CVS Caremark Corp. agreed Tuesday to pay $36.7 million to settle charges it routinely overbilled Medicaid for a popular generic antacid drug, cheating federal and state governments out of millions of dollars over more than six years.
Prosecutors say the pharmacy chain illegally substituted a more expensive capsule form of the drug instead of the prescribed tablets to increase its Medicaid reimbursement. Switching the form of the drug did not endanger patients, federal officials said.
“Switching medication from tablets to capsules might seem harmless, but when that is done solely to increase profit … pharmacies must know that they are subjecting themselves to the possibility of triple damages, civil penalties and attorney fees,” U.S. Atty. Patrick Fitzgerald said in a statement.
The CVS investigation, which began more than five years ago, is the second that targeted Medicaid fraud at pharmacies brought by the U.S. attorney’s office in Chicago. In 2006, Omnicare Inc., a leading supplier of drugs to nursing homes, paid $49.5 million to settle allegations similar to those in the CVS case.
A Northbrook pharmacist was the whistle-blower in both investigations. Bernard Lisitza will receive $4.3 million from the CVS settlement. He received $6.4 million from the Omnicare case. He declined to comment through his attorney.
Woonsocket, R.I.-based CVS, with about 6,200 stores, did not admit wrongdoing. CVS said in a statement that it stocked the capsule form of Ranitidine for dispensing to all patients, not just Medicaid recipients, because the capsules were cheaper to buy than tablets. Ranitidine is generic Zantac.
How fraud was spotted
Lisitza was a substitute pharmacist, placed by a temporary agency at drugstores that were short-staffed, the complaint said.
In filling some prescriptions transferred from CVS pharmacies, he noticed that Ranitidine scripts called for capsules rather than the industry standard tablet. CVS pharmacists, in response to his questions, told him that the company “had set up its system so that Ranitidine tablets were impossible to provide, and that all the Ranitidine prescriptions were filled as capsules despite what a physician had specifically prescribed,” the complaint said.
The switching increased the amount CVS charged Medicaid. For example, from December 2000 to April 2001, CVS billed Illinois Medicaid, $79.80 for 60 capsules, nearly five times more than the $17.10 price for the same number of tablets, federal officials said.
Lisitza took his case to Michael Behn, a Chicago lawyer who in January 2003 filed suit under the False Claims Act. The anti-fraud law provides financial incentives to encourage whistle-blowing against unscrupulous contractors and businesses that receive taxpayer money.
In May 2003, Lisitza and Behn filed their case against Omnicare, based in Covington, Ky. The pharmacist had worked for an Omnicare facility in Des Plaines from 1992 until May 2001, according to that complaint. The Omnicare case included a second whistle-blower.
Prior to Omnicare, Lisitza managed his own pharmaceutical distribution business. He was arrested in 1992 as part of a national investigation dubbed “Operation Goldpill” that targeted fraudulent practices in the distribution of prescription drugs, according to a Chicago Tribune report. Lisitza was one of 11 Chicago-area pharmacists charged in the investigation.
According to Illinois Department of Professional Regulation, which licenses pharmacists, Lisitza’s actions included purchasing drugs that did not have intact safety seals, manufacturers’ boxes and packaging inserts with the intent of reselling the drugs to the public.
License reinstated
Lisitza pleaded guilty to violating the Food and Drug Act on Sept. 14, 1995. He was sentenced to 21/2 years of probation and paid a $3,000 fine. In 2001, in connection with the conviction, the state suspended his license for nine months. Lisitza appealed, and the suspension was effectively reduced to six weeks. His license is currently in good standing, said a department spokeswoman.
“Mr. Lisitza and his family paid dearly for unrelated conduct that occurred nearly 20 years ago and, since then, he has done everything he can to help the government and his fellow citizens,” Behn said Tuesday. “His service has resulted in uncovering major frauds that would otherwise have gone undetected, and in recovering over $80 million for the taxpayers.”
Lisitza’s criminal record had no bearing on the investigation, said Linda Wawzenski, deputy chief of the U.S. attorney’s office civil division. “He did bring us information and after doing our own independent investigation it turned out to be accurate,” Wawzenski said.
Twenty-three states, including Illinois, and the District of Columbia, will share about $15.6 million of the CVS settlement. Illinois is expected to receive $241,110, federal officials said. CVS will pay about $800,000 in investigative costs and other fees.
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asachdev@tribune.com
