Two Northeast pharmacies fined $3.5 million to settle charges of Medicare Fraud

This story originally appeared on The Philadelphia Tribune.

A couple of Northeast Philadelphia pharmacies and their owners on Tuesday agreed to pay $3.5 million in penalties by the U.S. Attorney’s office to settle charges that they billed Medicare for prescriptions that were not filled.

They have also agreed to cease operations, as part of the deal.

According to Jacqueline Romeo, U.S. Attorney for the Eastern District, Future Pharmacy, Inc., and JJ Pharmacy, Inc., and their respective owners, Arthur Kilimnk, Alexander Ferman, Mikhail Ferman, Leonard Kilimnk, and Aleksey Orlov will pay the federal government to settle the allegations that they violated the False Claims Act, by billing Medicare for prescription medication that was never dispensed.

As part of the agreement, Future Pharmacy on Bustleton Ave. and JJ Pharmacy on Red Lion Rd. have accepted a five-year federal healthcare exclusion that will prohibit the companies from getting payments from any federally funded health care insurers, such as Medicare for that time period. In addition, the companies have surrendered their Drug Enforcement Agency certificates of registration.

“Pharmacies and pharmacists have a responsibility to serve as gatekeepers of a closed system of prescription drug distribution,” Romero said. “That responsibility was allegedly abused for profit here.”

The alleged scheme was carried out between Jan. 1, 2012 and Dec. 31, 2016, and the medication that the government was billed for included treatments for asthma, depression, and some anesthetics. For example, they included Abilify, Advair, Creon, Diskus, Lidocaine, Lidoderm, and Nexium.

In addition to the U.S. Attorney’s office, the case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General and the DEA.

As part of the settlement, there has been no determination of civil liability.

According to the government’s allegations, Arthur Kilimnk, as majority owner of Future Pharmacy and minority owner of JJ Pharmacy and a pharmacist, he violated the Controlled Substances Act by failing to keep accurate and complete records; failure to separate narcotics and other prescription drugs; receiving inventory of narcotics from another company without proper documentation and filling prescriptions from that company, along with allowing another individual to illegally use its Controlled Substance ordering system.

The Tribune called the telephone numbers listed for both pharmacies for comment, but they were both disconnected.

According to the U.S. Department of Justice, the federal government collected about $2.2 billion in Medical Care False Claims Act settlements in the 2022 fiscal year that ended Sept. 30. It was the second-highest number of settlements and judgments collected in a single year.

Last year, Biogen Inc., of Cambridge, Massachusetts, agreed to pay $900 million to resolve allegations that it submitted false claims to Medicare and Medicaid by paying kickbacks to physicians to entice them to prescribe Biogen drugs. It was one of the largest such settlements in U.S. history.

Justice Department officials said the large settlements are an indication that the False Claims Act is an important tool to ensure that public funds are spent properly.

“Pharmacies are integral partners in patient care, and they are expected to act with integrity,” said Maureen Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Department of Health and Human Services, Office of the Inspector General. “We take allegations of pharmacy fraud seriously, and today’s settlement reflects our commitment to working with our partners to ensure that taxpayer dollars are spent in an appropriate manner – on needed medications, not wasted on fraud and abuse.”