Pharmacist Takes Plea Deal in Billing Fraud Case

ISSUE OF THE CASE

A pharmacist was charged in federal court with numerous counts of submitting fraudulent claims for reimbursement to federally run health plans, along with a number of other financial transgressions. Federal agents executed search warrants to review information in the computers at the pharmacies owned by the pharmacist. His attorney moved to suppress the information found through audits of the data contained in the computers. Were those searches lawful?

FACTS OF THE CASE

A federal grand jury in a Middle Atlantic state issued an indictment, charging a pharmacist who owned and operated 2 pharmacies with health care fraud, submission of false claims for reimbursement, money laundering, filing false personal income tax returns, filing false corporate income tax returns, and aiding and assisting in the preparation of false corporate income tax returns. Regarding the fraud allegation, it was alleged that he billed for refills neither authorized nor dispensed. The pharmacist’s attorneys made motions to suppress the audit information, claiming that the information was tainted by an illegal search of one of the pharmacy’s computers.

The Office of the Inspector General (OIG) of the US Department of Health and Human Services obtained search warrants authorizing searches of the 2 pharmacies, including the computers there. The OIG special agent copied the information stored on the hard drives at both pharmacies. She took those copies to the regional office, where the information was copied onto the office’s internal server.

The federal agents then discovered that the data were in a proprietary format that was unreadable without using proprietary pharmacy management software. That proprietary software would be downloaded onto the pharmacy’s computer, and the pharmacy would pay a fee for software and hardware maintenance. The software contractor could not access the stored data during the day without first obtaining permission because that might disrupt operations in the pharmacy. However, at night, the contractor’s employees could log in without notification.

For technical reasons, the data from the computers at the 2 pharmacies were placed onto 1 hard drive bearing 2 folders. Many technological issues continued to surface, resulting in an official of the pharmacy management software firm remotely logging onto the computer at one of the pharmacies to retrieve missing data. This occurred on August 8, long after the June 19 issuance of the search warrant and the June 20 execution of that search. The attorneys representing the pharmacist made 2 motions to suppress the information obtained from the 2 hard drives at the pharmacies.

THE RULING

One set of data was not going to be used by the prosecutors at trial, so the issue with that became moot. The prosecution did plan to use the other set of data at trial, and the court ruled this information to be admissible into evidence at trial, denying the motion of the pharmacist’s attorneys.

THE COURT’S REASONING

The court quoted from the Fourth Amendment, which prohibits “unreasonable searches and seizures.” The party to the lawsuit seeking the uncovered informa- tion excluded from use at trial has the burden of establishing that the search and seizure violated his rights. But the government has the burden of establishing that its evidence was not tainted through a connection to the evidence that was procured illegally.

The court looked at a nearly 2-month period when the data were being collected and evaluated. It concluded that the information that the prosecution was seeking to use at trial was what it had retrieved when executing the original search warrant on June 20. The August 8th retrieval of data from the pharmacy computer’s hard drive did not result in accumulation of data to be used at trial. All data proposed to be presented at trial were not retrieved on August 8.

The court did label the August 8th retrieval of information from the pharmacy computer’s hard drive by the outside contractor at the request of the OIG special agent as “troubling.” Nonetheless, the court concluded that the information to be presented at trial resulted solely from “legitimately sourced data.”

News reports indicate that several days after this ruling was announced, the defendant pharmacist entered a plea of guilty to 1 count of health care fraud and 1 count of tax fraud. He was ordered to serve 31⁄2 years in federal prison and pay $2.7 million for the health care charge and $736,000 to the Internal Revenue Service for the charges related to income tax violations.

Joseph L. Fink III, BSPharm, JD, DSc (Hon), FAPhA, is a professor of pharmacy law and policy and the Kentucky Pharmacists Association Endowed Professor of Leadership at the University of Kentucky College of Pharmacy, Lexington.