A.G. Schneiderman Announces $22.4 Million Settlement With NYC Pharmacy For Improper Medicaid Billings For Injectable Pediatric Drug Synagis

This Settlement With Walgreen-Owned Trinity HomeCare LLC Concludes Second Investigation Against The Pharmacy And Results In $25 Million In Combined Recoveries For Medicaid; Resolves Allegations Company Used Improperly Obtained Information From Hospital Neonatal Units To Make Misrepresentations To Families And Prescribers To Increase Synagis Prescriptions

Federally Approved Synagis Settlement Marks $1 Billion In Medicaid Recoveries For Attorney General Schneiderman’s Medicaid Fraud Control Unit

Schneiderman: Cynical Overbilling And Use Of Improperly Obtained Patient Information Will Not Be Tolerated In NYS; We Will Protect Patients and Our Important Medicaid Program

NEW YORK – Attorney General Eric T. Schneiderman today announced a settlement that returns $22.4 million to the state’s Medicaid program. The agreement reached with the pharmacy Trinity Homecare LLC, primarily owned by Walgreen Co., began with a whistleblower claim of improper conduct and false Medicaid billings by the company and led to an expanded investigation by the Attorney General. The settlement relates to Synagis, an injectable drug for certain at-risk premature infants. The drug can cost more than $2,000 per dose, with some babies requiring additional vials based on their weight. The settlement resolve claims of improper prescriptions and billings for patients in New York City, Dutchess, Orange, Rockland, Sullivan, Westchester and Ulster counties, and on Long Island, and allegations that Trinity lacked basic documentation for Medicaid claims it submitted or proof it delivered Synagis.

The settlement brings the total recoveries for Attorney General Schneiderman’s Medicaid Fraud Control Bureau to more than $1 billion since 2011.

“My office will seek to recoup taxpayer dollars that are improperly drained from our important Medicaid program,” Attorney General Schneiderman said. “The claims under investigation in this case were for a drug that is supposed to help some premature babies. It turned out that the pharmacy did not always have a prescription for that drug, but billed Medicaid for it anyway. Of greater concern than the improper billing, is the possibility that infants could have received injections which were not properly prescribed to them. New York patients, their families and our taxpayers must not be exposed to sales tricks by pharmacies, and corporate owners will not get away with failing to supervise operations of the pharmacies they own.”

The settlement with Trinity, based in College Point, Queens, is the second court approved settlement the Attorney General’s Office reached with the company in the past two weeks. Under an agreement announced on June 29,the pharmacy has returned $2.5 million to the Medicaid program related to claims for excess quantity and also for the undocumented alleged delivery of expensive drugs sent to hemophilia patients, among others. In both cases, the Attorney General’s investigation found improper conduct and false Medicaid billings from 2007 to September 2011. During the course of the investigation and audit, Trinity discontinued its Synagis program.

Today’s settlement concerns the injectable drug Palivizumab, which is sold under the brand name Synagis. It is intended only for qualified premature babies and children with hemodynamically-significant heart disease who are at high risk for severe lung disease from Respiratory Syncytial Virus (“RSV”). Subject to pharmacy confirmation of continued need before refill, the refrigerated drug is injected once a month in certain cold weather months in New York when RSV mostly occurs.

According to allegations, initially lodged by a whistleblower, a hospital physician, Trinity staff improperly obtained babies’ names and other patient information from the hospital’s neo-natal intensive care unit logbooks. The whistleblower also alleged that Trinity misappropriated her name and medical license number on one alleged Synagis prescription for a baby she had never cared for.

