50 plead guilty in prescription scam in N.Y. 11 others indicted in smaller scheme

November 24, 1992|By New York Times News Service

NEW YORK -- In a case that authorities described as the largest of its kind, 50 people, including 38 pharmacists, have pleaded guilty to taking part in a scheme to fill bogus Medicaid prescriptions and resell the drugs, federal prosecutors in New York City said yesterday.

Prosecutors also announced the indictment of 11 other people, six of them doctors, in a smaller but equally elaborate operation to bilk Medicaid through dummy medical clinics.

Both groups reaped millions of dollars in illegal profits, the prosecutors said. And their schemes were so well known to the poor residents of Upper Manhattan and the Bronx who were recruited to pose as patients that "it was known colloquially on the street as 'playing the docs,' " said Susan E. Brune, an assistant U.S. attorney.

The illegal operations also posed a health threat, Ms. Brune said, because they dealt in illegally obtained drugs that were eventually sold to people who actually needed them. The pharmacists "didn't know the expiration dates on the drugs, didn't have the lot numbers you need to trace a drug if it's recalled, and didn't know if it was handled and stored properly," she said.

The larger of the two organizations operated for five years before being shut down in a series of FBI raids in June, said Otto G. Obermaier, U.S. attorney for the Southern District of New York. Prosecutors said the ring relied on Medicaid patients' ability to obtain prescriptions for drugs they did not need from clinics known as "Medicaid mills."

Patients would fill their prescriptions, paid for by Medicaid, and sell the medication to dealers, who would resell it at below-market prices to more than 30 pharmacies in the metropolitan area. The defendants in the case are the dealers and the pharmacists.

Officials would not estimate the size of the illegal profits netted by the group, but Ms. Brune said it certainly reached into the millions of dollars.

In New York state, Medicaid, which is financed jointly by the state and federal governments, spends $14 billion a year providing medical care for 2.5 million poor people.

Prosecutors said the smaller organization operated one pharmacy and four "Medicaid mills," whose sole purpose was to bill Medicaid for procedures that were not needed or never performed. The defendants are charged with submitting more than $8 million worth of fraudulent bills to Medicaid in 1990 and 1991.

Six doctors, who had legitimate medical practices elsewhere, allowed their names and credentials to be used to bill Medicaid for the care of patients they had never seen, prosecutors said.

After an investigation by several federal agencies, the doctors and five others were indicted by a federal grand jury on racketeering, racketeering conspiracy and mail fraud charges. The man accused of masterminding the scheme, Mohammed Sohail Khan, 33, of Jersey City, N.J., and the six doctors are also charged with money laundering.

Officials said there was no evidence that the two groups worked together. Of the 53 people who were indicted in the pharmacy case, 50 have pleaded guilty and the three others have agreed to do so. All 38 pharmacists have relinquished their licenses, prosecutors said. The defendants face maximum sentences ranging from 3 to 15 years in prison.

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