Unethical pharmacy owner arrested

The former owner of Davis Ethical Pharmacy was arrested on Sept. 24 for allegedly defrauding the state of $232,000 after the scam was uncovered in two audits by State Comptroller Thomas P. DiNapoli’s office.

William Davis, 62, the former owner of Davis Ethical Pharmacy, was charged with grand larceny in the second degree, a class C felony, for allegedly sending phony prescription records for reimbursement to Medicaid and the New York State Health Insurance Program (NYSHIP) from 2008 through 2011. Davis, who currently resides in Lake Ariel, Penn., was arraigned in Nassau County District Court. He was originally accused of the fraud after two audits by the comptroller in 2013 uncovered the malfeasance, but charges were not filed until now.

“Thanks to our joint efforts with law enforcement, Mr. Davis’ four-year fraud was in vain and the money he stole will be returned,” DiNapoli said. “This serves as a warning to those who might consider health care rip-offs.”

The arrest follows a joint investigation by the comptroller, the Nassau County District Attorney and the state Department of Financial Services (DFS). The improper payments were exposed when the comptroller’s auditors sampled 840 of the nearly 60,000 claims paid to Davis Ethical, which were valued around $7 million.

In one instance, the supposed prescribing physician was deceased when the prescription was written. In another, United paid Davis Ethical $2,688 for an Aciphex prescription for acid reflux disease, though the member named was not the prescribing physician’s patient. Davis Ethical also billed excessive quantities for 23 other prescriptions, overcharging NYSHIP $11,942 for them.

“The defendant claimed to own and operate an ethical pharmacy, but allegedly he stole more than $230,000 from the taxpayers of New York by submitting fraudulent billing claims,” Acting Nassau County District Attorney Singas said. “Thanks to the hard work of the State Comptroller’s Office, the NYS Department of Financial Services and our office, the defendant will now have to answer for his alleged crimes.”

NYSHIP provides health insurance to some state and local government and school district employees and their families. The state Medicaid Program provides prescription drug coverage for enrollees. During the audit period, Medicaid paid Davis Ethical $776,849 for 7,053 claims. Davis sold the business in December 2011.