The New Jersey Office of Insurance Fraud Prosecutor has announced guilty pleas in several pharmacy fraud cases in 2003. New Jersey has clearly made a great effort to crack down on pharmacy fraud in the New Jersey Medicaid program. Cases include fraudulent billing for Serostim, a podiatrist writing fraudulent prescriptions, and an undercover bust.

Serostim Diversion

On October 17, 2003 Matthew Faenza was sentenced to three years in jail for billing $450,000 for prescriptions for drugs that Medicaid patients did not receive. He is also required to pay back the $450,000 plus a $15,000 fine. One of his employees, Michael Pacheco, was also sentenced to three years in state prison.

A lot of the fraudulent bills were for Serostim. Serostim is a prescription drug used to treat wasting disease associated with AIDS. Body builders use the drug illegally. A typical prescription is $7,000 to $8,000 for a one-month supply. After Medicaid or private insurance pays for the drugs, dealers often sell them on the street.

Going Undercover

An undercover operation by New Jersey state investigators determined that Kwadwo Osei Agyemang, a pharmacist, billed Medicaid for $27,000 of prescription drugs that were never provided to patients. Agyemang is the owner of Victory Pharmacy, Inc. in Newark. Investigators posed as Medicaid recipients. Victory Pharmacy billed Medicaid for prescription drugs that the investigators did not receive.

Agyemang pled guilty June 27, 2003, admitting that between November 2001 and June 2002 he billed New Jersey Medicaid more than $27,000 for prescription drugs he did not dispense. He could be sentenced to up to 5 years in prison and a fine up to $15,000, plus civil penalties.

Podiatrist Guilty of Pharmacy Fraud

July 16, 2003 a retired podiatrist pled guilty to Medicaid fraud and was sentenced to one year probabation and ordered to pay $5,819 in restitution. Seymour H. Blau, 80, admitted that he wrote and submitted 150 fraudulent prescriptions in the names of former Medicaid patients. Some of the prescriptions were for controlled substances. The drugs were then billed to the Medicaid program.

“Hudson County Podiatrist Sentenced for Medicaid Fraud.” 16 Jul. 2003a. Trenton: New Jersey Office of Insurance Fraud Prosecutor. Available: Podiatrist press release.

“Passaic County Pharmacist and Emplyoyee Sentenced for $450,000 Medicaid Rip-Off Scam.” 17 Oct. 2003 Trenton: New Jersey Office of Insurance Fraud Prosecutor. Available: Serostim press release.

“Union County Pharmacist Pleads Guilty to Bilking $27,000 from Medicaid.” 27 Jun. 2003c. Trenton: New Jersey Office of Insurance Fraud Prosecutor. Available: Victory Pharmacy press release.