by Eric Moch and Ryan Chancellor

America is in the grips of a lethal opioid epidemic, and law enforcement and insurance claims departments are on the front lines of the fight. Thechallenge is to ensure physicians have the freedom to prescribe necessary and responsibly priced medications while simultaneously ensuring that bad actors do not take advantage of the system to endanger the public with unnecessary and over-priced medications that pose real risks to public health while driving increases in insurance premiums. This column highlights a recent civil lawsuit by the United States of America and a case study, with a prescription record from an actual injury claim, to shine a spotlight on what modern prescription medicine fraud looks like in practice.

The Allegations: U.S.A. v. Spivack, Inc. et. al. 2:22 cv 00343 (U.S. Dist. Ct. E.Dist. PA)

The U.S. Attorney’s Office for the Eastern District of Pennsylvania has filed a civil lawsuit against Philadelphia-based pharmacy Spivack, Inc., which previously operated under the name Verree Pharmacy, and its former owner, pharmacist Mitchell Spivack, alleging that they engaged in a years-long practice of illegally dispensing opioids and other controlled substances, and systematic health care fraud. The lawsuit alleges that Verree and Spivack illegally dispensed unparalleled quantities of opioids and other controlled substances into the Philadelphia community. The complaint seeks civil penalties and civil damages, which could total in the millions of dollars, as well as injunctive relief.

The Government alleges that Verree Pharmacy, its pharmacist and then-owner Mitchell Spivack and other employees of Verree dispensed opioids and other controlled substances 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 struggling with addiction, excessive cash payments for the drugs, blatantly forged prescriptions, and other signs that the pills were being diverted for illegal purposes. The complaint alleges that Verree, 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, the Defendants allegedly made false statements to maintain a veneer of legitimacy and keep the pharmacy well-stocked. The complaint alleges that Spivack drew millions of dollars from the pharmacy while the public suffered the consequences, including one patient who overdosed and died next to Verree Pharmacy bottles from Spivack.

The lawsuit seeks to impose civil penalties and damages on Verree and Spivack under the Controlled Substances and False Claims Acts. If Verree and Spivack are found liable, they could face civil penalties up to $68,426 for each unlawful prescription dispensed, civil penalties up to $23,607 for each false claim they submitted to federal health care programs, and treble damages for the alleged health care fraud against federal programs.

This is a case worth tracking. Future editions of this column will update developments in the case.

Prescription Medication Fraud: A Growing Trend

SIU investigators and defense counsel by now are well acquainted with the rising prevalence of prescription medication fraud in the personal injury claim context. Of the many components of the modern organized medical fraud claim, unnecessary prescription medication, often from prescription/mail order pharmacies, can be as lucrative for perpetrators as it is be dangerous for patients. To be clear, prescription pharmacies can be true conveniences for people who cannot easily leave their homes, or who face language barriers to conversing with in-store pharmacists. Unfortunately, this segment of the healthcare system is also home to fraud.

The danger of overdose and death, of course, only arises when patients actually receive the medications for which they are billed. SIU investigations have revealed that, quite often, patients receive fewer medications than what appears on the pharmacy invoices. This is its own wrong: billing for medical services not rendered. Indeed, in this case, the Government alleges that a cornerstone of the Defendants’ scheme was a policy of “BBDF”, internal code for “Bill But Don’t Fill.”  When pharmacy employees saw that code in the computer system, they knew to bill for the medications without providing them to customers.

Prescription Medication Fraud in Practice: A Case Study

Prescription medication fraud of the sort at issue in this case is probably pretty easy to envision in theory, but what does it look like in the course of an injury claim? Actually, it can be easy to miss, and that is by design. Perpetrators go to great lengths to make it look mundane in hopes that a claim representative will miss it.

Consider this invoice, from an actual injury case I defended. I have redacted all patient and provider information from the invoice, but the remaining prescription and pricing information is real. This case involved a low speed vehicle collision after which the plaintiff alleged sprains and strains of her low back.


image of patient statement showing multiple medications charged on same day

Discovery in the case included the deposition of the treating doctor who purportedly prescribed these medications. His testimony was eye-opening in ways that nobody could possibly glean merely by looking at this invoice with no broader context.

He first revealed that he was only an independent contractor with the medical practice that ordered these medications for the patient, and that he ended his affiliation with the practice several months before the date of this prescription. This means that the medical practice was using this doctor’s personal DEA number to order controlled substances without his authorization or knowledge. This alone is a serious offense and fertile grounds for a civil recovery action. No claims representative would possibly know this merely by reviewing the invoice as part of a larger medical specials package from plaintiff’s counsel.

The specific combination of medications was of immediate concern even before the doctor’s deposition, and his testimony confirmed our suspicions. Note the combination of tramadol, hydrocodone and Ambien. This cocktail of narcotics is known on the street as the “Holy Trinity” and it is an especially dangerous combination, as the three drugs interact in a way that magnifies the effects of each individual drug. Moreover, the trio combine to suppress the central nervous system and a patient’s ability to breathe. This Holy Trinity can be lethal. Doctors prescribe it with extreme caution only when absolutely necessary.

Apart from the potential lethality of this combination, the doctor’s testimony revealed an even more troubling detail: although he did prescribe a number of dubious medications to this patient before he ended his affiliation with the medical practice, he never prescribed this trio for this patient, and he never would have. He was aghast at the realization that someone may have provided such a dangerous cocktail of drugs to someone with garden variety low back strains. He made clear that doing so was very dangerous and without medical basis. Apparently, after he left the practice, the practice continued ordering medications under his DEA number, and expanded the regimen far beyond what this doctor ever considered necessary or safe.

The good news in this case, if we may call it that, is that it was never clear this patient actually received these medications. She did not recognize the medications by name and did not describe any effects from any of her oral medications that resembled the mood-altering impact of this trio of drugs. Such is the grim nature of this sort of fraud: it is welcome news that a patient was merely charged for medical treatment she never received.

The prices for these drugs are astronomical; considerably in excess of what is usual and customary for the geographical region in which this patient lived. Healthcare pricing, and drug pricing in particular, can seem standardless in the U.S. healthcare system, but providers do have an obligation to charge usual and customary prices. For instance, charging over $1,000 for Terocin, a topical medicine arguably no more effective than over-the-counter lidocaine rubs that cost under $5 per tube at retail pharmacies, is indefensible. Anyone who testified that $1,000 or more for Terocin is a usual and customary charge would be inviting allegations of fraud. In fact, all of these medications are grossly over-priced.

This case settled for a fraction of medical specials after the doctor’s deposition. An organized activity investigation into the medical practice and the prescription service commenced soon thereafter.


The shrewdness of this type of medical fraud lies in the mundaneness of the invoicing. Perpetrators know very well that busy claims representatives may gloss right over routine-seeming medication invoices while evaluating a multi-faceted injury claim, and they create them accordingly. Success in combatting prescription medication fraud will always lie in good and continuous training of claims personnel and vigilant discovery in litigation. Pairing with experienced SIU defense counsel in cases like this won’t simply save money; it could very well save lives too.

This blog was originally published in SIU Today, the journal of the International Association of Special Investigation Units.

The post Prescription Medication Fraud: A New Federal Civil Suit and a Case Study to Highlight Real Dangers appeared first on HeplerBroom Blog.