US Pharm. 2015;40(4):47-50.
Imagine finding out that your employer is billing third-party prescription insurance companies like Medicare and Medicaid at rates higher than the benefit provider allows. It might be only a couple of cents per prescription. Over time, however, the billing error could amount to millions of dollars in profit for your company that the insurers are being bilked out of. What do you do? Keep silent? Report the potential fraud to a higher authority? Alert the insurer of the problem? Call someone in the government?
Each of these options is fraught with potential problems. Staying quiet might mean you could be charged as a coconspirator in the fraudulent activity. Alerting your boss or someone in the billing department could bring on a whole set of problems including a threat to your job. If you opt to tell the insurer or the government, where do you begin? How do you best report the situation?
These are only a few of the questions that might arise when you discover a billing discrepancy. Blowing the whistle can be fraught with both monetary and emotional consequences. Perhaps the worst is the loss of your job—being fired for telling the truth. Of course, the employer could find some other reason, probably one that makes you the villain in the story.
That is exactly what happened to Sam Mitri, a California pharmacist who had worked for Walgreens for over 10 years.1 In the summer of 2009, Mitri found instances in which pharmacy employees had billed Medicare for 30 days’ worth of patients prescriptions but had provided only 10 days’ worth to the patients, along with an IOU receipt for the remainder. This essentially allowed the pharmacy to bill Medicare for the cost of a 30-day supply each time it provided a 10-day supply. Walgreens managers admitted that they were aware of these complaints prior to issuing a final written warning to Mitri to stop working overtime.
Months after his initial com-plaint, Mitri continued to find IOUs for Medicare patients and raised his concerns again. The Walgreens loss prevention manager took the IOU receipts Mitri found, but told him it was not his job “to report an example of fraudulent billing…to the government.”1
After making several complaints regarding the Medicare fraud to Walgreens managers, the Depart-ment of Health and Human Services, and the California Department of Healthcare, Mitri was fired on January 8, 2010, for allegedly violating a final written notice given several months earlier.
In 2008, 1 year before Mitri made his first complaint, Walgreens had attempted to reduce its expenses by limiting the overtime worked by employees. At that time, according to court documents, the Walgreens district manager had spoken to Mitri on several occasions about adhering to his scheduled shift. In May 2009, Mitri was issued a final written warning for working beyond his scheduled shift because he had called in to a mandatory staff teleconference while he was on vacation. The final warning did not follow Walgreens’ own discipline policy, which stated that employees are first issued a verbal warning, then a written warning, and next a final written warning, followed by possible suspension or discharge.
Less than 7 days from the time of producing additional IOUs, Walgreens managers conducted a one-time search of Mitri’s shift records and fired him on January 8, 2010, for violating the written warning by working 10 minutes before or after his shift, usually because he was helping pharmacy customers, according to court documents. The 20 instances found of Mitri’s working beyond his shift totaled 248 minutes, amounting to $450 of overtime pay. For this reason, asserted Walgreens, Mitri was fired. At the time, it was reported he made $230,000 annually.2
Appeal: Mitri took action against Walgreens for his wrongful termination as a whistleblower, and in 2011 a jury awarded Mitri $88,000 in economic damages and $1.1 million in punitive damages.3 After the trial jury returned a verdict for Mitri, Walgreens appealed the decision, arguing that as a corporation it was not liable for punitive damages “arising from the acts of an employee” who was not a managing agent of the corporation. Walgreens also appealed the constitutionality of the excessive punitive damages, which were 13 times the amount of actual damages awarded. The Ninth Circuit Court of Appeals denied Walgreens’ motion regarding its liability for punitive damages, but remanded the punitive award decision back to the district court.