An investigation by the Attorney General’s Medicaid Fraud Control Unit found that Trinity had its staff try to sell Synagis by directly contacting the families of outpatient premature babies or their doctors, regardless of a patient’s need or if the baby’s current physician wanted it prescribed. Findings include that the pharmacy sometimes falsely represented to families that Trinity had been contacted by the baby’s doctor to begin providing Synagis. The investigation also found that, at times, Trinity contacted families to “verify” information, including inducing the family to provide their pediatrician or outpatient clinic’s name, and thereafter sought to obtain a prescription for the baby. The Attorney General’s investigation into Trinity’s conduct related to pediatric patients discharged from other hospital neonatal intensive care units as well. Trinity used names of pediatricians and physician assistants on Synagis prescriptions and Medicaid bills without authorization, even though the “prescriber” had not determined that the baby needed the drug. The Attorney General also conducted an audit and found that Trinity billed Medicaid when the pharmacy had no written prescription or when a purported prescription was invalid, including because it lacked a prescriber’s signature, patient’s name or a date. The pharmacy submitted claims to Medicaid for invalid telephone orders and dispensed Synagis even though the order did not contain basic information, such as the correct prescriber name, the initials of the pharmacist or time of call.  The investigation further found that Trinity billed for excessive vials of weight-dosed Synagis by over-stating baby weight, and dispensing refills that had not been confirmed to still be necessary.The pharmacy’s owners received rebates from the drug manufacturer for Trinity’s Synagis purchases. The investigation did not discover incidents of actual harm to patients.

Trinity HomeCare is a specialized pharmacy that dispenses and delivers prescription drugs to patient homes. During the period of the Attorney General’s investigation, the pharmacy was first acquired by Option Care, Inc. and OptionCare of New York. In August 2007, Walgreen Co. acquired Option Care, Inc., later known as Walgreens Infusion Services, Inc. The investigation found that Option Care and Walgreen, which are both parties to the settlements, failed to ensure that Trinity complied with federal and state laws and Medicaid rules and regulations.

The Synagis investigation and settlement relates to a whistleblower lawsuit filed in U.S. District Court alleging violations of the federal and state False Claims Acts. The New York State Office of the Medicaid Inspector General had previously audited Trinity’s Medicaid claims for an earlier time period and was conducting a new audit of Trinity’s Synagis claims when the whistleblower case was filed. The Attorney General’s investigation and audit encompassed this new audit period and also a longer period.  The Attorney General thanks the Office of the Medicaid Inspector General for its prior work and cooperation in this matter.

The total amount of the settlements is $25 million, of which $22,448,938 is for the Synagis case and $2,551,062.32 is for the hemophilia case. After reimbursement of the federal contribution to Medicaid, New York will receive $12,230.607.63 in restitution for the Synagis case and $1,484,766.84 for the infusion drug case.  Under the False Claim Acts, the whistleblowers also receive a share of the settlements.

The total recoveries by MFCU since 2011 for Medicaid total $1,000,742,479.09. The five largest settlements in that time frame returned $550 million to the New York State Medicaid program:

  • Settlement with pharmaceutical giant GlaxoSmithKline returned $146 million to the program;
  • Settlement with Johnson & Johnson returned $138 million;
  • Settlements with Americare returned $141 million;  
  • Settlement with drug distributor McKesson returned $64 million;
  • Settlement with the pharmaceutical company Merck returned $61 million.

Special Assistant Attorney General Sherrie Brown of the Attorney General’s Medicaid Fraud Control Unit led the investigation, assisted by Special Assistant Attorney General Elizabeth Silverman; Medical Analyst Catherine Mosher, RN; Principal Special Auditor Investigator Jean Moss, Associate Special Auditor Investigator Sandra Alvarez ; Senior Investigator Wayne Rivers, Supervising Investigator Edward Keegan; Electronic Investigative Support Group Deputy Director Carolyn Hart; Information Technology Specialist 3 Gail Lysiak; and Legal Assistants Mohamed Zakaria, Geoffrey Gund and Amy Vastola. The Medicaid Fraud Control Unit is led by Acting Director Amy Held; Paul J. Mahoney is the unit’s Assistant Deputy Attorney General. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan. 

Groups audience: