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By Online Pharmacy


By Alan R. Spies, R.Ph., J.D., M.B.A.
Department of Pharmacy Administration, University of Mississippi
The subject of fraud is a very broad area of the law, encompassing a variety of crimes. One might wonder why this vague topic is the subject of a continuing education article for pharmacists. With so much attention focused on prescription errors and pharmacist liability, is there a need to devote an entire article to fraud? Obviously the answer is Yes, as seen from the title of this piece.

Fraud is an area of law having the potential to affect every pharmacist, regardless of practice setting. This article will focus primarily on the pharmacist's action or inaction as it applies to committing health-care fraud. Excerpts from several statutes aid in this discussion, and the article will conclude with a section devoted to the subject of fraudulent prescriptions and the corresponding R.Ph.s' role. After each major topic, a chart of application principles (see Figs. 1-3) will present some guidelines to take into practice. These guidelines are merely suggestions, however, and should not be interpreted as law.

Fraud is defined by Black's Law Dictionary as "a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her injury." Throughout the article, this definition will provide a solid framework in identifying health-care fraud.

First, we will examine the government's ongoing effort to combat this type of fraud, highlighting current statutes, such as the Anti-kickback Statute and the False Claims Act, as they apply to pharmacy practice. An Alabama case will help illustrate what is meant by a "usual and customary" charge in the context of Medicaid fraud. Lastly, two recent cases involving fraudulent prescriptions will be discussed to determine the pharmacist's responsibility when confronted with this problem.

Government's actions to combat fraud
The Department of Justice (DOJ), prompted by the recent increase of abuse and waste in health care, has identified the eradication of health-care fraud as its No. 2 priority, immediately behind violent crime. As James Sheehan, assistant U.S. attorney in the Eastern District of Pennsylvania and a leader in health-care fraud prosecution, recently told the American Society of Consultant Pharmacists, "Since the [recent] creation of dedicated health-care fraud units in every U.S. Attorney's office, every Inspector General's office, and most FBI offices, there are now people whose full-time job is to focus on health-care fraud cases and to bring them to proper resolution." For example, a 1998 General Accounting Office (GAO) report announced that DOJ had more than 4,000 health-care fraud cases under review in 1997, up from the 270 cases it reviewed just five years earlier. To aid DOJ in identifying and prosecuting health-care fraud, Congress allocated $158 million for fiscal year 2000 and $240 million for fiscal year 2001. In 1999, DOJ collected $524 million in criminal fines, civil settlements, and administrative penalties. While the monetary penalties may be severe, individuals or organizations found in violation are also subject to exclusion from participating in Medicare, Medicaid, and other federally funded health-care programs. This penalty can be financially devastating to a pharmacy whose business relies heavily on its Medicare and Medicaid patients.

As mentioned earlier, several statutes will be examined to show their relevance in dealing with health-care fraud. Though each of these laws affects the various health professions, this article will focus solely on the practice of pharmacy. The first law to be discussed is the federal Anti-kickback Statute.