What Medical Professionals need to know about Prescription Drug Fraud
What is prescription drug fraud?
Prescription drug fraud, essentially, is the selling of prescription drugs without a valid medical prescription, or the selling of prescription drugs for an invalid or unlawful medical purpose.
Article 178 of New York Penal Law is aimed at doctors and other healthcare providers though you may also be subject to criminal liability under this article if you receive a prescription for a medication knowing that the person who sold it to you has no legal authority to sell the medication or prescription.
Federal law defines prescription drug fraud in the same way under Title 21, Chapter 13 of the Drug Abuse Prevention and Control Act (21 U.S.C., chap. 13). The penalties for those convicted of prescription drug fraud are similar under both the state and federal laws.
Prescription drug fraud may involve selling painkillers without a license, or stealing a physician’s pad and creating fake prescriptions.
The intent required for prescription drug fraud:
Requires the intentional purpose to unlawfully prescribe or sell drugs for personal use or profit without a valid medical reason.
What are the short-term negative effects of prescription drug fraud?
Prescription drugs include, but are not limited to, major pain killers such as Oxycontin Vicodin and anti-anxiety medications like Valium and Xanax.
Recreational use of these drugs has caused increased accidental overdoses and deaths. In 2010, the National Institute on Drug Abuse reported 12,000 accidental overdose deaths.
The current focus on eliminating the opioid crisis means that more federal dollars are being spent on curbing the prescription drug fraud epidemic. Prescription drug fraud has become a high priority crime in many states and the federal government. As a result, more and more people are being charged and prosecuted for prescription drug crimes.
Who is affected by prescription drug fraud?
Every person who has insurance and almost every insurance company is affected, in some way, by prescription drug fraud. Medicare and Medicaid patients licensed medical insurance plans, and Medicare and Medicaid agencies lose 3 to 10 percent of every federal dollar to fraud.
For example, in 2012 alone, Medicaid lost $500 million in reimbursements for unlawfully disbursed pills.
Prescription drug fraud also drives up healthcare premiums.
In addition, most people see increases in healthcare premiums and higher healthcare costs, higher taxes and higher deductibles because of the increased effort to curb prescription drug fraud.
Who is commonly charged with prescription drug fraud?
The medical professionals, including doctors, physician assistants, and other medical service employees and people who illegally acquire prescription drugs by impersonating doctors are commonly charged with prescription drug fraud.
Who usually files prescription drug fraud charges?
Federal agencies such as the
- Federal Bureau of Investigations (FBI),
- United States Department of Justice (DOJ),
- New York Attorney General, and
- the New York State Board for Professional Conduct
are all authorized to file federal and state prescription drug fraud charges.
The government’s cases are often initiated by:
The healthcare employees who blow the whistle against unethical doctors and pharmacists and families with children who have died from illegally prescribed drugs.
The government also tracks and acts against doctors and pharmacists who sell large quantities of prescription drugs to patients.
Who are common whistleblowers in the healthcare industry?
Whistleblowers include employees of hospitals, doctor’s offices and other healthcare facilities who witness acts of healthcare fraud by other medical professionals. They often give information that helps law enforcement open a prescription fraud investigation.
When you’re talking about medical professionals, who does that include?
It is important to note that medical professionals could include not only physicians but also medical residents, dentists, physician assistants, psychiatrists, and specialist assistants.
Who can take action against you for illegally providing prescription drugs? Can you be prosecuted for buying or receiving illegally prescribed prescription drugs?
- Doctors and healthcare providers who illegally sell prescription drugs are reported to the New York State Department of Health.
- A healthcare professional can also be reported to the New York State Board for Professional Medical Conduct.
- Suppliers and buyers of illegally prescribed prescription drugs can also be reported to local and state police departments.
These actions may lead to further federal involvement by the FBI and DOJ.
Where can you get legal assistance?
If you have been wronged, you can contact your local county and state bar associations. Lawyer Referral Networks can also provide experienced healthcare criminal lawyers.
We can assist medical professionals in defending felony and misdemeanor drug diversion cases at the state and federal level.
We have provided high-quality legal representation in addressing federal healthcare compliance issues in prescription drug fraud cases in the past and will protect your rights and interests in your case.
What are the laws and regulations covering prescription drug fraud?
Title 21, Chapter 13 of the Food and Drug Act makes it a felony and punishes any person who illegally proscribes or sells drugs for profit without a valid medical purpose. This federal law applies to prescription drug fraud.
In New York State:
Article 178 covers the illegal use and sale of prescription medication in New York State without a valid medical prescription or a valid medical purpose.
Public Health Law Section 3397 also makes it a crime to possess a controlled substance with a forged or false prescription. This legislation treats prescription fraud as a third and fourth-degree felony under New York State Law.
Federal and state law apply the same criminal penalties to medical professionals who illegally prescribe prescription drugs.
