Pharmacy Settles Prior Authorization Fraud Allegations for $115,000

New York-based specialty pharmacy allegedly altered documentation, including lab test results, to obtain insurance coverage of expensive drug.

In last week’s key enforcement actions involving the healthcare industry, DJ Drugs & Surgicals Inc., a specialty pharmacy based in New York, agreed to pay $115,000 to settle allegations that it changed patient medical records and submitted those changed records to Medicare to support prior authorization requests, according to a July 26 announcement from the U.S. Department of Justice (DOJ).

According to the DOJ statement, DJ Drugs allegedly removed specific information in supporting documentation, such as laboratory results and patient medical records, relating to prior authorization to obtain insurance coverage for an expensive cholesterol-lowering medication. The company made these changes without the OK from prescribing physicians and then submitted the new, changed documents to Medicare plan sponsors for approval, the DOJ alleges.¹

In other key healthcare-related enforcement actions announced over the last week:

July 22: Oregon-based medical device manufacturer Biotronik Inc. settled allegations of False Claims Act violations for $12.95 million. Biotronik allegedly paid kickbacks to doctors in exchange for their use of the company’s “implantable cardiac devices,” including defibrillators and pacemakers, the DOJ said in a statement. The settlement also resolves claims brought forth in a qui tam whistleblower lawsuit by two former Biotronik employees, who will share $2.1 million of the settlement amount.²

July 26: New Jersey has now joined 49 other states as well as the federal government, Puerto Rico, and Washington, DC to settle fraud allegations faced by the US subsidiary of Irish pharmaceutical giant Mallinckrodt plc. Mallinckrodt ARD, LLC, formerly called Questcor Pharmaceuticals, Inc, had already agreed to pay nearly $234 million to resolve allegations that it had underpaid Medicaid rebates for one of its drugs. The state of New Jersey will receive roughly $2.8 million as its share of the settlement, according to the New Jersey Office of Attorney General.³

July 29: A skilled nursing facility in Pennsylvania agreed to pay $819,640 to settle allegations of false billing brought forth in a qui tam whistleblower complaint. According to the DOJ, the facility, Old Man’s Home of Philadelphia d/b/a Saunders House, provided rehab therapy services to its residents that were medically unnecessary and didn’t prioritize “clinical needs” in order to boost revenue.⁴

Pharmacy Settles Prior Authorization Fraud Allegations for $115,000

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