ISSUE OF THE CASE
When a pharmacist and a pharmacy assistant are indicted on charges of defrauding a government health insurance program and make motions with the relevant federal court to overturn the charges, should they prevail, heading off a trial, or should the matter proceed to trial?

FACTS OF THE CASE
A pharmacist and his assistant at a pharmacy in a Southern state were the subjects of a 3-year investigation by several federal agencies focused on matters related to their dispensing of and billing for compounded medications. The bills were submitted to the Tricare program for military personnel and their beneficiaries and to the Federal Employees Health Benefit Program. Total claims submitted under the scheme were in the millions. Evidence at trial disclosed that the pharmacist automatically refilled prescriptions without patients’ requests. The pharmacy waived the co-payment amounts, hoping that the patients would not return the medications. The prescribers who had been recruited to participate issued prescriptions without ever seeing the patient. Their prescriptions were issued using patients’ personal information already on file.

The results of the investigation were presented to a federal grand jury, which issued indictments and formal charges of serious crimes, with a total of 19 counts against the pair. Included in the allegations were conspiracy to pay kickbacks to patient recruiters, conspiracy to submit false claims for services, fraudulently obtaining the right to submit claims through providing false information to become a qualified provider of services, and money laundering. The pharmacy allegedly submitted false and fraudulent claims totaling $37,263,519, resulting in payments equaling $31,034,919. Some of the compounded prescriptions were billed at $17,000 per bottle.

The motions for dismissal were referred by the US district court judge who would preside at a trial to a US magistrate judge affiliated with the same district court. A magistrate judge in the federal court system is appointed by the judges of the local federal court, not by the president of the United States, as would be the case with judges who sit on the trial court. The role of the magistrate judge is to assist district court judges in discharge of their responsibilities. In this instance, the district court judge asked the magistrate judge to review the motions for dismissal and make recommendations to him about appropriate rulings on them.

THE RULING
The magistrate judge reviewed all motions related to the 19 counts of the indictments and recommended that motions for dismissal by the 2 defendants all be denied. The recommendations were received by the US district court judge handling the case in principal. His options were to accept, modify, or reject the assessments and recommendations of the magistrate judge. He affirmed and adopted all the recommendations of the magistrate judge, thereby moving the proceedings to trial.

THE COURT’S REASONING
US district court judges do not need to reveal their reasoning behind such decisions, and that did not occur in this case. However, the subsequent proceedings in the matter appear to support the decision of the trial court judge to move the matter to trial.

Following a monthlong trial, the pharmacist and the assistant were found guilty on a number of counts related to health care fraud, kickbacks, and money laundering. The charges were based on submission of thousands of fraudulent claims to the insurers. A further conviction with a more direct pharmacy connection was for introducing misbranded drugs into interstate commerce in violation of the Federal Food, Drug, and Cosmetic Act.

The pharmacist was sentenced to 204 months of imprisonment, to be followed by 3 years of supervised release. He was ordered to pay $31,259,252 in restitution. The assistant received a sentence of 188 months of incarceration and 3 years of supervised release and was ordered to pay the same amount in restitution. Evidence showed that the pharmacist had used some of his proceeds from the criminal activity to buy a $3.6 million mansion once owned by Dwayne “The Rock” Johnson. It was reported that he also owned 2 Rolls-Royce automobiles, a Cadillac Escalade, a Ferrari, a Lamborghini, a Land Rover, and a Mercedes-Benz van.

The Defense Criminal Investigative Service, the Office of Criminal Investigations of the FDA, the US Army Criminal Investigation Command, the US Office of Personnel Management Office of the Inspector General, and the US Postal Service Office of the Inspector General collaborated on the investigation.
 
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 in Lexington.