The district court judge reinstated the punitive damages against Walgreens and with regard to the excessiveness, ruled that “every dollar lost” to the “serious crime” of Medicare fraud is a “dollar that could have provided medical care to the elderly or disabled.” As punitive damages are “supposed to sting’” and Walgreens is a “multibillion dollar, publicly traded corporation,” the $1.15 million punitive damages award was “very low compared to Walgreens’ net worth” and constitutional, considering the high “reprehensibility of Walgreens’ conduct.” The judge also stated that “Medicare fraud is a serious crime…which affects the financial integrity of a program meant to aid tens of millions of people in need of healthcare.”1
Analysis: Mitri had a well-paying position as a pharmacy manager. He had no reason to jeopardize his job. Perhaps, when he first complained about the fraudulent activity he observed, he had no idea his job would be at risk. Maybe he did work a little bit of overtime after being warned not to do so. But is that a valid reason to terminate a whistleblower? Apparently not, at least not according to the jury and judges who reviewed the evidence. The reason advanced by Walgreens for terminating Mitri was purely in retribution for exposing fraudulent billing activities.
Consider the time involved in resolving this dispute. Mitri first complained in 2009. It was not until December 2014 that a final judgment was entered. What the facts and evidence in this case do not reveal is the emotional pain and suffering that accompany all whistleblowing cases. Imagine how it would feel to be fired from any job, but especially from an extraordinarily well-paying one, when you are over the age of 50 years and other employment with the same or similar benefits is nowhere in sight. There is a great deal of emotional harm that no lawsuit will ever compensate for. This is especially true when you have reported wrongdoing and your employer paints you as the criminal.
The only way to protect against the inevitable emotional problems is to be prepared before blowing the whistle. Hopefully, you will have friends and family to give you emotional and, if necessary, financial help while the legal proceedings continue.
Case 2: CVS pharmacist Stephani LeFlore of Minnesota brought evidence to the government that CVS had used a billing system for years that was designed to overbill Medicaid on prescription charges.4 This was done in relation to dual-eligible customers—those legitimately on Medicaid who also maintained their private health insurance coverage. The insurance coverage required CVS to charge the insurance company a smaller amount for prescriptions and the patient a limited copay. When people are allowed Medicaid coverage, the government always obtains an assignment of their rights under their private health insurance coverage. The government essentially takes over the citizen’s rights under the coverage. This includes the common right to pay a smaller copay amount on prescriptions.
LeFlore claimed in her federal and state lawsuits that CVS should only have billed the Medicaid program the same limited copay on prescriptions that it would have normally billed the customer under the private insurance plan. She alleged that CVS designed a billing software program for its pharmacies that consistently overcharged Medicaid on these copays. She claimed that these overcharges occurred on hundreds of thousands of prescription sales for well over 5 years.
LeFlore first complained internally, but she was told by a supervisor that “corporate took care of the billing” and that she need not be concerned.4 She then commenced a False Claims Act (qui tam) lawsuit in September 2008. The lawsuit stayed under seal (nonpublic), according to the False Claims Act and court orders, until the announcement of this settlement.
The original federal False Claims Act was made law by Abraham Lincoln and the Civil War Congress, to enlist citizen whistleblowers in the fight against fraudulent war-industry profiteers.5 It empowers citizens by giving them a reward and substantial legal rights against retaliation by employers. In the act’s present form, the government and whistleblowers can recover up to three times the amount of the fraud, plus substantial penalties and attorney fees. Whistleblowers (who are called relators under the law) may recover from 15% to 30% of the amounts collected from the defrauding corporation. At least 29 states have passed their own similar false claims acts, and many other states are in the process.
Only CVS allegedly had the information necessary to reveal the correct, legal price established by its contracts with the insurance companies or related pharmacy benefit manager companies (PBMs). The state’s Medicaid agencies did not have this information. The Medicaid program is jointly financed by the federal and state governments. It is administered by an agency in each state. Some state Medicaid agencies were aware of this wrongful billing potential and directly addressed it in their rule making. Other states, particularly those states not included in the settlement, have missed the overbilling and are still paying it.
