FBI Arrests 97 in Nationwide Crackdown on Health Care Fraud

In a nationwide crackdown on health care fraud, the FBI on Tuesday arrested 97 people on charges of illegally diverting prescription drugs and falsely billing Medicaid and private insurance firms.

The arrests, along with 88 searches and the seizure of 10 pharmacies occurred in more than 50 cities and towns, including San Francisco and Portland, Ore., on the West Coast. The sweep stemmed from a 21-month probe now dubbed Operation Goldpill.

FBI Director William S. Sessions described Goldpill as “the largest health care fraud undercover operation ever undertaken by the FBI.”

Atty. Gen. William P. Barr, noting that the Justice Department last February had transferred FBI agents and prosecutors to newly established health care fraud units in 12 cities, said: “This type of fraud hurts all who use the health care system and particularly endangers those least capable of protecting themselves--the aged and the infirm.” Electronic surveillance played a central role in the investigation, and FBI sources said that they hoped some of the pharmacists charged Tuesday will provide evidence against other suspects, including physicians.

An FBI official termed “disappointing” the fact that only one physician--a doctor of osteopathy in Fairfax, S.C.--was among those charged Tuesday. But the official noted that additional arrests are expected.

Another, referring to heavy use of electronic surveillance in the inquiry, said: “We’re working this like we do organized crime.”

Sessions described the schemes uncovered by the investigation:

In illegal diversion, individuals eligible to receive Medicaid obtain prescriptions for high-priced medications through an unscrupulous physician, who may have recruited the patient to take part in the scheme. The physician then bills Medicaid for extensive office visits by the patient, who is not ill and may stay long enough only for the physician to write the prescription.

The prescription then is filled by a pharmacist taking part in the scheme and Medicaid is also billed for the medicine. The patient then sells the prescription drugs for about 10% of their value to a “non-con” man, a street term for those who trade in non-narcotic prescription medication.

The drugs are resold to other diverters or sometimes to other pharmacies, which then sell them to the public. In most cases, the drugs are repackaged to disguise the origin of the medications.

Fraudulent billing includes filling prescriptions with generic drugs, but billing for more expensive brand-name products; billing Medicaid and insurance carriers multiple times for the same prescription or for prescriptions never written or filled; and filling only a portion of a prescription, so a patient returns for a refill at a later date, thereby allowing the pharmacist to be paid two dispensing fees instead of the one he would normally receive.

Announcement of the operation at FBI headquarters had a definite election-year cast to it, as Health and Human Services Department officials stressed that it was a “Bush Administration” move against health care fraud. The Administration has drawn congressional fire for not moving to bring down health care costs. When Sessions was asked about “more sophisticated” forms of health care fraud being pursued by his agents, he said that those “will be the subject matter of other press conferences.”