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Case Number: 2:22-cv-00343
Judge: Harvey Bartle, III
Court: United States District Court for the Eastern District of Pennsylvania (Philadelphia County)
Plaintiff's Attorney: United States Attorney’s Office
Description: Philadelphia, Pennsylvania criminal law lawyer represented Defendant charged with illegally dispensing controlled drugs.
Philadelphia-based Spivack, Inc., previously operating under the name Verree Pharmacy, and owner-pharmacist Mitchell Spivack, to resolve allegations that they engaged in a years-long practice of illegally dispensing opioids and other controlled substances, and systematic health care fraud. The United States filed the related lawsuit against them and other employees of the pharmacy earlier this year. The pharmacy and Spivack have agreed, subject to court approval, to pay over $4.1 million to resolve their civil liability under the Controlled Substances Act, False Claims Act, and forfeiture. The proposed judgment would also permanently ban them from ever dispensing controlled substances in the future.
The culmination of a multi-year federal-state investigation, the previously-filed complaint alleged that Verree Pharmacy, its pharmacist and owner Mitchell Spivack, and other employees of Verree, had a responsibility to dispense opioids and other controlled substances only when appropriate. Instead, the United States alleged that the pharmacy and Spivack dispensed the drugs, even when faced with numerous red flags suggestive of diversion—such as opioids in extreme doses, dangerous combinations of opioids and other “cocktail” drugs preferred by those addicted, excessive cash payments for the drugs, blatantly forged prescriptions, and other signs that the pills were being diverted for illegal purposes. The complaint alleged that Verree—which was the top retail pharmacy purchasing oxycodone in Pennsylvania—has been a nationwide and regional outlier in its deviant purchasing, dispensing, and billing of controlled substances. To avoid scrutiny from the drug distributors that sold them the pills, Verree through Spivack allegedly made false statements to maintain the façade of legitimacy and keep the pharmacy stocked with these pills critical to their profits. Behind that façade, the complaint alleged that Spivack drew millions of dollars from the pharmacy while the public suffered the consequences.
The United States’ complaint alleged that Verree and Spivack were also engaged in an expansive health care fraud scheme involving fraudulent billings for drugs not actually dispensed. The alleged cornerstone of the scheme was a code used by the pharmacy employees in their internal computer system: “BBDF” or “Bill But Don’t Fill.” Verree, Spivack, and their co-conspirators allegedly used BBDF as a means to cover their losses on other drugs and further line their pockets with illicit profits by falsely claiming to insurers, including Medicare, that they had dispensed a drug to a patient, when in fact they had not. According to the complaint, this sophisticated fraud—which one of the employees admitted to investigators—resulted in significant damages to Medicare and other federal programs.
The lawsuit seeks civil penalties and damages on Verree, Spivack, and the other pharmacy employee defendants under the Controlled Substances Act, False Claims Act, and civil forfeiture.
The pharmacy and Spivack agreed to resolve this civil liability under terms outlined in the proposed consent judgment, if accepted by the court. Among other things, the pharmacy and Spivack would pay over $4.1 million in civil damages and penalties under the False Claims Act, Controlled Substances Act, and in civil forfeiture, along with the approximately $500,000 Spivack agreed to pay in criminal restitution and criminal forfeiture. The proposed resolution would also permanently prevent the pharmacy and Spivack from prescribing, distributing, or dispensing any controlled substances in the future, and prevents them from ever seeking another controlled substance registration from the Drug Enforcement Administration. The resolution would also impose a 22-year exclusion on the pharmacy and Spivack from Medicare and Medicaid.
The civil complaint relates to criminal charges that were previously filed against Mitchell Spivack. On May 31, 2022, the U.S. Attorney’s Office filed a one-count criminal information against Spivack for conspiracy to defraud the United States based on allegations similar to those in the civil litigation. Spivack pled guilty to that charge on June 29, 2022.
“Pharmacies and pharmacists who engage in illegal dispensing of opioids devastate their communities and worsen our country’s opioid epidemic” said U.S. Attorney Romero. “Providers who abuse Medicare and other federal health care programs by taking money with false billings also steal precious resources from programs critical to the health of our seniors and other citizens. This Office is committed to investigating and holding accountable those providers who violate their controlled substance and health care billing obligations. Our Office deeply appreciates our partnership with the DEA, HHS-OIG, and the Pennsylvania Attorney General’s Office in pursuing these cases.”