If you are a medical professional, how can you be punished for Medicaid or Medicare violations?
There are many common acts that could rise to the level of prescription or drug diversion fraud.
Under federal, and accompanying state law, medical professionals may be subject to criminal liability for the following:
This involves Washing ink off prescriptions for creating blanks and fraudulently rewriting new prescriptions. This could apply to both doctors and pharmacists.
This crime involves increasing dosage quantities or refills on existing prescriptions. This applies to doctors, pharmacists, and other medical professionals.
The use of copy machines or computers to create fake prescriptions. This applies to both medical professionals and users of illegal prescription drugs.
I faxed fraudulent prescriptions to pharmacies by phone or fax.
This targets both medical professionals and patients.
Illegal market sales:
This crime involves acquiring drugs from illegal sources.
Example: Physician acts of fraud (prescription alteration or forged prescriptions):
Any doctor who sells opiates, depressants, or stimulants on the open market, or issues a prescription that is outside of the usual course of the doctor’s medical practice. A doctor can also be charged with fraud for transferring controlled substances, such as pain killers, for money without a prescription or a valid prescription.
This means that you could be prosecuted for selling bottles of Valium tablets with a forged medical prescription for commercial profit. You can also be subject to criminal liability for falsely diagnosing your patient’s medical condition as a basis to dispense controlled substances.
If you are NOT a medical professional can you still be punished for violation of prescription drug fraud laws?
Yes, under federal and state law patients and their families may be subject to criminal liability for unlawfully acquiring illegal prescription drugs.
Example: Pharmacy Shopping
Buyers or users of illegal prescription drugs can be targeted under federal law.
Patients who fill multiple pharmacies to acquire larger quantities of prescription drugs illegally .
Example: Doctor Shopping
Prescription fraud can also involve doctor shopping. This is when a person calls 10 different doctor’s offices to try to get a prescription for painkillers they don’t really need.
What are the effects of prescription drug fraud on the healthcare practitioner?
You can be subject up to a maximum of $30,000 in fines and investigation by the New York State Medical Board. You can be incarcerated for up to 15 years in prison for a first-degree felony. The same criminal penalties for medical professionals are applied under both federal and state law. The penalties are applied based on the number of narcotics sold.
Physicians, pharmacists, and other medical professionals can also be subject to license suspension or permanent license revocations. Other options might involve fines and community service.
If you are successfully prosecuted, you would have to face the consequences of a final board report that would be made available to the general public on the internet.
What types of criminal punishment are imposed against healthcare practitioners?
New York State Law
You may be prosecuted as either a misdemeanor or a felony. This often depends on the amount of the drugs involved and the monetary value of the drugs that are delivered and received.
First-time medical professionals and buyers of prescription drugs might be eligible for a one- time diversionary program called an ACD or Act in Contemplation of Dismissal. Under this program, charges can be dismissed after the payment of fines, and completion of probation or community service.
Under Article 178 of New York Penal Law, prescription drug fraud falls into four classifications:
4th Degree Criminal Diversion is a Class-A Misdemeanor
Punishable up to a year in prison and a one thousand dollar fine.
3rd Degree Criminal Diversion is a Class E Felony:
Punishable up to four years in prison. This statute applies if the monetary value of the prescription drugs exceeds $1,000 or if the person is committing the crime in the 4th degree for the second time.
2nd Degree – Class D Felony
Both sellers and buyers who commit a Class D felony may face seven years in prison when the monetary value of the drugs in the alleged crime exceeds $3,000.
1st Degree – Class C Felony:
Punishable by up to 15 years in prison.
The criminal penalties under Title 13 of the Drug Abuse Prevention and Control Act depend on the specific action that makes up the criminal offense.
Each penalty is outlined under 21 U.S.C. § 842.
What are the defenses to prescription drug fraud?
The Good Faith Defense
Most medical professionals, including doctors and PA’s, often use the “good faith defense.” This defense alleges that the accused did not have the requisite criminal intent or men’s rea to issue an illegal medical prescription deliberately.
For example, if you’re a doctor, nurse, or physician’s assistant, you could argue that you should be found not guilty because your patient failed to disclose a material fact to you. If you had known of this material fact, you would not have issued the prescription.
Illegal Action 1: You prescribe morphine to an elderly patient who willfully fails to disclose that she has a heart condition. She signed a medical application form affirming that she has no adverse health conditions.
Illegal Action 2: Another situation might involve a college student who obtains a prescription for Valium from you for anxiety. But he never revealed that he is addicted to opiates and uses heroin on a weekly basis. He dies, and you are sued by the patient’s parents. You could file an answer to the wrongful death claim using a “good faith defense.”
4th Amendment Defenses – unlawful search and seizure
Illegal Action 3: You can challenge physically seized evidence by using a Fourth Amendment defense. For example, you might allege that the government unlawfully seized evidence from your medical office without a valid search warrant, supported by probable cause under the Fourth Amendment to the U.S. Constitution.
