IN THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT IN AND FOR LEON COUNTY, FLORIDA. Jury Trial Demanded COMPLAINT

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1 IN THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT IN AND FOR LEON COUNTY, FLORIDA STATE OF FLORIDA, OFFICE OF THE ATTORNEY GENERAL, DEPARTMENT OF LEGAL AFFAIRS, vs. Plaintiff, Case No. Jury Trial Demanded RAPHA ASSOCIATES, INC., a Florida Corporation, PATRICIA HAUSER, individually, and RODERICK HAUSER, individually, Defendants. / COMPLAINT Plaintiff, STATE OF FLORIDA, OFFICE OF THE ATTORNEY GENERAL, DEPARTMENT OF LEGAL AFFAIRS, files this complaint against Defendants RAPHA ASSOCIATES, INC., PATRICIA HAUSER, and RODERICK HAUSER (collectively referred to herein as Defendants ) and alleges: I. INTRODUCTION 1. This is a civil action to recover damages and civil penalties in an amount of at least $245, from Defendants for causing false claims to be submitted to the State of Florida s Medicaid program during the time period October 1, 2003, through July 30, The State of Florida seeks recovery under the Florida False Claims Act, , Florida Statutes, and the principles of common law. 3. This Court has jurisdiction of the causes of action set forth herein pursuant to the provisions of and , Florida Statutes, and venue is proper in Leon County pursuant to and , Florida Statutes.

2 II. PARTIES 4. Plaintiff, STATE OF FLORIDA, OFFICE OF THE ATTORNEY GENERAL, DEPARTMENT OF LEGAL AFFAIRS, (hereinafter the State ), is Florida s chief legal office and has the responsibility of protecting the State s property and revenue. The Office of Attorney General is acting through its Medicaid Fraud Control Unit ( MFCU ), which is federally mandated to conduct[] a statewide program for the investigation and prosecution of violations of all applicable State laws regarding any and all aspects of fraud in the Medicaid program. See 42 U.S.C. 1396b(q)(3). The Attorney General is authorized to seek the remedies sought in this complaint pursuant to (8)(d), Florida Statutes. 5. Defendant, Rapha Associates, Inc. is a closed-end pharmacy enrolled in the Medicaid program and is assigned Medicaid provider number Rapha Associates, Inc., is a Florida corporation which operates its main business in Hillsborough County, Florida. 6. Defendant, Patricia Hauser, is the president of Rapha Associates, Inc., and resides in Hillsborough County, Florida. Defendant Patricia Hauser directly participated in the acts and practices described herein, and directed and controlled the acts, practices or policies of the Defendant Rapha Associates, Inc. 7. Defendant, Roderick Hauser, is the vice-president of Rapha Associates, Inc., and resides in Hillsborough County, Florida. Defendant Roderick Hauser directly participated in the acts and practices described herein, and directed and controlled the acts, practices or policies of the Defendant Rapha Associates, Inc. III. THE FLORIDA MEDICAID PROGRAM 8. The Medicaid Program, enacted under title XIX of the Social Security Act of 1965, 2

3 42 U.S.C. 1396, et seq., provides funding for medical care for indigent individuals. The Medicaid program is a joint federal-state program in which the United States provides approximately one-half of the funding and the state provides the remaining one-half. See 42 U.S.C. 1396b. 9. The Florida Legislature has designated the Florida Agency for Health Care Administration ( AHCA ) as the single state agency authorized to make payments under the Medicaid program. See , Fla. Stat. A private corporation under contract with AHCA acts as the fiscal intermediary and is authorized to receive and process Medicaid claims on behalf of AHCA. To receive reimbursement for providing medical services to a Medicaid recipient, a Medicaid provider electronically or by paper transmits a claim requesting payment to the intermediary located in Tallahassee, Florida. Payment is made to the provider via electronic or paper warrant. 10. As a condition of receiving federal money to help fund the Medicaid program, each state is required by federal law (with narrow exceptions not relevant here) to operate a Medicaid Fraud Control Unit ( MFCU ). See 42 U.S.C. 1396a(61). Each MFCU must conduct[] a statewide program for the investigation and prosecution of violations of all applicable State laws regarding any and all aspects of fraud in the Medicaid program. See 42 U.S.C. 1396b(q)(3); see also (7), Fla. Stat. In the state of Florida, the MFCU is primarily responsible for the investigation and control of Medicaid fraud, and its investigators who have been certified under , Florida Statutes, are Florida law enforcement officers. See (17)(b), , Fla. Stat. IV. FACTS 11. The State of Florida, acting through its MFCU, conducted an investigation of the 3

