Billing Data Caught the Eye of Our Analyst
When you’re hurt on the job, you trust that your doctor has your best interest at heart. You trust the medication they prescribe for you is what you need to feel better. Unfortunately, this is not always the case. Sometimes medical professionals allow their integrity to be compromised for financial gain at the risk of what’s best for their patients. More than 420 injured postal employees were impacted by a kickback scheme costing the Postal Service $14 million in medication payments.
Through an investigation, OIG agents discovered that a pharmacy was paying doctors to prescribe an expensive medication, send the prescription for that medication to be filled at that pharmacy, and then pay the doctors for their “business.”
In Cahoots for Cash
While reviewing billing data from the Department of Labor (DOL) in April 2016, an OIG analyst noticed a particular pharmacy that was used regularly for postal worker’s compensation claimants. Because so much money was involved, the OIG decided to take a closer look.
What Constitutes a Kickback?
A kickback is a bribe - offering or giving something of value in exchange for business referrals. This can be perfectly legal in some areas of the commercial world. However, it is not permitted when the government is paying for healthcare programs. This is governed by the Anti-kickback Statute (AKS), the federal law that prohibits kickbacks in this sense. The AKS prohibits the knowing and willful payment to encourage referrals or generating business involving any item or service the federal healthcare program pays for such as medical devices, supplies or drugs, or healthcare services.
Interviews with the injured postal employees revealed initially their doctors prescribed them pain cream. Each tube of this pain cream cost the Postal Service as much as $4,000 each. When the patients felt the pain cream did not help, they requested the medication stop being delivered. However, the patients continued to receive the creams.
Why Is This a Concern?
Not only did this scheme cost the government millions of dollars, when doctors are involved in situations where they are bribed for their medical decisions, their integrity is called into question because now their financial gain becomes more important than their patients’ wellbeing. Their medical decisions are then subject to be questioned. And, in turn, this can be a very dangerous situation for patients.
Wrapping It All Up
In December 2016, OIG agents discovered the doctors were receiving payments from this pharmacy for these fraudulent practices and, in April 2018, enough evidence was gathered to begin a full investigation.
Over the next couple of years, the full impact of this scheme revealed not only the pharmacy, but also the marketers along with the doctors, received payment from the pharmacy, and by the end of 2021, criminal charges and plea agreements began to take place. By the time it was all said and done, two marketers and the pharmacy owner were sentenced.
The first marketer received two years’ probation, ordered to pay nearly $1.5 million in restitution, and a $100,000 fine in September 2021. A second marketer received three years of probation and ordered to pay $173,000 in restitution in April 2022.
Finally, in October 2022, the pharmacy owner received more than two years in prison and was ordered to pay $12 million in restitution. In April 2023, the owner was excluded from all healthcare programs for 30 years.
The Postal Service spends hundreds of millions of dollars every year on health care-related costs. Money lost to schemes like this are costly to the government and takes away from those who legitimately require medical services.
If you suspect or know of healthcare crimes involving Postal Service employees or contractors, please report it to our Hotline.
For further reading:
Department of Justice (via uspsoig.gov), Southern District of Texas | Pharmacist sent to prison for fraudulent compounding cream scheme | United States Department of Justice