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Pharmacy Chain to Pay Millions to Settle Medicare and Medicaid Fraud Claims

A Pennsylvania pharmacy chain accused of Medicare and Medicaid fraud will pay the federal government $2.67 million to settle civil False Claims Acts allegations, the U.S. Department of Justice in the Western District of Pennsylvania announced on Oct. 4, 2017.

The government pursued Med-Fast Pharmacy, Inc., its owner and some employees both civilly and criminally. According to the Department of Justice, Med-Fast submitted false claims to Medicare and Medicaid, allegations that included distributing recycled medications to nursing homes and submitting claims for retail-packaged versions of diabetes testing strips while actually supplying patients with cheaper, mail-order versions.

The global resolution of the case included charging Med-Fast’s former vice president of store operations, 47-year-old Gino Cordisco, of Mars, Pa., with a count of conspiracy for his role in a scheme to fill nursing home prescriptions “with recycled unused drugs that were commingled with drug stocks on hand at Med-Fast’s Institutional Pharmacy,” according to the Justice Department, which reported that Iserve Technologies, Inc., operated out of Med-Fast, participated in the same scheme, and was similarly charged with conspiracy.

The government brought the criminal charges against Cordisco and Iserve Technologies after Med-Fast Institutional Pharmacy’s former manager, Correna Pfeiffer, 37, pleaded guilty to conspiracy in 2015.

Law 360 reported that Cordisco and Pfieffer were “responsible for mixing the recycled drugs with Med-Fast’s other stocks and then using them to fill prescriptions at nursing homes between 2009 and 2013.”

The $2.67 million settlement, to be paid by Med-Fast owner Douglas Kaleugher and related entities, resolves claims brought by two whistleblowers, both former Med-Fast employees, who filed separate lawsuits in federal court in Pittsburgh.

One alleged that she was instructed to “falsify records, including expiration dates of drugs that were recycled, and that company officials ‘recklessly and deliberately disregarded’ her complaints,” according to U.S. News & World Report.

The other whistleblower, Med-Fast’s former marketing and sales director said “he had access to records showing the pharmacy was overcharging Medicare and Medicaid for the diabetes testing strips.”

“Unused prescription drugs are supposed to be destroyed, but Med-Fast drivers would pick up unused drugs from nursing homes after patients died or otherwise no longer needed the drugs, so they could be recycled to fill future prescriptions, prosecutors said,” according to U.S. News & World Report.

“As a result the older, unused drugs were commingled and relabeled with newer drugs, in violation of federal law.”

Med-Fast spokeswoman Elisabeth Mistretta said the company has corrected the problems and all of its patients received the correct medication.

Med-Fast’s website states that it operates 13 retail pharmacy locations in Western Pennsylvania, many of which are located inside Shop’n Save Grocery stores. The company also sells durable home healthcare medical equipment, such as hospital beds, wheelchairs, scooters and oxygen equipment.

Its Long Term Care division services to personal care homes, assisted living centers and hospice patients as well as compounding, or customized, pharmacy services.

If you have evidence of Medicare and Medicaid fraud, or another type of fraud against the government, the whistleblower attorneys at Bradley/Grombacher want to hear from you. They can help you determine if you have a case and advise you on the next steps to take. Fill out the form on this page for a FREE and confidential case evaluation.

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