The
Court of Appeal, Fourth District, Division 3, recently upheld the California
State Board of Pharmacy’s revocation of a pharmacist’s license on the ground of
dishonest and fraudulent Medi-Cal billing practices. Hoang v. California State Bd. of Pharmacy,
Case No. G049275 (4th App. Dist., Div. 3, Oct. 9, 2014).
Plaintiff
Tue Ngoc Hoang, pharmacist-in-charge of Orange Pharmacy (Orange), appealed from
a judgment denying his petition for a writ of mandate. The petition sought to overturn a decision by
the Board of Pharmacy revoking his pharmacy license and Orange’s permit to
operate a pharmacy.
The
Board alleged that Orange (which was ineligible to bill Medi-Cal for filling
prescriptions) entered into an unlawful arrangement with another pharmacy
(Pacific) to secretly bill for filling Medi-Cal patients’ prescriptions through
Pacific, unlawfully receiving nearly $150,000 in Medi-Cal payments.
After
CalOptima (an entity administering Medi-Cal benefits in Orange County)
terminated Orange’s authorization to seek payment for filling Medi-Cal patients’
drug prescriptions (because Orange refused a new condition to allow on-site
reviews of its operations as part of a fraud prevention program), Orange entered
into a surreptitious arrangement with Pacific, whereby Orange used Pacific’s billing
authority to obtain payment for filling the drug prescriptions of persons
covered by CalOptima. Under the
arrangement, Orange created a set of labels containing its name, address, and
phone number for each CalOptima-qualified patient for whom it filled a prescription. Orange sent Pacific a record of having filled
the prescription and Pacific then created a duplicate set of prescription
labels for the same patients. Using its label,
Pacific applied to CalOptima for payment, thereby representing it had filled
the prescription. Upon receiving payment
from CalOptima for the drug prescriptions actually filled by Orange, Pacific
then funneled the money to Orange. To foster an appearance of legitimacy for this
arrangement, Orange and Pacific also created documents such as refill pharmacy contracts,
purchased and borrowed logs, returned to stock memoranda, and labels that
incorrectly stated that prescriptions had been transferred. The scheme was discovered during an
inspection of Pacific’s premises.
While
Hoang’s son (Orange’s business manager) insisted that Pacific was acting as
Orange’s refill pharmacy and that Orange had done nothing wrong, Pacific’s
pharmacist in charge admitted Pacific billed CalOptima for drug prescriptions
filled by Orange and denied Orange acted as a refill pharmacy for Pacific. Notably, Hoang himself did not testify at the
administrative hearing.
Although
the administrative law judge (ALJ) proposed a stayed revocation with five years
probation, the Board did not adopt the proposed decision and revoked Hoang’s
license and Orange’s pharmacy permit.
The Board noted that Hoang gained financially from the scheme; that the
misconduct was not isolated but occurred over the course of several months;
that the conduct was a deception against a public benefits program and
demonstrated a deliberate disregard of public health policy; and that Hoang
failed to acknowledge the misconduct, demonstrate any remorse, or undergo any
rehabilitation.
This
case demonstrates the danger of relying on an “I did nothing wrong”
defense. Although the violation of law in this case
appears to have been fairly clear, the laws and regulations are often murky
when applied to specific facts. While a
practitioner might genuinely believe he or she is operating in accordance with
the law, he or she must be open-minded to the possibility of being mistaken. It can be very costly to defend an
Accusation on an “innocence” defense—win or lose. And, in the case of a loss, the defense lends
itself to an inference of the practitioner’s indifference to the law, lack of
remorse, and failure to rehabilitate, which may provide a basis to increase the
level of discipline.
This
case also demonstrates the danger of failing to introduce evidence of
character, remorse, and rehabilitation.
While we will never know, had Hoang testified on his behalf (and there
might have been strategic reasons for him not to have done so) or had other
witnesses testify on his behalf as to his character, the Board might have
accepted the ALJ’s recommendation or issued discipline less severe than
revocation. Whether in negotiations
with licensing board, or at a hearing upon an Accusation, it is important for
the licensee to introduce evidence of character, community service, acceptance
of responsibility, and rehabilitation in order to view the licensee in the best
possible light.
Posted
by Ann C. Schneider, Law Office of Ann C. Schneider. Ms. Schneider provides representation to
licensed professionals throughout the State of California. Any questions or comments should be directed
to Ms. Schneider at aschneider@aschneiderlaw.com; (626) 789-1980. Ms. Schneider’s website is located at www.aschneiderlaw.com.
Ms.
Schneider focuses her practice on the representation of licensed professionals,
individuals and businesses in civil, business, administrative and family law
proceedings, as well as mediation.
