NEWS RELEASE

OFFICE OF THE UNITED STATES ATTORNEY

WESTERN DISTRICT OF MISSOURI

JOHN F. WOOD

Contact Don Ledford, Public Affairs ● (816) 426-4220 ● 400 East Ninth Street, Room 5510 ● Kansas City, MO 64106

www.usdoj.gov/usao/mow/index.html

DECEMBER 11, 2007

FOR IMMEDIATE RELEASE

FORMER PHARMACY OWNER SENTENCED FOR

MEDICAID FRAUD

KANSAS CITY, Mo. – John F. Wood, United States Attorney for the Western District of Missouri, announced that the former owner of a Kansas City, Mo., pharmacy was sentenced in federal court today for defrauding Medicaid of nearly $400,000.

James V. Spallo, 37, of Kansas City, was sentenced by U.S. District Judge Gary A. Fenner this afternoon to one year and six months in federal prison without parole. The court also ordered Spallo to pay a total of $378,877 in restitution to the Missouri and Kansas Medicaid programs.

On May 17, 2007, Spallo pleaded guilty to health care fraud. Spallo was the director and president of Transmed Pharmacy, which provided prescription drugs needed by transplant patients. The federal Medicaid program, as a secondary insurer, pays 20 percent of the cost of those prescription drugs after Medicare has paid 80 percent of the cost for beneficiaries.

Spallo admitted that he defrauded the Medicaid program between Jan. 24, 1999, and May 28, 2002, by submitting claims to both Medicare and Medicaid for the full price of transplant drugs. As a result, Medicaid paid the full price of the transplant drugs rather than just the 20 percent of the cost that should have been billed to and paid by Medicaid.

This case is being prosecuted by Assistant U.S. Attorney Gene Porter. It was investigated by the Federal Bureau of Investigation.

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