4 Medicaid billing practices of Defendants. Investigation found that Defendants submitted false claims to Medicaid for brand name drugs that were in truth and fact compounded drugs or a rudimentary homemade mixture of certain chemicals found in the brand name drugs (hereinafter referred to collectively as compounded drugs ). Compounded drugs mislabeled by Defendants as brand name pharmaceuticals include: TOBI, Albuterol, and Pulmicort; all brand name drugs commercially available in Florida. Defendants filled prescriptions with the mislabeled and compounded drugs prepared by persons not licensed as pharmacists, despite physicians prescriptions calling for brand name drugs. Defendants submitted false claims to Medicaid for the compounded and mislabeled drugs in the amount of $116,605.64, and they were in turn reimbursed in the amount of $64, Additional false claims were submitted to Medicaid by Defendants for tobramycin sulfate powder in the amount of $29,442.34, and they were in turn reimbursed in the amount of $17, Tobramycin sulfate powder was purchased by Defendants from an outside supplier and used by Defendants to compound drugs mislabeled as TOBI. Defendants prepared and dispensed compounded drugs mislabeled as TOBI, despite physicians prescriptions calling for the brand name drug and the commercial availability of TOBI. 13. As Medicaid provider, Defendant Rapha Associates, Inc. must be in compliance with the Florida Medicaid Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook. See Fla. Admin. Code R. 59G ( Drug Handbook ). 14. Further, drugs are identified on Medicaid claims and the Medicaid computer system by the National Drug Code (NDC). The NDC is an 11-digit number, which identifies the manufacturer or supplier, the product itself, and the package size. Billing an NDC number other 4

5 than the one for the product dispensed is a false claim. See Drug Handbook, pages 6-1 and 6-2. Here, Defendants falsely identified the compounded drugs on their Medicaid claims by using NDC numbers for brand name drugs 15. Defendants had an affirmative duty to supervise the provision of, and be responsible for, goods and services claimed to have been provided, to supervise and be responsible for preparation and submission of the claim, and to present a claim that is true and accurate and that is for goods and services that (a) Have actually been furnished to the recipient by the provider prior to submitting the claim... and (e) Are provided in accord with applicable provisions of all Medicaid rules, regulations, handbooks, and policies and in accordance with federal, state, and local law. See (7)(a) & (e), Fla. Stat. (emphasis added); see also Florida Medicaid Provider General Handbook, at page 5-4 (spelling out the same requirements as contained in the statute). 16. Attachment 1 to this Complaint herein is a list of the false claims. The spreadsheet identifies the recipients (by a unique number for privacy purposes), the date of service of the claim, the date billed, the amount billed, the date paid, the paid amount, the NDC number, drug name, units of service, Medicaid provider number and name, and the warrant number and remittance voucher number. 17. At all relevant times, individual Defendants Patricia Hauser and Roderick Hauser knowingly conspired to submit and did submit the false claims contained in Attachment 1. As a result, the individual Defendants benefitted financially from reimbursements received from Medicaid. 18. Defendant Patricia Hauser knowingly misrepresented to Medicaid recipient(s) or their parents that compounded drugs dispensed by Rapha were in accordance with physicians knowledge 5

