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Post date: April 28 2005

Wny Pharmacies Pay State $6.7 Million To Settle Medicaid Probes

Attorney General Spitzer today announced that his office has secured two separate settlement agreements with a number of pharmacies, mostly in Western New York, to resolve allegations of Medicaid overbilling and billing irregularities. As a result of the settlements, the State will recover approximately $6.7 million in restitution to the Medicaid program.

In the first settlement, entered April 15, 2005, Upstate Pharmacy, Ltd., of West Seneca, NY, agreed to reimburse the state’s Medicaid program $959,769 to settle allegations of fraud and regulatory violations in billing for prescription drugs.

Upstate Pharmacy and pharmacists Phillip Petoniak and Thaddeus Kuzniarek, president and vice president, respectively, of the corporation, entered into a settlement agreement with the Attorney General’s Medicaid Fraud Control Unit ("MFCU") to resolve allegations that during 2000 to 2003, Upstate fraudulently billed Medicaid for prescription drugs that were never dispensed and that it wrongly billed for refilled prescriptions that lacked supporting documentation required by law.

Upstate, which admitted that it had received more than $104,000 for drugs it had never delivered, agreed to pay interest and treble damages to the state for these false billings, for a total recovery of $440,759. Upstate further agreed to repay $519,009 for prescriptions that were billed when the pharmacy lacked written orders for the refills as required by Medicaid regulations.

The second settlement agreement, executed on April 25, 2005, involved 10 pharmacies which are presently subsidiaries of Omnicare, Inc., the nation’s largest institutional pharmacy provider. Omnicare and the pharmacies agreed to repay Medicaid $5.75 million to resolve allegations that the pharmacies had improperly billed Medicaid between 1997 and 2003. Audits conducted by MFCU, the Department of Health and by the pharmacies revealed a wide variety of billing irregularities, including instances where the pharmacies had billed, in violation of the Medicaid regulations, filled prescriptions that lacked the signature of the prescribing physician; refilled telephone orders unsupported by written orders; dispensed drugs in strengths that differed from the written orders; dispensed drugs in quantities in excess of the quantity listed on the prescriptions; and dispensed drugs without any written order.

Spitzer thanked the New York State Departments of Health and Education’s Office of Professional Discipline for referring the Omnicare matter to his office, and the New York State Department of Health ("DOH") for its assistance during the course of both investigations, especially that of Eugene Ryan, Deputy Director of DOH’s Bureau of Investigations and Enforcement.

The investigation resulting in the Omnicare settlement was conducted by Special Assistant Attorney General Jerry M. Solomon, Director of the MFCU’s Rochester Regional Office, Associate Special Auditor Investigator Heather Helms and Supervising Special Investigator Neil Davis.

The investigation resulting in the Upstate Pharmacy settlement was conducted by Special Assistant Attorney General Gary A. Baldauf, Deputy Director-in-charge of the MFCU’s Buffalo Regional Office, Special Investigator Thomas Kenney, under the supervision of Supervising Special Investigator DeWayne Baker, and Special Auditor Investigator Frank Zeffiro, under the supervision of Assistant Chief Auditor Paul Bermel.

Paul Mahoney, Chief of the MFCU Civil Enforcement Unit, assisted in the drafting of the civil settlement agreements.

Omnicare, Inc., is located at 100 East RiverCenter Boulevard in Covington, Kentucky. The Omnicare subsidiaries that took part in today’s settlement were:

  • Med Work Acquisition Corp. [d/b/a Med World in Chestnut Ridge, NY] - $657,051.63
  • NCS Healthcare of New York, Inc. (Buffalo) [formerly d/b/a NCS-Buffalo, NY] - $534.669
  • NCS Healthcare of New York, Inc. (New Hartford) [d/b/a NCS-New Hartford, NY] - $395,439.57
  • NCS Healthcare of New York, Inc. (Rochester) [d/b/a NCS -Rochester, NY] - $1,588,439.43
  • NCS Healthcare of New York, Inc. (Syracuse) [d/b/a NCS-Syracuse, NY] - $434,980.48
  • BPNY Acquisition Corp.[d/b/a Omnicare Pharmacy of Western New York, in West Seneca, NY] - $185,003.20
  • Pharmacy Associates of Glen Falls, Inc. [d/b/a Royal Care Pharmacy Services, in Malta, NY] - $694,838.29
  • Pharmacy Associates of Glen Falls, Inc. [formerly d/b/a Royal Care Pharmacy Services, in Rochester, NY] -$628,247.31
  • Shore Pharmaceutical Providers, Inc. [d/b/a Shore Pharmacy in Plainview, NY] - $541,477.71
  • Southside Apothecary, Inc. [d/b/a Southside Apothecary in Rochester, NY] - $89,853.38

Upstate Pharmacy, Ltd., is located at 40 Gardenville Parkway in West Seneca.