STATE TAKES AIM AT MEDICAID FRAUD

A Senate Subcommittee Will Offer Legislation This Spring To Recover An
Estimated $1.2-Billion Lost Each Year To Fraud

TALLAHASSEE - Crooked pharmacies, doctors and Medicaid patients are soaking
Florida taxpayers for millions of dollars in painkillers and phony cancer
treatments, officials say.

Attorney General Charlie Crist has made Medicaid fraud a top priority, a
grand jury has spent months investigating and now a new Senate subcommittee
will recommend legislation this spring to recoup the estimated $1.2-billion
lost each year.

But lawmakers say more is at stake than money: innocent lives.

"There's no question it's happening in Florida and it's costing millions of
dollars and it's costing lives as well," said subcommittee member Sen. Mike
Fasano, R-New Port Richey.

About 80 percent of all prescription drugs illegally sold for fraud in
Florida were paid for by Medicaid, the federal-state health care program
for the poor. The drugs are then resold on what investigators call the gray
market. "Before these drugs can be sold illegally on the street, someone
has to fill the prescription," Fasano said. So he wants to target the
source of the drugs: doctors and pharmacists.

Here's how it works: Medicaid patients go shopping for doctors willing to
write prescriptions for large quantities of drugs such as OxyContin, that
have street value. Pharmacies fill the prescription, the public pays for
it, and the Medicaid patients then sell the drugs.

OxyContin addicts are dying from overdoses from those Medicaid drugs at an
alarming rate: three to five people a day.

"There are numerous personal tragedies," said Sen. Burt Saunders, the
Naples Republican who chairs the Senate subcommittee. "We just need to get
our hands around it."

Sometimes, unscrupulous doctors working with Medicaid patients write
prescriptions for expensive cancer and HIV drugs the patients don't need.
Crooked pharmacies, often set up for the express purpose of bilking the
system, bill the state as much as $7,000 a month for the drugs but don't
deliver them to the patients. Instead, the drugs are repackaged and sold
through a web of drug wholesalers, with the prescribing doctor getting a
cut of the resale price.

Eventually the drugs wind up again on the shelf of a pharmacy that gets
them much cheaper than it would if bought directly from a drug manufacturer.

But these illegal dealers either don't know or don't care how vulnerable
the medications are to breakdown.

"What's scary is that most of this stuff has to be refrigerated, and it's
sitting in someone's trunk," said Jack Calvar, an investigator with the
Medicaid Fraud Control Unit in Crist's office. Reputable pharmacy chains
such as Eckerd and Walgreens keep close tabs on the source of their
medications, he said. But smaller, independent stores, particularly those
in poor neighborhoods whose residents lack insurance, may not be as careful.

"You don't know that this has been sitting around a crack house for three
weeks," Calvar said.

A statewide grand jury has been investigating this year and on Thursday
issued a series of recommendations to lawmakers. But the report also
accused state officials of failing to control fraud and protect the public
from potentially tainted drugs.

"While Florida has taken some positive steps recently, our efforts pale
compared to what other states are doing and, in some cases, have been doing
for a long time," the grand jury wrote.

"The result is the waste of hundreds of millions of dollars, exploitation
of Medicaid recipients, and the tainting of our supply of critical
lifesaving medication."

Diane Fernandez, a Medicaid fraud investigator in the state Attorney
General's Office, said drug ringleaders go door to door in public housing
projects searching for Medicaid patients willing to cooperate in exchange
for the street drug of their choice.

"They know Medicaid prescriptions and Medicaid recipient numbers are
currency," Fernandez said.

Crist and Miami-Dade State Attorney Katherine Fernandez-Rundle on Friday
announced the arrests of two Miami pharmacy owners, who were charged with a
combined 39 counts of Medicaid fraud. Juan Carlos Dominguez, owner of
Pharmed Pharmacy in Miami, was charged with forging prescriptions for
Medicaid patients who say they never set foot in his pharmacy or received
the drugs. He's also charged with billing Medicaid for "pharmaceutical
products" he never sold to customers. State officials say he defrauded
Medicaid of $393,681.

Stanley Davenport, owner of Community Pharmacy in Miami, also is accused of
billing Medicaid for products he never ordered for his stock nor delivered
to patients. He's accused of defrauding the state of more than $519,983.

"These arrests should serve as a warning that this type of behavior will
not be tolerated," Crist said.

Before July 1, anyone could sell prescription drugs by filling out a simple
application and paying for a dealer's license.

This spring, the same grand jury that released a report last week
criticized Florida's lax oversight of drug wholesalers and pharmacies, and
lawmakers passed the Prescription Drug Safety Act of 2003.

It requires a detailed accounting of prescription medication, in the form
of "pedigree papers," from manufacturer to pharmacy, guaranteeing its
authenticity and safety. It also required prospective wholesalers to
provide detailed information, including criminal background checks, to the
state. Stiffer penalties for those who knowingly sold fake medication were
also part of the new law.

But the law doesn't go fully into effect until 2006, leaving investigators
like Calvar and Fernandez to play catch-up.

Fasano and Saunders say they want to give state investigators the tools
they need to find the fraud. The Senate Select Subcommittee on Medicaid
Prescription Over-prescribing will meet several times in January and
February before delivering its findings to the Senate.

"It seems as though where government is involved people come up with ideas
of how to defraud the government," Fasano said.

His interest in stemming prescription drug abuse goes back several years.
He has sponsored legislation that would track all narcotic prescriptions,
regardless of whether the state was paying for them, to identify the
patients and doctors who abuse prescriptions. So far, it hasn't become law.
This year, he'll add Medicaid prescription abuse and fraud to his
legislative portfolio.

"I don't know if we'll uncover $1-billion in fraud but if we could get to
the tip of the iceberg that's money we could use for other things."