If you own a pharmacy and dispense medications prescribed by a physician and paid through a government health system, be careful. All prescriptions billed must be purchased and dispensed. You can not bill the US Government (state based medicaid or medicare programs) for prescriptions that were neither purchased nor dispensed. CMS audits through states’ medicare medicaid billing entities find this fraud out.

People’s Rx, Inc., d/b/a The People’s Pharmacy Shoppe (“People’s”), a pharmacy located in Union City, New Jersey, has agreed to pay $995,420 to resolve allegations that it violated the False Claims Act by knowingly billing a federal health care program for medications that it never dispensed, U.S. Attorney Alina Habba announced. According to the contentions of the United States in the settlement agreement:The United States alleged that, from January 2, 2015, through January 24, 2022, People’s caused the submission of claims for reimbursement to the Medicare Part D Program and the New Jersey Medicaid Program for drugs that were never dispensed to beneficiaries. The government contends that inventory records showed that People’s did not purchase enough of these medications from wholesalers to fill the prescriptions billed to the federal health care program.

The resolution obtained in this matter was the result of a coordinated effort between the U.S. Attorney’s Office for the District of New Jersey and the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section.

https://www.justice.gov/usao-nj/pr/union-city-pharmacy-agrees-resolve-false-claims-act-allegations-billing-drugs-not

This is different that over utilization. Third Circuit has recognized that “[c]ase law in the area of ‘worthless services’ under the FCA addresses instances in which either services literally are not provided or the service is so substandard as to be tantamount to no service at all.” In re Genesis Health Ventures, Inc., 112 Fed.Appx. 140, 143 (3d Cir. 2004). Again, “[i]t is not enough to offer evidence that the defendant provided services that are worth some amount less than the services paid for,” i.e., a “diminished value” of services theory is insufficient. U.S. ex rel. Absher v. Momence Meadows Nursing Ctr., Inc., 764 F.3d 699, 710 (7th Cir. 2014); See also U.S. ex rel. Sanchez-Smith v. AHS Tulsa Reg’l Med. Ctr., 754 F. Supp. 2d 1270, 1287 (N.D. Okla. 2010) (“in order to reach a jury on a factual falsity theory in the context of ‘bundled’ per diem Medicaid billing, a plaintiff must present facts amounting to (1) the provision of entirely ‘worthless services,’…; or (2) at a minimum, the provision of grossly negligent services with regard to a particular standard of care or regulatory requirement.”) (internal quotations omitted).