A.G. Schneiderman Announces $846,000 Settlement With New York Specialty Pharmacy to Resolve Allegations of Medicaid Fraud

NEW YORK, Oct. 9 -- New York Attorney General issued the following news release:

Attorney General Eric T. Schneiderman today announced that the state has entered into a settlement agreement with Sorkin's Ltd Rx. d/b/a CareMed Pharmaceutical Services ("Sorkin's"), a New York-based retail specialty pharmacy, resolving allegations that it made false statements to the New York State Medicaid Program to secure expeditious prior authorizations for the coverage of specialty drugs, and that it submitted false claims to the New York State Medicaid Program for certain prescription medications that were restocked and resold and for refills that recipients never obtained.

"Sorkin's used dishonest and unscrupulous practices that resulted in hundreds of thousands of dollars in wasteful spending," Attorney General Schneiderman said. "This settlement sends the clear message that companies that seek to defraud critical programs like Medicaid will be held accountable."

Sorkin's made the false statements in order to secure expeditious decisions on prior authorizations for the coverage of certain specialty drugs. Furthermore, Sorkin's restocked and resold unused dosages of the drugs, Rituxan and Procrit without reversing the previously submitted claims to Medicaid and Medicare Part D plans for amounts already paid. Sorkin's also submitted false claims for payment to Medicaid or Medicare Part D plans for refills of Rituxan and Procrit that were not actually delivered to and received by recipients. Under the terms of the agreement, Sorkin's will return $846,224 to Medicaid, a program jointly funded by the state and federal governments. New York will receive $465,423 of the total Medicaid restitution funds.

As part of the settlement agreement, Sorkin's admitted to the following conduct during the period of January 1, 2009, through December 31, 2012:

* When contacting insurance companies to obtain prior authorization for coverage of specialty drugs prescribed for Medicaid recipients, some representatives of Sorkin's falsely stated they were calling from the prescribing physician's office. In some instances, Sorkin's representatives responded to questions seeking clinical information based on their understanding of the prior authorization criteria for the particular drug, instead of obtaining patients' actual clinical information from prescribing physicians and conveying that information.

* Sorkin's failed to adequately oversee and train staff responsible for the prior authorization process.

* Sorkin's had inadequate procedures and auditing processes in place to ensure that some claims submitted to certain third-party payors for Rituxan and Procrit, including claims for payment to Medicaid and Medicare Part D, were reversed when necessary or credited to the Medicaid or Medicare Part D plans after Procrit and Rituxan were returned to the pharmacy and restocked, or not delivered to and/or received by the recipient.

The agreements - one with the State and one with federal authorities - followed a joint investigation by the Attorney General's Medicaid Fraud Control Unit and the United States Attorney's Office for the Southern District of New York. The investigation came after a qui tam lawsuit was filed by whistleblower Panna Nahar, a former clinical care coordinator at Sorkin's, alleging violations under the New York False Claims Act and federal False Claims Act. Following the investigation, the offices intervened in the whistleblower case against Sorkin's.

The state case was handled by Special Assistant Attorney General Jill D. Brenner, Associate Special Auditor Investigator Karin Flynn and Supervising Special Auditor Investigator Stacey Millis. The Medicaid Fraud Control Unit is led by Acting Director Amy Held. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

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