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San Marino pharmacy raided for massive Medicare, Medi-Cal scam

October 27, 2011 12:00:00 AM PDT
Federal agents raided a San Marino pharmacy Thursday that investigators say was the hub of a major Medicare and Medi-Cal scam.

A pharmacist, his wife and a doctor from Huntington Pharmacy were among the 17 people who were arrested, accused of running a scam that cost taxpayers $18 million.

FBI, IRS and California Department of Justice agents raided the Pasadena home of pharmacist Phic Laing Lim, 47, and his wife Theana Khou, 39. The two, along with 15 others, were arrested Wednesday. Federal officials said one more person allegedly involved in the scheme was at large.

Thursday's raid was the culmination of an investigation that started in the summer of 2010 looking into Medicare and Medi-Cal fraud.

The investigation zeroed in specifically on "prescription harvesting," a scheme in which perpetrators steal patient identities to bill Medicare and Medi-Cal for millions of dollars worth of illegitimate prescriptions for expensive drugs.

The dispensed drugs never reach the patient. Instead, they are diverted to black market wholesalers and routed back to the pharmacies, where the perpetrators re-label and repackage the medication in order to submit new bills to Medicare and Medi-Cal as though the drugs were never dispensed in the first place.

More than $18 million in fraudulent claims were submitted to Medicare and Medi-Cal as a result of this scheme, which paid out approximately $7.3 million.

Thom Mrozek with the U.S. Attorney's Office said antipsychotic medicines were the drug of choice in this scheme due to the high reimbursement.

"As much as $3,000 come from these public insurance companies. In order to continually defraud these public health programs, they essentially resell the drugs over and over through a black market system," Mrozek explained.

In addition to San Marino, raids were also carried out in Hollywood and Glendale.

Some neighbors and customers of Huntington Pharmacy said the fraud did not surprise them.

"There's always opportunity for crimes, so the government needs to stay ahead of the game or on the same level as the crooks are," said neighbor Ed Shrader.

Not everyone, however, felt this way. Pharmacy customer Marc Giambalvo said the whole scheme was hard to believe because the workers at the pharmacy were always kind to him.

Federal authorities said it was the San Marino Police Department that got the investigation rolling. San Marino police noticed suspicious activity, triggering red flags surrounding Huntington Pharmacy.

Those in custody were in federal court Thursday. Those charged with conspiracy to commit health care fraud could face up to 30 years in federal prison if convicted.

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