Pharmacy Ordered to Pay $10 Million to the State of Texas For Alleged Medicaid Fraud

Hi-Tech Pharmacal Co., Inc. is a specialty pharmaceutical company that “develops, manufactures and markets generic and branded prescription and OTC products.”  Unfortunately, the pharmaceutical company also appears to allegedly engage in deceptive and fraudulent business practices that cost the state of Texas millions of dollars.

As KXAN reported, Hi-Tech Pharmaceuticals allegedly fraudulently inflated the prices of generic drugs that were being sold to the Medicaid program. The Texas Attorney General’s Fraud Division discovered the billsalleged deceptive behavior after launching an investigation into the pharmacy and discovering the alleged illegal practices. Hi-Tech Pharmacal has now entered into an agreement to reimburse the government for money that it took through its alleged fraudulent actions. The AG’s website also indicates that it will recover both legal fees as well as investigative costs associated with uncovering the alleged wrongful behavior on the part of the pharmacy.

Alleged Medicaid Fraud Due to Inflated Drug Prices

Texas state laws require drug manufacturers to file reports with the Medicaid program disclosing the prices that they charge for their products when purchased by pharmacies, distributors and wholesalers.  In some cases, however, manufacturers improperly report prices that are higher than they actually should be, making it appear as if pharmacies are paying more for the medications. As a result, the Medicaid reimbursement rate is set at a dramatically higher rate than it should be and taxpayers end up spending more money on the drugs when they are needed by Medicaid patients.

The Texas Attorney General’s Civil Medicaid Fraud Division (CMF) monitors the actions of drug manufacturers and others involved in the Medicaid program to find signs of alleged fraud or wrongdoing. A Medicaid fraud attorney knows that sometimes insiders like pharmacy or drug company employees learn of the alleged fraud and come forward as whistle blowers to alert the government to the fact that dishonest tactics are being used to take taxpayer money. These insiders serve an extremely important function by bringing cases of alleged fraud to light and they can generally receive a portion of the money recovered depending upon the circumstances of the case.

In the recent instance of alleged fraud committed by High-Tech Pharmacal Co., however, it was CMF that identified the potential wrongdoing and pursued the claim of alleged fraud. Since 2002, CMF has recovered more than $400 million for the State of Texas and have recovered more than $1 billion in money for the federal government.

Medicaid is funded jointly by the federal government as well as by the state of Texas, which means that these two governments split money recovered through alleged fraud schemes.  Hi-Tech has agreed to pay a total of $25 million, which covers the money taken from both the state and federal Medicaid funds. The share of the settlement that Texas will receive is approximately $11.2 million dollars in addition to the attorney’s fees and costs that will be recovered.

Those facing charges of alleged Medicaid fraud must take the government seriously, as the consequences of conviction can bankrupt a business and land defendants behind bars.

Brewer & Pritchard, P.C. has law offices in Houston, TX and represents clients nationwide. Call 713-209-2950 to schedule a free consultation.

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