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TRENTON - Attorney General Anne Milgram announced that the owner of a Newark clinic pleaded guilty today to health care fraud for his role in a scheme in which pharmacy owners and employees allegedly bought completed prescription forms for HIV/AIDS drugs from indigent patients so Medicaid could be billed for drugs that were never actually dispensed.
Bryan X. Chandler, aka Dr. X, 41, of East Orange, owner and director of Samaritan Medical, a clinic that formerly operated at 508 South Orange Avenue in Newark, pleaded guilty today before Superior Court Judge Jerome M. St. John in Essex County to an accusation charging him with second-degree health care claims fraud. Under the plea agreement, Chandler will be sentenced as a third-degree offender, meaning he faces three to five years in state prison.
Chandler also must pay restitution of more than $100,000, representing all payments made by Medicaid to his clinic since it opened in 2007, and will be barred from participating in the Medicaid program as a service provider for five years. He must forfeit assets seized in the investigation, including $18,220 in cash and two vehicles, and will waive any rights to $17,239 in pending Medicaid claims due to Samaritan. His sentencing is scheduled for Oct. 17.
Chandler was charged as a result of Operation PharmScam, an investigation targeting Medicaid fraud that began last year and has been conducted by the Office of Insurance Fraud Prosecutor’s Medicaid Fraud Control Unit, the Jersey City Police Department and the U.S. Food and Drug Administration’s Office of Criminal Investigations. The investigation is ongoing.
According to Insurance Fraud Prosecutor Greta Gooden Brown, patients who agreed to go without their medicines were paid cash for their prescriptions, which were used to fraudulently bill Medicaid at prices 10 to 30 times higher than what was paid to the patient. Prescriptions for HIV/AIDS drugs and other expensive specialty drugs were bought for several hundred dollars and billed to Medicaid for thousands of dollars. The total fraud is estimated to exceed $2 million.
It is estimated that two pharmacies - Pharmacy of America at 60 Evergreen Place in East Orange and Orange Drugs at 261 Orange Street in Newark - each may have filed more than $1 million in fraudulent prescription claims with the Medicaid program in 2007. On Jan. 24, 2008, search warrants were executed at the two pharmacies and at Samaritan Medical, and charges of health care claims fraud and Medicaid fraud were filed against Chandler and 13 other defendants.
A full list of defendants charged is in the Jan. 24 press release.
Deputy Attorney General Sherry Wilson represented the state at the plea hearing.
Chandler was charged with conspiring with Medicaid beneficiaries and area pharmacies to defraud the Medicaid program. He recruited beneficiaries to come to his clinic so that multiple prescriptions could be written in each beneficiary’s name and sold to pharmacies, including Pharmacy of America and Orange Drugs. Those pharmacies allegedly billed Medicaid for the medicines without dispensing them to the named beneficiaries.
Herbert Brandt, 75, of Verona, the owner of Pharmacy of America, and his son, Douglas Brandt, 48, of Verona, who worked at the pharmacy, were charged with conspiring with Chandler to defraud Medicaid. Also charged were Pharmacy of America pharmacy technicians Shivonne Forde, 25, of East Orange, Alicia Stevens, 27, of Newark, and Jannah Muid, 24, of East Orange.
Jovy D. Carino, 42, of Newark, a pharmacy technician at Orange Drugs, was charged for allegedly conspiring with Chandler and others to pay cash for prescriptions and submit fraudulent claims to Medicaid.
In addition, seven Medicaid beneficiaries were charged for assisting Chandler, Orange Drugs or Pharmacy of America by selling their prescriptions. Five of the beneficiaries recently pleaded guilty to third-degree conspiracy to commit Medicaid fraud and were sentenced to probation. They are Bonita Clark, 53, Steven Collazo, 43, Clifton Daniels, 37, Edward Kinder, 43, and Ingrid Thomas, 59. Clark is an East Orange resident, and the others are Newark residents.
Attorney General Milgram credited the numerous investigators, officers and attorneys with the Office of Insurance Fraud Prosecutor’s Medicaid Fraud Control Unit, the Jersey City Police Department and the U.S. FDA who have conducted Operation PharmScam. She further credited all of the Division of Criminal Justice investigators and other law enforcement agencies that assisted in the arrests and raids and other aspects of the ongoing investigation.
The investigation has been conducted for the Medicaid Fraud Control Unit by Detective Joseph Jaruszewski, Detective Danielle Han, Detective Jacqueline Latty, Sgt. James Wrightson and Detective Kevin Gannon. Deputy Attorney General Sherry Wilson is leading the prosecutions, with assistance from Deputy Attorneys General Erik Daab, Cynthia Vazquez, Linda Rinaldi, William Hoyman, Carol Stanton Meier and Alvina Seto.
According to Insurance Fraud Prosecutor Brown, prescription fraud, including the “buy back” of prescriptions from Medicaid patients, is becoming more common. In 2007, the New Jersey Medicaid program paid over $500 million in reimbursement to pharmacies to dispense medications. Many of these medications, especially HIV medications, are extremely expensive. For example, a one-month supply of the HIV medicine Fuzeon costs more than $2,300. Fraud in this part of the Medicaid program can take multiple forms, including the pharmacies generating claims or refills for prescriptions that do not exist. However, it is more common for pharmacies to pay cash to beneficiaries, runners or doctors to bring them valid prescription forms or blanks.
If anyone has information or would like to report fraud or abuse involving the Medicaid program or Medicaid providers, they should contact the Medicaid Fraud Control Unit by calling the toll-free hotline 1-877-55-FRAUD or visiting the Web site www.NJInsuranceFraud.org. All information received through the hotline or Web site will remain confidential.
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