Southeastern Kentucky health provider, pharmacies took part in fraud, lawsuit claims

March 31--A community health provider in southeastern Kentucky and several pharmacies took part in billing the federal government inflated prices for prescription drugs, two people have charged in a federal lawsuit.

The lawsuit says Mountain Comprehensive Health Corp. and nine pharmacies billed far more than allowed for providing prescription drugs to people covered by federal insurance such as Medicare and the black-lung program.

The complaint also alleges Mountain Comprehensive Health Corp., or MCHC, and the pharmacies charged people covered by federal programs far more than they charged patients who paid cash, a violation of federal law.

For instance, pharmacies under contract to Mountain Comprehensive Health charged a cash patient $23 for a prescription of the acid-reflux drug Nexium but charged third-party payers, including Medicare, $196 to $199 in late 2012, according to the lawsuit.

The pharmacies then would "kick back" part of the inflated reimbursement to MCHC, the lawsuit alleges.

In the case of the Nexium example, the pharmacies gave Mountain Comprehensive Health $105.80 of the profit from the prescription, the complaint says.

In another example, MCHC and its contract pharmacies paid 16 cents for an inhaler for black-lung patients but charged the government $133, with $67 going to the company, according to the complaint.

L.M. "Mike" Caudill, chief executive officer of Mountain Comprehensive Health, said the nonprofit company had not been served with the lawsuit, so he could not comment on specific allegations.

However, he said the company followed the law.

"We want to assure our patients that we at MCHC work hard to not only provide the very best medical care to our patients, but also to make sure that we are in compliance with all applicable statutes, rules and regulations at all levels of government under which we work," Caudill said. "We are confident that at the end of this process it will have been demonstrated that we have conducted ourselves appropriately and in a lawful manner that has legitimately maximized our ability to care for those people who are most important to us, that being our patients."

Mountain Comprehensive Health started operations in a mobile home in Leslie County in 1971.

It has since grown into one of the largest rural community health centers in the nation, with clinics in Letcher, Perry, Harlan, Bell and Owsley counties and 30,000 patients annually, according to its website and Caudill.

William R. Hall, a pharmacist at Superior Drug in Whitesburg, and his wife, Jennifer, who worked for several years at another pharmacy, filed the lawsuit against company and nine pharmacies in Letcher, Lee, Perry, Harlan, Madison and Owsley counties.

Attorneys from Louisville filed the lawsuit for the couple in July, but it was sealed until recently.

That's because it was filed under the federal False Claims Act, under which whistle blowers may get a portion of the money recovered in cases in which the federal government has been defrauded.

The alleged overbilling involved in this case could run into millions of dollars, the lawsuit said.

The lawsuit said the Halls have notified federal authorities of the alleged misconduct.

The federal government has declined to intervene in the complaint, according to a court document.

The complaint said that Mountain Comprehensive Health and pharmacies under contract to it can get prescription drugs at deep discounts under a federal program designed to help low-income people.

Federal rules bar providers from charging excessive amounts for the drugs, and require them to provide the medications economically, according to the lawsuit.

"A pharmacy that charges the government a price for prescription drugs that is substantially higher than the pharmacy's price to the general public does not provide the drugs 'economically' to the government," the complaint said.

The complaint said William Hall learned of the alleged scheme in 2012 when he received a solicitation to be a contract pharmacy serving MCHC patients.

The worksheet had information on what a pharmacy could earn, and asked pharmacies to "bid" on "the level of kickback they would provide" to Mountain Comprehensive Health , the complaint said.

Hall recognized the potential fraud in the arrangement and raised the issue with a representative of MCH, who "told him to ignore his concerns," the lawsuit alleged.

Hall submitted a worksheet but included a reference to fraud on it.

MCHC rejected his bid to be a contractor for its Whitesburg clinic.

The lawsuit seeks an order for MCHC and the pharmacies to stop violating the law.

It also seeks monetary damages. It does not cite a figure but seeks three times the amount of money Mountain Comprehensive Health and the pharmacies obtained through alleged improper conduct.

Bill Estep: 606-678-4655, @billestep1

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