Identification of drugs not necessary for Health Care Fraud

In a case of first impression, the First Department interpreted the new Health Care Fraud crime, Penal Law Article 177.  In People v Khan (1st Dept. 1/20/2011) (Acosta, J.) (5-1), Defendant was convicted of Health Care Fraud (HCF) 4°.  A person is guilty of HCF 4° (§ 177.10) when he commits HCF 5° (§ 177.05) and the aggregate amount wrongfully received during a one year period exceeds three thousand dollars.

Section 177.05 provides that:

A person is guilty of health care fraud in the fifth degree when, with intent to defraud a health plan, he or she knowingly and willfully provides materially false information or omits material information for the purpose of requesting payment from a health plan for a health care item or service and, as a result of such information or omission, he or she or another person receives payment in an amount that he, she or such other person is not entitled to under the circumstances.

The NYPD and NY Human Resources Administration conducted a joint undercover investigation of a pharmacy in two phases.  During the first phase, an investigator made multiple cash purchases from Defendant of prescription drugs (Amitriptyline and Clonidine) without a prescription.  During the second phase, the investigator was provided with a Medicaid card and prescriptions for various drugs.  The card and prescriptions were issued to a fictitious person that the investigator identified to Defendant as his wife.  On multiple occasions the investigator presented prescriptions to the Defendant and requested that Defendant dispense drugs to the investigator other than the drugs prescribed.  The investigator told Defendant that he needed the drugs so that he could make money.  Defendant generally complied with the investigator's requests, and on multiple occasions he dispensed Amitriptyline and Clonidine instead of the prescribed drugs.  Subsequent to each transaction in the second phase, Defendant submitted reimbursement requests to Medicaid that indicated that he had dispensed the prescribed drugs to the fictitious person.  Defendant received reimbursements from Medicaid pursuant to this arrangement which, in aggregate, exceeded three thousand dollars during a one year period.

On appeal, Defendant argued that the evidence was insufficient to support the HCF 4° conviction because the People failed to establish the falsity of the information provided to Medicaid.  The First Department cited People v. Ramirez, 33 A.D.3d 460 (1st Dept. 2006), for the proposition that evidence is to be viewed as a whole when determining support for a conviction.  The court held that § 177.05 did not require the People to prove the chemical composition of the drugs.  The court indicated that the falsity of the information turned on the identity of the recipient and not the identity of the drug.  Although the court acknowledged that the evidence concerning the March 6, 2008, incident was weak, it found that this weakness was alleviated by considering the nature of the relationship between the investigator and Defendant established and cultivated during the combined phases.  Thus, the court affirmed the conviction on the ground that the evidence was sufficient when examined as a whole.

In dissent, Justice Catterson contended that the evidence proffered was sufficient to support a HCF 5° conviction but insufficient to support a HCF 4° conviction.  The dissent focused on the evidence concerning March 6, 2008; the dissent argued that because the evidence as to this particular date's transaction was weak, the People were not able to establish the $3,000 threshold for HCF 4º.  On March 6, 2008, the investigator presented a prescription for a drug called Sustiva, but requested that Defendant instead dispense “the usual pills.”  Per the arrangement established during the first phase, “the usual pills” meant Amitriptyline and Clonidine.  Defendant dispensed a bottle of pills labeled Sustiva.  The dissent argued that because the People failed to proffer the actual identity of the pills there was insufficient evidence to support the conclusion that Defendant falsely informed Medicaid that he dispensed Sustiva.  Additionally, the dissent argued that the evidence concerning March 6, 2008, was insufficient to conclude that Defendant knew on that day that the investigator was not delivering the drugs to the person named on the prescriptions.  The dissent agreed that the evidence concerning the other dates in question was sufficient to support the conviction, but by excluding the March 6 reimbursement the aggregate reimbursement amount dropped below the three thousand dollar threshold.  Thus, the dissent would have reduced the conviction. (MM/LC)

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