Two Harford County men and a Howard County man have been indicted by a federal grand jury in connection with an alleged pharmacy fraud scheme federal prosecutors say bilked the government out of at least $2.6 million in Medicaid and Medicare reimbursements.
An indictment was returned in Baltimore on July 23 against Reddy Vijay Annappareddy, 45, of Fallston; Vipinkumar Patel, 30, of Edgewood; and Jigar Patel, 27, of Columbia, on charges of health care fraud and aggravated identity theft in connection with a scheme to defraud Medicaid and Medicare by submitting false claims for prescription refills, the Maryland U.S. Attorney's Office announced in a news release late Monday afternoon.
The indictment was unsealed on July 25, upon the arrest of both Patels and the execution of search warrants at six locations, including three pharmacies and a storage space, according to the news release.
Both Patels had detention hearings Monday in federal court in Baltimore, the U.S. Attorney's office said, and were released under the supervision of U.S. Pretrial Services.
Annappareddy was arrested in Las Vegas on Monday night and was scheduled to have an initial appearance in federal court in Nevada on Tuesday, according to Marcia Murphy, a spokesperson for the U.S. Attorney's Office.
According to the indictments, Annappareddy owns Pharmacare LLC and Caremerica LLC, a pharmacy store chain doing business in Maryland and elsewhere. Jigar Patel and Vipinkumar Patel met when they worked at Pharmacare at 208 Plumtree Road and at Caremerica at 2227 Old Emmorton Road, both in the Bel Air South area, and both part of the Pharmacare store network, according to Pharmacare's website.
The indictment states Jigar Patel is employed at a Pharmacare store in Washington, D.C. It does not state where Vipinkumar Patel works.
The two-count indictment alleges that from at least 2007 to July 2013, the defendants would identify customers who filled prescriptions at the pharmacy and for whom prescription refills remained.
Typically, the indictment notes, the two federal health care benefit programs reimburse pharmacies for a substantial portion of the cost of prescription drugs dispensed to a beneficiary. The individual patient pays a small deductible to the pharmacy.
"The health care benefit programs require that, in order for a pharmacy to receive reimbursement, the prescription drugs must actually be dispensed to a patient," the indictment states.
As soon as a prescription was eligible for refill, the defendants allegedly caused entries to be made in the pharmacy software to reflect that the refill had been requested, when it had not, the indictment alleges.
Such a computer entry would then be used to support a claim for reimbursement by the relevant health care benefit program, such as Medicare and Medicaid, the indictment continues.
The defendants would cause a false claim to be electronically submitted to a health care benefit program for a prescription refill that had not been requested or dispensed, according to the indictment. They allegedly used the actual name and insurance and identification number of hundreds of customers, according to the indictment.
The defendants would allegedly also re-use the prescription drug refills that were not delivered or picked up by a customer by, among other things, re-stocking the inventory in the pharmacy, the indictment alleges.
The indictment alleges that the defendants personally profited from the fraud scheme, and that the loss to the health care benefit programs to date is approximately $2.6 million, the U.S. Attorney's news release states.
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The defendants face a maximum sentence of 10 years in prison for health care fraud and a mandatory minimum of two years in prison consecutive to any sentence imposed for aggravated identity theft, plus a $250,000 fine, according to the release.
In addition, prosecutors are seeking the forfeiture of any property, real or personal, derived directly or indirectly from the alleged offenses, but not limited to $2.6 million, according to the indictment.
None of the three defendants could re reached for comment. Both Patels were represented by federal public defenders at their initial court appearances.
Neither of the Bel Air South stores appeared to be open Tuesday afternoon, nor were their phones being answered other than by recording asking the caller to leave a callback number for the pharmacist.
The indictment does not state at which specific pharmacies the alleged fraud occurred. According to its website, Pharmacare also has two locations in Baltimore City and one each in Towson, Reisterstown and Reading, Pa., in addition to the two stores in the Bel Air South area and one in Northwest D.C.
"Pharmacare is an independent pharmacy chain based in Bel Air, Maryland," the company's website states. "Pharmacare serves patients with traditional needs in addition to patients with special needs, such as psychiatric, substance abuse, HIV and oncology patients. With its high customer service standards and caring culture, Pharmacare is emerging as a regional leader."
The indictment was announced by U.S. Attorney for the District of Maryland Rod J. Rosenstein; Maryland Attorney General Douglas F. Gansler; Special Agent in Charge Stephen E. Vogt of the FBI; Special Agent in Charge Drew Grimm, Office of Personnel Management, Office of Inspector General; Special Agent in Charge Nicholas DiGiulio, Office of Investigations, Office of Inspector General of the Department of Health and Human Services; and Acting Inspector General Lynne M. Halbrooks of the U.S. Department of Defense, Office of Inspector General.