Corporate Compliance

Twenty-six indicted for massive healthcare fraud scheme

Compliance Monitor, August 10, 2011

Twenty-six individuals have been indicted for their participation in a large-scale healthcare fraud and drug distribution scheme, according to a Department of Justice (DOJ) press release.

Twelve pharmacists, four physicians, an accountant, and a psychologist were all indicted.

A 34-count indictment returned by a federal grand jury in Detroit alleges that Babubhai "Bob" Patel, 49, a Canton, MI, pharmacist, ownedand controlled 26 pharmacies statewide, but concealed his ownership and control over many pharmacies through straw owners.

Patel allegedly offered kickbacks, bribes, and other inducements to physicians. The physicians wrote prescriptions for patients with Medicare, Medicaid, and private insurance, and directed patients to present the prescriptions to one of Patel’s pharmacies. Patel and his pharmacists then billed insurers for dispensing the medications, which were medically unnecessary and/or never provided.

Patient recruiters allegedly paid kickbacks and bribes to patients in exchange for the patients' permitting the pharmacies and the physicians associated with Patel to bill their insurance for medically unnecessary medications and services.

According to the indictment, Patel’s pharmacies billed Medicare not less than $37.7 million for medications since January 2006, and not less than $20.8 million for medications purportedly provided to Medicaid beneficiaries over the course of the scheme.

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