6 or consent, when in truth the physicians did not have such knowledge and actually prescribed brand name drugs. Patricia Hauser further directed pharmacists at Rapha to compound drugs. She also directed the purchase of compounding equipment by Rapha. 19. Defendant Roderick Hauser directly participated in compounding drugs at Rapha, although he is neither a licensed pharmacist or pharmacy technician. 20. Each time Defendants billed the Medicaid program or its designated intermediary, Defendants represented to the State of Florida that he has complied with all federal and state laws governing the relevant program. 21. Defendants ignored the billing criteria set forth by the Florida Medicaid Program and knowingly engaged in a pattern of submitting false claims to Medicaid. 22. As a result of the false claims presented or caused to be presented, the Medicaid program suffered least $81, in actual damages. 23. As investigation continues, the number of false claims identified by the state may increase and the State reserves its right to allege additional false claims and submit evidence of those false claims at the trial in this matter. COUNT I VIOLATION OF THE FLORIDA FALSE CLAIMS ACT FLA. STAT The State of Florida realleges and incorporates by reference paragraphs 1 through 23 as though fully set forth herein. 25. Defendants knowingly presented, or caused to be presented, false or fraudulent claims for payment to the Florida Medicaid Program. 26. As a result of Defendants conduct set forth in this Count, the State of Florida 6

7 suffered actual damages in an amount of at least $81, COUNT II CONSPIRACY TO VIOLATE THE FLORIDA FALSE CLAIMS ACT FLA. STAT The State of Florida realleges and incorporates by reference paragraphs 1 through 23 as though fully set forth herein. 28. Defendants knowingly entered into an agreement or understanding to present, or cause to be presented, false or fraudulent claims for payment to the Florida Medicaid Program in violation of (2)(c), Fla. Stat. 29. While the agreement or understanding was in effect, each Defendant knowingly did one or more of the acts as alleged herein for the purpose of carrying out or carrying forward the agreement or understanding. 30. As a result of Defendants conduct set forth in this count, the State of Florida suffered actual damages in excess of $81, COUNT III PAYMENT BY MISTAKE OF FACT 31. The State of Florida realleges and incorporates by reference paragraphs 1 through 23 as though fully set forth herein. 32. Had the Florida Medicaid Program known that Defendants improperly billed the Florida Medicaid Program for services not provided, the Florida Medicaid Program would not have paid Defendants for the claims submitted. 33. As a result of the improper conduct, the Florida Medicaid Program or its intermediary, paid monies to Defendants by mistake of fact and has been damaged by an amount of 7

8 at least $81, COUNT III UNJUST ENRICHMENT 34. The State of Florida realleges and incorporates by reference paragraphs 1 through 23 as though fully set forth herein. 35. As a result of their unclean hands and conduct, as described herein, Defendants were paid Medicaid funds to which they were not entitled. 36. As a consequence of the acts set forth above, Defendants were unjustly enriched at the expense of the State of Florida in an amount of at least $81, In equity and good conscience, Defendants should not be permitted to retain the monies wrongfully received. PRAYER FOR RELIEF WHEREFORE, Plaintiff demands that judgment be entered in favor of the State of Florida against Defendants as follows: a. On Count I, for treble the amount of the State of Florida s damages plus civil penalties of $10, for each false claim submitted; for reasonable attorney s fees and costs of this civil action; and for such other and further relief as the Court deems just and equitable; b. On Counts II and III, return of all funds paid by the Florida Medicaid Program or its intermediary to Defendants as a result of the improper billing submissions, prejudgment interest, costs, and for such other and further relief as the Court deems just and equitable; and c. On all Counts, for such other and further relief as the Court deems just and equitable. 8

9 DEMAND FOR JURY TRIAL Plaintiff respectfully demands trial by jury of all issues so triable. Respectfully submitted this day of, CHARLES J. CRIST, JR. ATTORNEY GENERAL Stephen V. Iglesias, FBN Scott J. Flint, FBN Assistant Attorneys General 3507 Frontage Road, Suite 325 Tampa, Florida (813) (813) (telecopier) 9