United States Attorney's Office District of Connecticut
Press Release

PHARMACIST AND FORMER BUSINESS PAY $1,115,000 TO SETTLE ALLEGATIONS UNDER THE FALSE CLAIMS ACT

Nora R. Dannehy, United States Attorney for the District of Connecticut, today announced that ROY KATZ and RG PHARMACY, INC., which did business as The Medicine Shoppe, located at 348 Main Street in Manchester, Connecticut, have entered into a civil settlement agreement with the United States and the State of Connecticut in which they will pay $1,115,000 to resolve allegations that they violated the False Claims Act.

U.S. Attorney Dannehy explained that KATZ is a pharmacist and the former president and owner of RG PHARMACY.   The Government’s allegations against KATZ and RG PHARMACY involved the submission of claims to Medicare and Medicaid for false and fraudulent dispensing fees (sometimes known as “professional fees”) that pharmacies are allowed to charge for filling prescriptions.  According to the Government’s allegations, KATZ and RG PHARMACY would routinely receive prescriptions that were faxed or phoned in to the pharmacy for 30-day supplies of medication, record the prescriptions in the pharmacy’s  computer system as four seven-day prescriptions, and bill Medicare and Medicaid for four dispensing fees, instead of just one.  In the case of faxed orders, RG PHARMACY employees would routinely destroy the faxes after recording the 30-day supply as four seven-day supplies in the pharmacy’s computer system.  Through this scheme, KATZ and RG PHARMACY were able to receive multiple dispensing fees for each prescription per month (including multiple refills), instead of the one dispensing fee the pharmacy was entitled to for each prescription.

To resolve their liability under the False Claims Act, KATZ and RG PHARMACY will pay $1,115,000, in order to reimburse the Medicare and Medicaid programs for conduct occurring between 1999 and 2007.

KATZ and RG PHARMACY also agreed to be excluded from participation in all federal health care programs for a period of seven years.

In 2007, RG PHARMACY filed for Chapter 11 bankruptcy protection.  RG PHARMACY was sold through the bankruptcy process in 2008.

“Pharmaceutical fraud siphons critical resources away from the Medicare and Medicaid programs, which relies on pharmacists to bill honestly and accurately,” U.S. Attorney Dannehy stated.  “The United States Attorney’s Office is committed to vigorously pursuing those who defraud Medicare and Medicaid.”

Today, KATZ pleaded guilty in state court to two counts of Fourth Degree Vendor Fraud, a class A misdemeanor, and was sentenced to two years of imprisonment, execution suspended, and three years of probation.

“The Office of Inspector General for the U. S. Department of Health and Human Services, the Connecticut U.S. Attorney’s Office and our state partners will continue to work together to address the problem of prescription drug fraud in Connecticut and aggressively investigate those who steal money from publically funded health care programs,” stated Susan J. Waddell, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations.

In entering into the civil settlement agreement, ROY KATZ and RG PHARMACY did not admit liability.

This case was investigated by the Office of Inspector General for the Department of Health and Human Services, the Federal Bureau of Investigation and the U.S. Food and Drug Administration’s Office of Criminal Investigation.

U.S. Attorney Dannehy also noted the substantial investigative assistance provided by the Connecticut Attorney General’s Office, the Connecticut Department of Social Services, and the Medicaid Fraud Control Unit in the Office of the Chief State’s Attorney.

This matter was prosecuted by Assistant United States Attorneys Richard M. Molot and Ann M. Nevins, along with Auditor Kevin A. Saunders.

People who suspect health care fraud are encouraged to report it by calling the Health Care Fraud Task Force at (203) 785-9270 or 1-800-HHS-TIPS.

CONTACT:

U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
thomas.carson@usdoj.gov