You might succeed in filing a pretrial motion to suppress the evidence under the Fourth Amendment. If the motion succeeds, the evidence would be suppressed, and you could win your case before trial.
The Statute of Limitations Defense
There is a three-year statute of limitations defense in which the prosecution must bring a prescription drug fraud action before three years has passed.
How important is it to have an attorney involved in prescription drug abuse cases?
Proactive attorney involvement could help you avoid the risks of prescription drug fraud charges.
Diversionary programs, good faith defenses, and constitutional defenses could be used by experienced legal counsel.
A knowledgeable attorney will ensure that your rights and interests are protected and that you get the best possible outcome from your case.
How are prescription drug fraud cases investigated?
Anonymous tips from patient’s families may start a criminal investigation. Criminal case investigations often start with undercover agents who investigate medical practices. These undercover agents are often police investigators who work with state or county prosecutor’s offices.
Office interviews and financial audits may often result in criminal investigations. Grand jury indictments, preliminary arraignments, bail hearings, and other pretrial hearings may follow. Experts for the prosecution and defense will ordinarily testify during the criminal trial. Plea deals are commonly reached with state and local law enforcement before or during the trial.
What were the results of recent criminal investigations in New York State?
In April 2017, 13 people were indicted in an opioid fraud scheme involving three Brooklyn medical clinics. The scheme involved doctor shoppers who hired doctors, physician assistants, and nurse practitioners to issue medically unnecessary prescriptions for oxycodone pills.
The doctors were convicted of defrauding Medicaid and Medicare in the sum of $16 million between 2012 and 2017. The DOJ conducted physical surveillance, employee interviews, and Russian language wiretaps as investigative techniques in their criminal investigation.
The doctor’s clinic was charged with causing the death of six chronically drug addicted patients. (46 No. 1 Controlled Substances Hndbk. Newsl. 5).
On November 8, 2017, a Buffalo doctor was indicted by the DEA and a federal grand jury on 144 counts of unlawfully distributing controlled substances including fentanyl, oxycodone, and other opioid painkillers without a valid medical purpose.
Dr. Gosy, nurse practitioners and physician assistants in his clinic dispensed more narcotics in a one-year period than in any hospital.
The drug counts constituted Class C felonies that carry maximum 15- to 20-year prison terms. The case was the first major criminal drug prescription case where a physician was charged with six patient deaths in the Western District of New York.
The DEA recently sentenced a 54-year-old physician to 5 years’ probation for the unlawful criminal sale of methadone not in good faith. The doctor consented to surrender his medical license on October 6, 2016 incident to his plea deal.
How did federal courts rule on prescription drug fraud cases?
US v. Milstein, 401 F.3d 53, 61 (2d Cir. 2005).
Here the District Court convicted the defendant, Milstein, for knowingly distributing misbranded prescription drugs into interstate commerce without a required state license.
The Appeals Court upheld Milstein’s sentence of 48 months in prison followed by three years’ supervised release and a fine of $25,000.
United States v. Fortgang, 77 F. App’x 37, 38 (2d Cir. 2003).
The District Court convicted the defendant for selling prescription drugs without a required state license and without required documentation. In this case, the defendant falsified shipping labels and pedigree sheets to hide the source of drugs he knowingly received from a person who had no distribution license and, in addition, made false sworn statements as part of his application for a valid distribution license.
On appeal, the court found that the police had not violated the defendant’s 4th amendment rights when they waited outside his house for the arrival of a search warrant. The court also denied 3 other defensive appeals and upheld the defendant’s conviction. Prescription drug fraud continues to cost the government over 72.5 billion dollars per year in direct healthcare costs.
You and other medical professionals continue to be exposed to criminal indictments, debarment and substantial terms of federal incarceration. In light of the recent opioid epidemic, it is advisable that all medical professionals seek proactive and precautionary legal advice.
What can you do to avoid federal exposure to prescription drug fraud abuse?
You need to contact an experienced white collar healthcare defense attorney. The law firm will address all defenses available to avoid potential indictment for prescription drug fraud.
You need proactive advice with legal counsel who, among many other things, can provide:
- Precautionary measures to avoid being charged and prosecuted with a prescription drug fraud offense under federal law,
- Corrections to inaccurate information in medical records, prescription forms, and billing invoices,
- Satisfaction of reporting requirements with required federal entities that regulate prescription drug fraud standards, and
- An appropriate response to your company’s system or organization problems.
If you are audited, investigated or accused of healthcare fraud or just want to know your legal rights under federal law, you need to:
- Contact an experienced healthcare defense attorney who can help you avoid making incriminating statements to healthcare fraud investigators,
- Protect your confidential information,
- Handle patient and community perception concerns, and
- Cooperate with your legal counsel to avoid criminal prosecution by effectively complying with federal prescription drug fraud laws.