Thursday, September 24, 2009

Pharmacy Owner Sentenced in Manhattan Federal Court to 78 Months in Prison for Medicaid Fraud

On September 23, 2009, the former owner of a Manhattan pharmacy, Yefry Burgos, 33, was sentenced in Manhattan federal court to 78 months in prison and ordered to pay $3,024,822 in restitution to the New York State Medicaid Program ("Medicaid"). The sentence was imposed by United States District Judge William H. Pauley III in the Southern District of New York.

Mr. Burgos' sentence comes after his guilty plea on March 23, 2009, in which he plead guilty to health care fraud for billing Medicaid for millions of dollars in medications that were not actually dispensed to Medicaid beneficiaries and to paying beneficiaries a kickback to use their billing information. The pharmacy's manager, Lourdes Bastardo, plead guilty to health care fraud on September 11, 2009 and is awaiting sentencing.

According to documents filed in this case and statements made during court proceedings, the background in this case is as follows:

Mr. Burgos owned Coral Pharmacy, a now-defunct pharmacy located at 4126 Broadway in Manhattan. Between December 2006 and January 2008, Coral Pharmacy billed Medicaid for prescription medications that were never dispensed.

Mr. Burgos and and Coral Pharmacy's manager, Lourdes Bastardo, purchased drug prescriptions from Medicaid beneficiaries for a fraction of the amount the Medicaid Program would reimburse to the pharmacy. In order to pay the beneficiaries cash, Mr. Burgos visited banks where Coral Pharmacy maintained its accounts to withdraw, on approximately a daily basis, thousands of dollars in cash—delivering a substantial portion to Ms. Bastardo to buy the prescriptions.

The pharmacy then submitted reimbursement claims to Medicaid for the full value of the drugs it falsely claimed were provided to Medicaid beneficiaries.

While imposing the lengthy sentence on Mr. Burgos, Judge Pauley stated that the defendant was "a poster child for part of the problem with the health care system," and "a predator who needed to be curbed."

Attorney Comments: There are a couple of notable points regarding this case. First, the patients (or beneficiaries) are involved. If the government wants to reduce health care fraud, there needs to be focus on the beneficiaries who are selling prescriptions or Medicare/Medicaid cards for cash. These beneficiaries need to be educated and learn that they could be prosecuted for health care fraud. Otherwise, the problem will continue.

Second, this is a trend of long sentences for white collar and health care fraud cases. Considering this was a guilty plea, the 78 month sentence is long and the Judge's comments show a tough stance on these cases.

Third, this was a joint federal-state investigation involving the Federal Bureau of Investigation, the New York City Human Resources Administration's Bureau of Fraud Investigation, and the Office of the Medicaid Inspector General of New York State. In California, this is handled by the California Medi-Cal Fraud unit of the Department of Justice. 

Any questions or comments should be directed to: Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in health care fraud cases. Their website is:


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