HLA is pleased to announce the complete dismissal of all criminal charges filed by the Attorney General of Massachusetts against a pharmacy and its owner. After a grand jury indicted the case, the Attorney General subsequently filed "nolle prosequi" notices announcing that it was abandoning the prosecution.

PBM Audits May Lead to Law Enforcement Referrals

As we have written about extensively, PBM audits can have severe consequences, including network termination and even criminal prosecution. In this case, following a PBM audit that noted inventory discrepancies, the PBM referred the case to law enforcement on the basis of suspected fraud.

The Attorney General's Office subsequently served grand jury subpoenas on the pharmacy and engaged in other evidence-gathering techniques typical of law enforcement. For example, detectives interviewed at least one referral source, a nearby physician, and numerous patients.

Medicaid Fraud Control Units (MFCUs)

As a condition to receiving federal funding for Medicaid programs, states are obligated to establish Medicaid Fraud Control Units, or MFCUs, to investigate and prosecute potential fraud. MFCUs are typically located in each state's Office of the Attorney General, the top law enforcement officer in each state.

MFCU investigators typically have many years of prior law enforcement experience and a background in computer forensics, financial crime, or data mining, including the use of artificial intelligence.

Attorney General Indictment

Following a grand jury investigation, the pharmacy and owner were indicted on seven criminal charges each, including Medicaid False Claims, Medicaid Reverse False Claims, False Health Care Claims to Private Insurer, Reverse False Health Care Claims to Private Insurer, Excess Charges to MassHealth Members, and two counts of Larceny.

For example, the government claimed that the owner had billed Medicaid and and other insurance plans almost $500,000 for 37,000 units of Zegerid, a heartburn medicine, even though the pharmacy's records indicated that the pharmacy had only purchased 12,000 units, a discrepancy of 25,000 units. In addition, the indictments alleged that the pharmacy had charged MassHealth patients cash for "early refills" of controlled substances in violation of Medicaid laws.

HLA's Defense Strategy

Because HLA's attorneys previously served as federal and state prosecutors, we know how difficult it can be to prove guilt "beyond a reasonable doubt." Accordingly, we often use that insight to persuade the government to abandon an "all or nothing" strategy and strike a negotiated resolution.

In this case, however, we demanded an immediate jury trial based on our analysis of the case. While the size of the inventory discrepancy was large, our attorneys believed that the client had not acted with criminal intent.

Attorney General Dismisses All Charges

Ultimately, the Attorney General's Office agreed with HLA. Rather than face a public loss in court, the Attorney General dismissed the case before trial. In addition, the client achieved a negotiated resolution in which he admitted no wrongdoing, was permitted to remain in network with MassHealth and other plans, and experienced no licensing consequences, exclusion, or professional discipline.

HLA is Available to Help

If you are facing an aggressive PBM audit with inventory or other discrepancies, call or email before the audit gets referred to law enforcement. If you are the subject of an investigation by law enforcement, we can help stop charges being brought. And if you are the subject of filed criminal charges, we can help resolve the matter before trial or defend your innocence in court.