15 people arrested in Medicare scheme

Fifteen people were arrested Thursday on suspicion of taking part in an elaborate $18-million Medicare fraud scheme that officials say involved a Glendale medical clinic and a pharmacy in San Marino.

The scheme involved so-called “prescription harvesting,” in which Manor Medical Imaging Clinic and San Gabriel Valley pharmacies allegedly re-billed the government repeatedly for anti-psychotic medications, according to a federal criminal complaint unsealed Thursday.

A total of 17 people were named in the complaint. One person was arrested earlier this month, 15 were taken into custody during the early morning sweep, and one remains at large, according to the U.S. Attorney’s Office.

The U.S. Attorney’s Office alleged that prescriptions written by a doctor at a bogus branch of Manor Medical Imaging Clinic were funneled back to pharmacies via a fraudulent drug wholesale company.

Since the anti-psychotic drugs are significantly more expensive than many other mediations, authorities said the re-billing for the drugs — including Abilify, Seroquel and Zyprexa — can be lucrative.

The primary pharmacy allegedly involved in the scheme, Huntington Pharmacy in San Marino, billed Medi-Cal — the state name for the federal Medicaid program — nearly $45,000 in 2009, but that figure jumped to nearly $1.5 million in 2010, according to the U.S. Attorney’s Office.

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FOR THE RECORD: This corrects an earlier version that stated Medi-Cal was the state name for Medicare. Medi-Cal is the state name for the federal Medicaid program.
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Federal authorities alleged that the vast majority of those claims were for prescriptions written by Manor’s in-house doctor, Kenneth W. Johnson, 44, of Ladera Heights.

Federal authorities said it is the first case involving the use of anti-psychotic drugs to defraud government health-care programs.

Agents from the Drug Enforcement Administration scoured Huntington Pharmacy in San Marino as a “closed” sign caught a handful of customers and employees unaware.

Hours later, the pharmacy’s co-owner, 47-year-old Phic Lim of Pasadena, posted $100,000 bail in U.S. District Court in Los Angeles. He was forced to turn over his passport. His wife and business partner, Theana Khou, 39, of Pasadena, was assigned bail of $50,000.