Northwest Alabama Pharmacies Owner Pleads Guilty to Obstructing Medicare Audit
Pledges to Pay $2.5 Million Penalty
BIRMINGHAM – The owner of two northwest Alabama pharmacies pleaded guilty today to obstructing a Medicare audit and agreed to pay a $2.5 million penalty to the government.
U.S. Attorney Joyce White Vance, Department of Justice Criminal Division Assistant Attorney General Leslie Caldwell, FBI Special Agent in Charge Roger C. Stanton, Health and Human Services Office of Inspector General Special Agent in Charge Derrick L. Jackson, and Food and Drug Administration Office of Criminal Investigation Special Agent in Charge Robert J. West announced the guilty plea. The sentencing date has not been set.
RODNEY DALTON LOGAN, 63, of Muscle Shoals, pleaded guilty to one count of obstructing a 2012 federal audit of Medicare claims submitted by a pharmacy he owned, as charged by the U.S. Attorney’s Office for the Northern District of Alabama. Logan, a registered pharmacist, owned Leighton Pharmacy Inc., which did business as Sheffield Pharmacy and Homecare in Sheffield, and Russellville Pharmacy in Russellville. At various times, according to Logan’s plea agreement with the government, he was the lead pharmacist at both Sheffield and Russellville.
The Sheffield and Russellville pharmacies operated as both compounding and retail pharmacies. A compounding pharmacy is one that prepares customized medications for individual patients, usually by mixing ingredients in order to create a prescription. The two pharmacies sold compounded prescriptions to patients in Alabama and other states.
According to the charges and plea agreement, Logan obstructed a 2012 audit of the Sheffield pharmacy’s claims for Medicare reimbursement on compounded prescriptions as follows:
CVS/Caremark Inc. administered prescription drug claims for Medicare Part D and served as an auditor on Medicare’s behalf. Part D prohibited reimbursement to pharmacies for compounded medications made using bulk pharmaceutical powders. Russellville and Sheffield nonetheless sought Part D reimbursement after February 2009 for compounded medications, primarily topical pain creams, made from bulk powders. The pharmacies, however, used the billing code for the tablet or capsule form of the ingredient.
In response to the 2012 audit, Logan caused Sheffield to submit falsified and misleading documents stating that medications in tablet or capsule form were used as ingredients for the compounded prescriptions.
The maximum penalty for obstructing a federal audit is five years in prison and a fine of $250,000 or twice the amount improperly gained through the defendant’s conduct.
FBI, HHS-OIG and FDA-OCI investigated the case, which Assistant U.S. Attorney Chinelo Diké-Minor and Trial Attorney William S.W. Chang of the Justice Department’s Criminal Division Fraud Section are prosecuting.