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Post date: November 30 2000

Long Island Pharmacy Owner Admits To Three Year "phantom Drug" Medicaid Scam

Attorney General Spitzer today announced that a Suffolk County pharmacy owner has admitted to stealing hundreds of thousands of dollars from the Medicaid Program by fraudulently billing the State for expensive drugs that were never dispensed to patients - or were even in stock.

Appearing today in Suffolk County Court before Judge Stephen L. Braslow, Gary Grossman, a licensed pharmacist, pleaded guilty to Grand Larceny in the Fourth Degree and his corporation, Shirley Mastic Pharmacy, Inc., pleaded guilty to Grand Larceny in the Third Degree. As part of the pleas, Grossman made restitution, including interest, of $333,951 to the Medicaid program.

Sentencing was set for January 25, 2001, at which time Grossman faces up to four years in prison. In the case of a corporation, a felony is punishable by a fine of up to $10,000 or double the amount of the illegal gain.

"Shortly after buying the pharmacy in 1996, the defendant began ripping off taxpayers by billing the State for having dispensed costly brand name drugs that the drugstore did not even stock. As a result of these 'phantom' drugs, the pharmacy's Medicaid billings jumped from $24,341 in 1997 to more than $570,000 in 1999," said Spitzer. "My Office will continue to aggressively pursue and prosecute those individuals who abuse the Medicaid program and the taxpayers of this State."

The illegal billings took place between June 1996, when Grossman purchased the pharmacy, and December 1999. Among the drugs improperly billed for were Serostim (a human growth hormone), Procrit (a glycoprotein which stimulates red blood cell production), Novir (an HIV inhibitor), Avonex (Interferon), and Imitrex (used in the treatment of migraine and cluster headaches).

Spitzer noted that his office has referred the case to the State Education Department's Office of the Professions for a review of Grossman's pharmacist license.

Grossman, 43, lives at 5 Hearthstone Drive in Dix Hills. Shirley Mastic Pharmacy, Inc., is located at 940 Montauk Highway in Shirley.

The case was prosecuted by Special Assistant Attorney General Veronica E. Bindrim-MacDevitt, of the Long Island Regional Office of Spitzer's Medicaid Fraud Control Unit. All cases are handled under the direct supervision of Deputy Attorney General Jos? Maldonado.