“In a city that has been so adversely and disproportionately affected by the opioid epidemic, Verree Pharmacy was the top retail pharmacy purchasing oxycodone in the entire state of Pennsylvania,” said Thomas Hodnett, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division. “Spivack and Verree Pharmacy routinely demonstrated total disregard for their professional and ethical obligations, and improperly dispensed powerful painkillers when numerous warning signs were present.”
“The Medicare and Medicaid Programs provide vital prescription drug services to their beneficiaries,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office for the Department of Health and Human Services, Office of Inspector General. “Pharmacies are required to only bill for prescriptions and products they actually provide to their patients. HHS-OIG will continue to work with the U.S. Attorney’s Office, the Pennsylvania Attorney General’s Office, and the DEA to investigate allegations of fraudulent insurance billings.”
“We know that nearly 80% of those who use heroin first started with misusing a prescription opioid,” said Attorney General Josh Shapiro. “Today, this pharmacy and their owner took a critical step in resolving the civil suit against them for allegedly filling prescriptions outside of medical standards for the highly addictive drug oxycodone. In addition to the owner’s criminal plea, this civil settlement will get them out of the drug business for good. The opioid crisis killed 5,438 Pennsylvanians last year – and we can’t afford to lose one more life. Pharmacies and medical professionals have a responsibility under the law to dispense these drugs only when appropriate.”
If the public has any information regarding Verree Pharmacy or any other health care fraud allegation, individuals should contact the HHS-OIG hotline at 800-HHS-TIPS.
The case is being investigated by the Philadelphia Field Division of the DEA, the Pennsylvania Department of State’s Bureau of Enforcement and Investigation, HHS-OIG, and the Pennsylvania Office of the Attorney General, with additional assistance from the HHS-OIG Office of Audit Services, Office of Personnel Management Office of Inspector General, the Defense Health Agency, and the Defense Criminal Investigative Service. The civil investigation and litigation are being handled by Assistant United States Attorneys Anthony D. Scicchitano and Sarah L. Grieb and auditors Dawn Wiggins and George Niedzwicki. The related criminal charges are being prosecuted by Assistant United States Attorney M. Beth Leahy and Special Assistant United States Attorney Linda Montag from the Pennsylvania Office of the Attorney General.
Except for what has been admitted in the criminal proceeding, the complaints in the civil litigation contain allegations only that the United States must prove if the case proceeds to trial. The proposed consent judgment would resolve any alleged civil liability as to Spivack, Inc. d/b/a Verree Pharmacy and Mitchell Spivack. The United States’ civil litigation against the remaining pharmacy employee defendants remains ongoing.
31:3729 False Claims Act
Outcome: 08/11/2022 29 STIPULATION Order and Consent Judgment as to Defendant Spivack, Inc., Defendant Mitchell Spivack, and Defendant $2,900,342.60 by UNITED STATES OF AMERICA. (SCICCHITANO, ANTHONY) (Entered: 08/11/2022)
08/11/2022 30 NOTICE of Appearance by Jason Bologna on behalf of LEE KAMP (Bologna, Jason) (Entered: 08/11/2022)
08/11/2022 31 ORDER THAT WE APPROVE THE ATTACHED STIPULATED ORDER AND CONSENT JUDGMENT 29 SUBJECT ONLY TO OUR LATER EVALUATION OF POTENTIAL CONTINUING JURISDICTION AS A MATTER OF LAW; WE ENTER JUDGMENT IN FAVOR OF THE UNITED STATES AND AGAINST DEFENDANT SPIVACK, INC. D/B/A VERREE PHARMACY, MITCHELL SPIVACK, AND DEFENDANT TWO MILLION NINE HUNDRED THOUSAND THREE HUNDRED FORTY-TWO DOLLARS AND SIXTY CENTS ($2,900342.60) CONSISTENT WITH THE ATTACHED STIPULATED ORDER AND CONSENT JUDGMENT; AND, NOTHING IN THIS ORDER ALTERS THE REMAINING DEFENDANTS' OBLIGATIONS UNDER OUR JULY 21, 2022 ORDER 28 ; AS OUTLINED HEREIN.. SIGNED BY HONORABLE MARK A. KEARNEY ON 8/11/22. 8/11/22 ENTERED AND COPIES E-MAILED.(bw) (Entered: 08/11/2022)