IOWA CITY (AP) — An Iowa City pharmacist will contest federal criminal charges alleging that he improperly filed insurance claims for expensive drugs needed to treat patients with hemophilia, his attorney said.
Pharmacist Michael Stein made an initial appearance in federal court in Des Moines on Monday. He entered a not guilty plea to a 10-count indictment charging him with health care and mail fraud.
Stein operates Pharmacy Matters, an independent retail pharmacy with locations in Iowa City and North Liberty. His attorney issued a statement late Monday vowing to fight the charges.
“Michael Stein vehemently denies that there was anything illegal about the way in which he helped provide lifesaving medications to hemophilia patients,” attorney Mark Weinhardt said.
Stein was released on his own recognizance pending trial, which is scheduled to start July 29.
The charges stem from a lengthy dispute between Stein's pharmacy and Wellmark, Iowa's largest health insurer, over millions of dollars in claims for reimbursement for drugs used to treat hemophilia, an inherited condition in which patients suffer from excessive bleeding and lack the proteins needed to form blood clots.
The type of medicine at issue, called clotting factor drugs, is injected at home to prevent patients from bleeding to death.
Stein's business signed an agreement to join Wellmark's provider network after opening in 2006.
The indictment alleges that Stein signed a deal in 2008 to give Factor Health Management, a now-closed Florida drug wholesaler, access to Wellmark's network of customers in the Blue Cross and Blue Shield Association by agreeing to distribute its clotting factor drugs.
Factor Health Management referred patients to Stein, who sent them drugs provided by FHM and filed for reimbursement from Wellmark. The indictment says Stein would get 1 percent of the revenue, or $100,000, whichever was greater, under the deal.
The indictment says Wellmark's contract states that such arrangements are not allowed. It alleges that Stein submitted false and fraudulent claims to Wellmark nine times in August and September 2008 and got $1.6 million in reimbursements for which he was not entitled.
The indictment seeks forfeiture of $3.5 million, the “gross proceeds obtained as a result of the offenses.”
Weinhardt noted that Stein's business has had a civil lawsuit pending against Wellmark since 2009 in which he contends that the claims were valid and that the insurer “wrongfully denied insurance benefits in his pharmacy's hemophilia cases.”
A key issue in both cases appears to be whether Stein's arrangement with FHM and a subsidiary, FCS Pharmacy, was proper.
In the civil lawsuit, Stein's attorneys contend that the drugs were medically necessary and lawfully dispensed to patients who had valid prescriptions and insurance through Wellmark. Getting the expensive, specialty drugs from a wholesaler allowed Stein's independent pharmacy to afford to carry the drugs, the attorneys said.
The lawsuit alleges that Wellmark refused to pay 117 claims for 24 patients at a cost of $6.3 million, coming up with ever-shifting reasons for the denials.
The refusal by Wellmark and other insurers to pay reimbursements forced FHM to close in 2009, after its revenue plummeted, the lawsuit alleges.
The trial judge in the suit, District Judge Paul Miller is expected to rule in the coming weeks. Weinhardt said Stein is looking forward to a decision and “looks forward to vindicating himself in criminal court if necessary.”
First Assistant U.S. Attorney Kevin VanderSchel said Tuesday that he could not explain why the charges were being brought now, in the middle of the civil case and nearly five years after the claims were filed.
The indictment alleges that FCS Pharmacy clinically managed the patients, assembling patient-specific doses and shipping them to Iowa, complete with shipping labels for Stein to mail the drugs to them.
Stein said that in four cases FHM drugs were sent to patients who needed them on an emergency basis without the drugs passing through his pharmacy but that it was proper to save lives.
Some of Stein's claims for reimbursement included an extra charge generally used when pharmacists actually inject the drugs, which Stein did not do, the indictment alleges.
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