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Drug firm
settles state suit
for $4 million

The medical recovery
settlement is the largest
ever obtained

---

By Helen Altonn
Star-Bulletin

Two former employees of a Honolulu pharmacy will receive $750,000 as part of a $4 million settlement of a state lawsuit stemming from their reports of medical fraud at the company.

Settlement of the case against pharmaceutical giant Bergen Brunswig Corp. was announced today by Attorney General Earl Anzai.

Bergen owns and operates Interstate Pharmacy Corp., including IPC Liliha and seven other pharmacies in Hawaii that supply prescription and nonprescription drugs to state long-term care facilities.

The unidentified employees complained that they were required to recycle and reuse pills returned from nursing facilities in violation of state and federal laws governing medical assistance and health care payments to the poor and elderly.

Both employees had worked for IPC Pharmacy/Liliha, 1027 Hala Dr., Honolulu -- one from December 1995 until last July and the other from September 1993 through last October.

Attorneys Thomas Grande and Warren Price III represented the employees and the state in the civil complaint against Bergen Industries.

Grande said the $4 million medical recovery settlement is the largest ever obtained by the federal or state governments in Hawaii.

He represented a Kapiolani Home Health Services employee in the second largest settlement -- $3.4 million paid by Kapiolani Health in 1999 to resolve false billing allegations. That employee received $630,000 from recovered Medicare and Medicaid money under the federal False Claims Act.

IPC Pharmacies is "by far the largest distributor to the state's long-term care facilities," said deputy attorney general Michael Parrish. "They've been doing some very questionable things for quite a few years now."

He said the Bergen case is the first "qui tam" lawsuit (involving people who report false claims submitted to government) under a law passed by last year's Legislature.

The Hawaii False Claims Act encourages citizens to report fraudulent claims submitted to the government by sharing money recovered.

The $4 million settlement includes restitution of excessive government payments to Bergen, the employees' share, penalties and investigative costs, Parrish said.

The employees were pharmaceutical technicians who filled prescription orders. Instead of destroying unused drugs returned to the facility for any reason, they were told to repackage them, they reported. The pills then were resold to the nursing homes.

Grande said the whistle blowers asked not to be identified to protect their privacy, but they issued a statement saying:

"We are proud that we did the right thing by reporting this problem to the state of Hawaii. This was not an easy thing to do, but we hope that this serves as an example for other people to come forward to report fraud."

Grande noted, "Workers in Hawaii are very loyal to their employers. It takes a great deal of courage for anyone who has uncovered fraud to report it."

He said billions of dollars each year are billed fraudulently to the Medicare and Medicaid public health programs.

"It is only by individuals such as these two courageous employees coming forward that we are going to stop companies from defrauding the government."

Grande also praised Anzai's department and particularly Dewey Kim Jr., head of the Medicaid Fraud Unit, and his staff for their efforts to eliminate such practices.