Pharmacist Accused Of $3.2 Million Fraud Scam | Pharmacist disputes auditor's assertion about discrepancies that points to six-year swindle
A state pharmacy auditor testified Tuesday that he found discrepancies between prescription records provided to him by the Manchester Pharmacy and records of the same prescriptions kept by doctors and other “prescribers.”
The auditor, Michael J. Elkin of the state Department of Social Services, detailed a number of cases in which the pharmacy’s records showed that patients had been prescribed seven-day supplies of medication, while the prescriber’s records showed orders for 30-day supplies.
DSS officials contend that the Manchester Pharmacy, formerly known as The Medicine Shoppe, and owner Roy D. Katz defrauded the state of more than $3.2 million over more than six years by breaking 30-day prescriptions down into seven-day units and charging a separate dispensing fee for each. The dispensing fee is currently $3.15 per prescription.
Elkin’s testimony came at an administrative hearing before a DSS hearing officer at the department’s headquarters on Sigourney Street in Hartford. Department officials are seeking to have Katz and his business, officially known as R.G. Pharmacy Inc., barred for a decade from providing goods or services under the Medicaid healthcare program for the poor or any other program run by DSS.
State, Feds Team Up
The federal government already has joined the state in making the fraud claims in U.S. Bankruptcy Court in Hartford. The Medicaid program is funded 50-50 by the state and federal governments, and the Medicare prescription drug benefit is a federal program.
The Manchester Pharmacy, at 348 Main St., has been operating under bankruptcy court protection for more than a year, primarily because of an inability to pay millions of dollars in debts to its former franchise company, Medicine Shoppe International Inc., and Medicine Shoppe’s parent company, Cardinal Health.
In addition to discrepancies in the amount of medication prescribed, Elkin described discrepancies between the number of refills shown in the Manchester Pharmacy’s records and in prescriber records.
In a fairly typical case, the Manchester Pharmacy’s records showed a seven-day prescription for a certain psychiatric medication, with 24 refills, while the prescriber’s records showed a 30-day prescription with two refills.
Elkin didn’t comment on it, but those two prescriptions would cover very different total time periods. Twenty-five seven-day periods total 175 days, while three 30-day periods total 90 days.
Seven-Day Service Needed
Katz and his lawyers have maintained throughout the controversy that he had authorization from doctors and other prescribers to dispense the seven-day prescriptions through the pharmacy’s so-called “med box” program. In the program, the pharmacy prepackages patients’ medications to make it easier for them to take each dose at the proper time.
On cross-examination by Katz’s lawyer, Thomas F. Maxwell Jr., Elkin acknowledged that he didn’t know what oral instructions had been passed from the prescriber to the pharmacy. Prescriptions can be communicated to a pharmacy by telephone or fax as well as in traditional written form, Elkin has testified.
He also acknowledged that the $3.2 million figure included all the Manchester pharmacy’s dispensing fees for seven-day prescriptions paid for by Medicaid, even though he conceded that some of those fees are legitimate.
Elkin noticed the large number of seven-day prescriptions during his first audit of the Manchester pharmacy several years ago. He recalled a conversation in which Katz explained that the patient population he served needed seven-day service. “Based on his explanation at the time, it seemed reasonable,” he said.
Maxwell suggested through a question that a common characteristic of the patients whose prescriptions had been discussed during the hearing was that they had schizophrenia. Elkin replied, however, that he hadn’t reviewed patient evaluations. The patients have been identified only by numbers to comply with medical confidentiality laws.
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