CVS, the nation’s largest retail pharmacy chain, operates over 7,100 stores across the United States. The $17.5 million settlement covers overbillings by CVS in Minnesota, California, Massachusetts, Michigan, Florida, Indiana, Alabama, Nevada, New Hampshire, and Rhode Island. LeFlore and her attorneys will receive $2,595,460 as the reward under federal and state False Claims Acts. They are also entitled to receive attorney fees from CVS.4
Case 3: For the first 10 years of his career, Bernie Lisitza was a typical local pharmacist who owned a small mom-and-pop drugstore outside of Chicago. When his store became unprofitable, he sold it and went to work for Omnicare, the nation’s largest pharmacy for nursing homes. While working at Omnicare, Lisitza discovered that the pharmacy was routinely switching Medicaid patients’ prescriptions for more expensive forms of the drugs. He did not see any medical reasons for these switches and believed that Omnicare was doing this to increase company profits by cheating state Medicaid programs. He confronted his superiors about his discovery and was subsequently fired.6
Lisitza then went to work as a temporary employee at other local pharmacies, where he soon discovered that CVS and Walgreens were also switching Medicaid patients’ drugs for more expensive forms. He then filed False Claims Act complaints for fraud against all three of his former employers. Between 2006 and 2008, Lisitza’s three Medicaid fraud qui tam cases recovered more than $120 million for taxpayers. He received over $5 million for his efforts. Walgreens alone paid $35 million to 42 states and Puerto Rico to settle allegations it had overcharged Medicaid by switching dosage forms in filling generic Prozac (fluoxetine), Zantac (ranitidine), and Eldepryl (selegiline) prescriptions.7
The three Lisitza settlements show how an alert, dedicated pharmacist whistleblower can help the government clean up an entire industry when profits are put ahead of the public trust.
Taken together, these cases show how pharmacists can fight back when they see fraud, complain about it, and lose their jobs as a result. The two qui tam actions also show that pharmacists may profit from their extraordinary actions to protect money wrongfully gained from taxpayers and federal government agencies. But do not forget, as discussed in the analysis of the Mitri case, that the emotional toll and time consumed in pursing these cases can be tremendous. Not every pharmacist is expected to have the stamina necessary to assume the whistleblower’s role. Those who do should take pride in advancing the profession of pharmacy against wrongdoers who would defraud the government, insurance companies, and taxpayers.
1. Mitri v. Walgreen Company. U.S. District Court, E.D. California Case No. 1:10-CV-00538 AWI SKO. December 3, 2014. http://leagle.com/decision/In%20FDCO%2020141205715/MITRI%20v.%20WALGREEN%20COMPANY. Accessed March 26, 2015.
2. Lowery M. Pharmacist’s punitive award against Walgreens reinstated. Drug Topics. December 12, 2014. http://drugtopics.modernmedicine.com/drug-topics/news/pharmacist-s-punitive-award-against-walgreens-reinstated. Accessed March 14, 2015.
3. Mitri v. Walgreen Co. No. 11-17836, April 1, 2014, 9th Cir. http://law.justia.com/cases/federal/appellate-courts/ca9/11-17836/11-17836-2014-04-01.html. Accessed March 14, 2015.
4. Stephani LeFlore, as Relator for the United States v. CVS Pharmacy, Inc. May 14, 2011. www.false-claims-act.com/2011/05/14/stephani-leflore-as-relator-for-the-united-states-v-cvs-pharmacy-inc. Accessed March 26, 2015.
5. False Claims Act history. Phillips & Cohen LLP. www.phillipsandcohen.com/False-Claims-Act-History. Accessed March 26, 2015.
6. U.S. ex rel. Lisitza et al. v. Omnicare, Inc. November 14, 2006. www.justice.gov/usao/iln/indict/2006/01c7433_settlement_agreement.pdf. Accessed March 26, 2015.
7. Walgreens to pay $35 million to United States, 42 states and Puerto Rico to settle Medicaid D prescription drug fraud claims. U.S. Department of Justice. June 4, 2008. www.justice.gov/usao/iln/pr/chicago/2008/pr0604_01.pdf. Accessed March 26, 2015.
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