16 Arrested in Elaborate Medicare/Medi-Cal Fraud Scheme
According to authorities, 17 people associated with Manor Medical Imaging Clinic and pharmacies around the San Gabriel Valley, have been charged in a "prescription harvesting" scheme.
Fifteen of the 17 federal defendants were arrested Thursday morning, and authorities arrested an additional defendant charged by the California Attorney General's Office.
One person named in the case remains at large.
The suspects are accused of fraudulently prescribing expensive anti-psychotic medications, and then re-billing the government for the drugs over and over.
The medications involved in the alleged scheme include Abilify, Seroquel and Zyprexa.
Manor recruited Medicare and Medi-Cal beneficiaries, including veterans, the homeless, low-income patients and the elderly, authorities say.
Other beneficiaries had their identities stolen and used without their knowledge, according to the criminal complaint.
Court documents outline an alleged conspiracy in which Manor operated a bogus clinic authorized to make claims to Medicare and employed a doctor to write prescriptions.
But the drugs that were dispensed by the pharmacies allegedly did not go to the beneficiaries.
Instead, they were diverted to black market wholesalers and back to the pharmacies, authorities allege.
The medications were then re-labeled, re-packaged and re-dispensed so they could submit new bills to Medicare or Medi-Cal as though the drugs had never been dispensed.
Authorities say the primary pharmacy involved in the case, Huntington Pharmacy in San Marino, saw a huge spike in Medi-Cal claims -- from just under $45,000 in 2009 to nearly $1.5 million in 2010.
Most of claims were the result of prescriptions written by Manor's in-house doctor, according to the criminal complaint.
The scheme defrauded Medicare and Medi-Cal of at least $7.3 million dollars, according to the U.S. Attorney.
More than 200 agents from across the country participated in the case, dubbed Operation "Psych Out."
Thursday's enforcement action included raids at five pharmacies, the Manor clinic and offices belonging to a wholesale drug company.
All 17 defendants are charged with conspiracy to commit health care fraud, which carries a maximum sentence of 30 years in federal prison.