician who allegedly prescribed this drug told auditors the recipient was not his patient.

The improper payments also included $25,825 for 30 prescriptions that were not authorized by the prescribing physicians, although the recipients were patients of the physicians. For three other prescriptions, auditors determined Davis Ethical billed Medicaid for excessive amounts.

DiNapoli’s auditors found the pharmacy processed many of the improper claims well outside of normal business hours and often lacked records verifying that patients received the prescribed medications.

DiNapoli recommended DOH, United and Civil Service:

  • Coordinate with the Nassau County District Attorney’s office, DFS and other authorities as requested in any further investigation and recover the improper payments made to Davis Ethical;
  • Formally assess the prescription payments auditors did not test, determine the extent to which Davis Ethical submitted other fraudulent or improper claims and recover any improper payments; and
  • Launch a formal review into the conduct of William Davis to determine if he should be allowed to continue to participate in the Medicaid program or face other sanctions and consider referring him to the State Education Department for assessment of his professional conduct.

For a copy of the reports, visit: http://www.osc.state.ny.us/audits/allaudits/093013/12s11.pdf and http://www.osc.state.ny.us/audits/allaudits/093013/12s10.pdf



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