Company agrees to pay $1 million to settle Longs Drugs whistle-blower’s suit [The Sacramento Bee, Calif.]

June 08--The parent company of Longs Drug Stores Corp. has paid nearly $1 million to settle a whistle-blower lawsuit charging the company with systematically ripping off the government's Medicaid health insurance program through fraudulent billing.

Lawyers for Haroon Aziz, once a pharmacy technician at a Longs store in Walnut Creek, on Wednesday asked U.S. District Judge Charles R. Breyer to dismiss their client's suit.

Aziz alleged that Longs, between Jan. 1, 2000, and Oct. 29, 2008, overcharged the Medicaid program for prescription drugs dispensed to customers in California and five other Western states that had Medicaid plus other coverage, and by misrepresenting the manufacturer of certain over-the-counter drugs.

He also claimed he was fired in March 2008 as retaliation for questioning the alleged dishonest practices.

Both the overcharges and the firing violated the federal False Claims Act, and a similar California law and the laws of other states, the suit asserts.

A written settlement agreement obtained by The Bee says it "is neither an admission of facts, liability or wrongdoing by (parent CVS Caremark Corp.), nor a concession by Aziz that his claims are not well founded. CVS expressly denies Aziz's contentions."

The suit alleges false claims were routinely submitted by Longs to the states before its acquisition by CVS in October 2008.

Aziz got $175,000 of the settlement money, California got $315,000, the United States$210,000, and $275,000 went to the Hirst Law Group P.C. in Davis, headed by Michael Hirst, a former assistant U.S. attorney in Sacramento and co-counsel in the case.

Aziz "was courageous in stopping the fraud," Hirst said Thursday in an interview. "To ensure the integrity of our public programs, we need people to stand up for what they know is right and object to what they know is wrong. It's gratifying when they are rewarded for that."

Medicaid -- known as Medi-Cal in California -- pays medical expenses for low-income patients. Funding is shared by the federal government and states that elect to participate. States administer the program.

In some states, including California, a provider's reimbursement from Medicaid is limited to the amount the provider receives from a supplemental insurer if there is agreement that the other carrier's reimbursement is "payment in full."

Aziz claimed that, despite such agreements with supplemental insurers, Longs billed Medicaid for amounts beyond the "payment in full."

In other states, such as Washington and Hawaii, a provider may not submit claims to Medicaid in excess of a patient's responsibility, such as a co-payment or a deductible. But, according to Aziz, Longs submitted claims beyond those amounts.

He also accused Longs of dispensing its own brand of over-the-counter medications, but listing on claims submitted to Medicaid other manufacturers' brands with a higher average wholesale price, once again collecting more of the taxpayers' money than it deserved.

Before its acquisition by CVS, Longs was a chain of more than 500 stores in the West headquartered in Walnut Creek.

Call The Bee'sDenny Walsh, (916) 321-1189.

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