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48 Charged In Multimillion-Dollar Medicaid Fraud Case

$11.7 million worth of prescription pills seized from alleged aggregator (credit: Handout via Juliet Papa/1010 WINS)

$11.7 million worth of prescription pills seized from alleged aggregator (credit: Handout via Juliet Papa/1010 WINS)

CBS New York (con't)

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NEW YORK (CBSNewYork) – Federal agents and NYPD officers arrested 48 people Tuesday in a multimillion-dollar Medicaid fraud case that spans a dozen states but is centered in New York City.

The alleged scheme involved high-priced prescription drugs typically used to treat HIV, asthma, and schizophrenia, authorities said.

1010 WINS’ Juliet Papa reports

Instead of using the drugs, Medicaid recipients allegedly sold them to so-called aggregators, working out of bodegas and street corners, in Washington Heights and parts of the Bronx, according to court papers.

WCBS 880’s Irene Cornell On The Case

The drugs would then be sold to a black market network that would relabel and re-bottle the drugs before selling them to pharmacies and unsuspecting customers, authorities said.

The drugs involved are non-addictive but were often resold beyond their expiration dates.

Some would sell for nearly $2,000 a bottle, 1010 WINS’ Juliet Papa reported.

Sixteen defendants arrested in New York and New Jersey are expected to be arraigned in Manhattan federal court on Tuesday. Nineteen other defendants were arrested in Pennsylvania, Massachusetts, Florida, and Texas. The remaining defendants charged are at large.

“The scheme to collect, aggregate and resell costly prescription drugs was bad medicine in three ways: Profiting so obscenely by breaking the law is the very definition of unjust enrichment,” FBI Assistant Director-in-Charge Janice K. Fedarcyk said in a statement. “The scheme was theft, plain and simple, from a program funded by taxpayers.”

Fedarcyk added that the scheme posed serious health risks at both the collection and distribution ends.

“People with real ailments were induced to sell their medications on the cheap rather than take them as prescribed, while end-users of the diverted drugs were getting second-hand medicine that may have been mishandled, adulterated, improperly stored, repackaged and expired,” Fedarcyk said.

Medicaid lost more than $500 million, officials said.