New York pharmacist, Andrew Barrett pled guilty last week to falsely billing Medicare and Medicaid more than $2.7 million for HIV medication refills never requested or received by patients and for filing false tax returns.  Mr. Barrett faces up to 10 years in prison, restitution, criminal forfeiture and a fine.  A sentencing date has not yet been set.

The case was initiated by HHS-OIG in a complaint filed under seal on June 19, 2013 which led to the March 11, 2015 indictment filed by the U.S. District Court Eastern District of New York.  (A copy of the complaint and indictment can be downloaded here.)  Mr. Barrett owned and operated Economy Drug and Surgical Pharmacy (“Economy Drugs”) in Queens, NY and EDS Healthcare Pharmacy (‘EDS”) in Floral Park, NY as well as other pharmacies in the Greater New York area.  The original complaint revealed HHS-OIG employed three undercover agents, acting as Medicaid recipients, using undercover Medicaid cards and prescriptions for the HIV medication, Atripla.  Each undercover agent filled a single prescription at Economy Drugs.  Economy Drugs billed Medicaid for multiple refills, none of which were ordered or received by the “patients” and in some instances, were fraudulently documented as “called in” by a doctor.  All prescriptions refilled identified Andrew Barrett with his pharmaceutical license number, as the authorizing pharmacist.

The complaint also reveals the depth of the technology component of investigation. The indictment maintains that Economy Drug was the third highest biller of Medicare for Atripla in Queens, NY.  A clear indication that the trigger for HHS-OIG’s investigation was the high volume of refill activity for Atripla, an HIV drug for which there is no generic substitute. Medicare and Medicaid were billed approximately $1,800 per 30 pill prescription and the pharmacy made approximately $80 on each refill.

Another twist in the investigation is the use of a confidential informant.  Identified as “CI-1,” the unnamed individual was an employee of Economy Drugs. CI-1 gave the investigators detailed information about the computers and software used at both pharmacies.  Throughout CI-1’s employment, CI-1 had access to all computers and knowledge about the inner workings of Economy Drugs and EDS.  CI-1 advised that Mr. Barrett moved all prescription delivery services from Economy Drugs to EDS in order to save money by not paying the higher New York City taxes associated with Economy Drugs.  EDS was not approved or authorized to bill Medicaid directly.  According to CI-1, Mr. Barrett used the EDS facility to physically prepare and bottle the prescriptions while labeling the bottles with Economy Drugs labels.  A forensic review of pharmacy records on various computers indicated that Mr. Barrett did not purchase sufficient levels of pharmaceutical products from wholesale distributors to meet the purported demand at Economy Drugs and EDS.  The indictment alleged that Mr. Barrett billed health insurance plans including Medicare and Medicaid approximately $5.8 million for pharmaceutical products purportedly dispensed by Economy Drug and EDS, which were never purchased by either pharmacy.  (It is noted in the complaint that CI-1 is awaiting sentencing after pleading guilty in 2013 to Bank Fraud, Wire Fraud and Conspiracy to Commit Bank Fraud.  It is unknown if those charges pertain to this investigation.)

Mr. Barrett also owned Clarkstown Pharmacy in West Nyack, NY and his wife owned B&P Pharmacy in Bronx, NY.  From April 2011 to December 2012, Mr. Barrett is alleged to have used approximately $4.2 million of unlawful proceeds received from the overbilling to Medicare and Medicaid by Economy Drugs to purchase pharmaceutical products for his other pharmacies, evidenced by ACH transfers between the bank accounts of the pharmacies.  He allegedly took approximately $2.6 million from the bank accounts of B&P Pharmacy and Clarkstown Pharmacy for his personal benefit while claiming the funds were business related expenses. The funds should have been claimed as personal income on his tax returns for tax years 2010, 2011 and 2012.  At the time of the indictment, Special Agent-in-Charge IRS, Criminal Investigation, Shantelle P. Kitchen stated, “Individuals who steal from government programs often take the added risk of committing tax crimes in the process, exposing themselves to further criminal sanctions.”

This investigation highlights the government’s ability and techniques to use technology to identify potential wronging doing via high volume billing, forensically collect evidence and furthermore, use undercover agents and confidential informants to build a case.   For more information this subject matter please contact any one of the following partners:

Brian E. Dickerson
brian.dickerson@fisherbroyles.com
202.570.0248

Nicole Hughes Waid
nicole.waid@fisherbroyles.com
202.906.9572

Anthony J. Calamunci
anthony.calamunci@fisherbroyles.com
419.376.1776

Amy L. Butler
amy.butler@fisherbroyles.com
419.340.8466