UC Regents Say Doctors & Pharmacists Ran $12 Million Fraud

LOS ANGELES (CN) — The University of California claims in court that a group of physicians defrauded students’ self-funded health care benefit plan of $12 million by prescribing thousands of drugs to students who did not know they had been dispensed under their names.

The Regents of the University of California sued Studios Pharmacy, Excel Care Pharmacy, Pharma Pro Solutions and California Clinical Trials, and 17 people in Superior Court, claiming they “drained” the University of California Student Health Insurance Plan of millions of dollars through bogus claims.

Among the 17 individual defendants are eight health care professionals, including four physicians and two orthopedic surgeons, who are accused of prescribing the drugs, and other alleged conspirators.

Calling the scheme “wide-ranging and sophisticated,” the April 20 lawsuit claims the companies obtained students’ personal information, including the health insurance plan identifying numbers of more than 500 University of California students on six campuses.

From September 2016 the companies elicited the information through misleading ads on UC student Facebook pages, and through bogus clinical trials for topical pain creams, offering students $550 to participate in the trials, according to the lawsuit.

At job fairs on UC campuses, people posing as representatives for a pharmaceutical start-up would gather students’ healthcare information, according to the lawsuit, telling them it was necessary to qualify them for employment at the company.

Using students’ health insurance IDs, health workers, including a doctor of osteopathy, a podiatrist and a nurse practitioner, wrote thousands of prescriptions for $3,000 drug kits that were not medically necessary, the regents say. From October 2016 until today nearly all of the 3,200 prescriptions were filled at a single pharmacy in Studio City, 13 miles from a university campus, according to the 37-page complaint.

“In the vast majority of cases, if not all, the prescriptions were written without any medical examination or diagnosis of the students — or with the student even knowing the medication was being dispensed,” the regents say.

They say prescribers wrote more than 100 prescriptions a day causing, the UC Student Health Insurance Plan almost $1 million a day in losses.

When the health insurance plan blocked the drugs, the prescribers would write prescriptions for a similar drug. When the plan blocked those prescriptions, defendants shifted to filling prescriptions at a different pharmacy to continue the scheme, according to the complaint.

The regents seek restitution, costs of suit and damages for violations of the California False Claims Act, common law fraud and conspiracy to commit common law fraud, negligent misrepresentation, and professional negligence.

Defendants include California Clinical Trials; Kare Foods doing business as Studio Pharmacy; Pharma Pro Solutions; and Excel RX doing business as Excel Care Pharmacy.

The regents are represented by Hailyn Chen with Munger, Tolles & Olson.

A phone call to Kare Foods delivered a disconnected signal. A representative at Studio Pharmacy referred Courthouse News to attorney Herb Weinberg, who said that he would not be representing the defendants in the matter.


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