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Walgreen’s Pays $22.4 Million in NY Medicaid False Claims Suit

New York Attorney General Eric T. Schneiderman has announced that Walgreen Co. will pay $22.4 million to resolve whistleblower allegations that New York subsidiary, Trinity HomeCare, charged Medicaid for improperly prescribing and dispensing the pediatric drug, Synagis. New York physician, Susan Vierczhalek, will receive a $4 million whistleblower award for reporting the fraud.

Walgreen’s Pays $22.4 Million in NY Medicaid False Claims Suit

NY Pediatrician Claims Trinity Faked Pediatric Synagis Prescriptions

In 2009, New York pediatrician, Dr. Susan Vierczhalek, filed a whistleblower lawsuit against Trinity in U.S. District Court, alleging that Trinity violated federal and New York State False Claims Acts when it used her medical credentials on prescriptions of Synagis that she had never approved. The New York State Office of the Medicaid Inspector General was conducting a second audit of Trinity’s Synagis Medicaid claims at the time Dr. Vierczhalek filed her whistleblower suit.

Trinity HomeCare is a College Point, Queens-based, specialized pharmacy that dispenses and delivers prescription drugs to patient homes. Walgreen Co., later known as Walgreens Infusion Services, Inc., acquired the company in August 2007. Dr. Vierczhaleks’ allegations surrounded Trinity’s dispensing of the pediatric drug, Synergis, generic name palivizumab. The injectable is intended for use only in qualified premature infants or children with heart disease who are at high risk for severe lung disease caused by respiratory syncytial virus (RSV) infection.

Physicians administer Synagis monthly, during peak RSV infection seasons. Refills are subject to pharmacy confirmation of continued need. The drug is expensive, costing over $2,000 per injection, and multiple injections may be required for patients with higher body weights.

Dr. Vierczhalek claimed that Trinity misappropriated her name and medical license number on a Synagis prescription for a baby she had never treated. The whistleblower report also claimed that Trinity staff improperly obtained patient names and information from hospital neo-natal intensive care unit logbooks in New York City, Orange, Dutchess, Rockland, Westchester, Sullivan and Ulster counties, and on Long Island.

Allegations claimed that Trinity failed to document the Medicaid claims it submitted and lacked proof of actual Synagis delivery. The lawsuit alleged that the pharmacy billed Medicaid for Synagis when it did not have a valid prescription. More concerning, patients may have received improperly prescribed injections.

AG Investigation Suggests Trinity Violated Medicaid Regulations to Increase Synagis Sales

Dr. Vierczhalek’s lawsuit prompted an investigation by the New York Medicaid Fraud Control Unit (MFCU), which found that Trinity asked staff to increase Synagis sales by directly contacting the families or doctors of outpatient premature babies, regardless of patient need. In a number of cases, allegations claimed the pharmacy falsely told families that their child’s doctor had asked Trinity to begin providing Synagis.

Trinity allegedly contacted families to “verify” information, urging the family to provide their pediatrician or outpatient clinic’s name. Trinity then allegedly used this information to obtain a prescription for Synagis for the child. Evidence suggested that Trinity used the names of physician assistants and pediatricians on Synagis prescriptions and Medicaid bills without authorization and without patient need.

An Attorney General audit discovered that the pharmacy billed Medicaid for Synergy without written prescription or using purported invalid prescriptions that lacked prescriber signatures, patient names or dates. The pharmacy submitted claims to Medicaid for invalid telephone orders and dispensed Synagis using incomplete orders that lacked a correct prescriber name, initials of the pharmacist or time of call.

The investigation also found that Trinity billed Medicaid for excessive vials of Synagis by falsely exaggerating baby weight. Trinity also dispensed refills without confirming necessity. Pharmacy owners received drug manufacturer rebates for Synagis purchases. The New York MFCU investigation found that Walgreens failed to verify Trinity’s compliance with Medicaid rules and regulations and federal and state laws.

Second Trinity FCA Settlement in Two Weeks Totals $5M in NY Medicaid Recovery

Trinity has agreed to pay $22,448,938 to resolve the allegations in this case. After reimbursement of the federal contribution to Medicaid, New York will receive an additional $12,230.607.63 in restitution. Under federal and state False Claim Acts, whistleblowers are eligible to collect between 10% and 30% of any government recovery. Dr. Vierczhalek will receive a whistleblower award of $4 million for reporting her knowledge of the alleged fraud.

This is the second court-approved settlement the Attorney General’s Office has reached with Trinity in the past two weeks alleging False Claims Act violations. In late June, Schneiderman announced a $2.5 million settlement with Trinity regarding allegations that the pharmacy submitted bills for hemophilia drugs without patient signatures. Both settlements alleged improper conduct and false New York Medicaid billings that occurred between 2007 and 2011. Trinity has since discontinued its Synagis program.

NY MFCU Recovers Over $1 Billion in Five Years

Attorney General Schneiderman announced that today’s settlement brings the total recoveries obtained by the NYMFCA to over $1 billion since 2011. Five settlements in that time period recovered $550 million for the New York State Medicaid program:

  • Americare settlement returned $141 million to New York Medicaid
  • GlaxoSmithKline settlement returned $146 million to New York Medicaid
  • Johnson & Johnson settlement returned $138 million to New York Medicaid
  • McKesson settlement returned $64 million to New York Medicaid
  • Merck settlement returned $61 million to New York Medicaid

“My office will seek to recoup taxpayer dollars that are improperly drained from our important Medicaid program,” Attorney General Schneiderman said. “…Our taxpayers must not be exposed to sales tricks by pharmacies, and corporate owners will not get away with failing to supervise operations of the pharmacies they own.”

Medicaid Fraud Hotline: 888.742.7248 or Report Online
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