NW Alabama pharmacies owner ordered to pay $2.5M penalty

A federal judge has sentenced the previous owner of two northwest Alabama pharmacies to six month’s home confinement for obstructing a Medicare audit, ordered him to pay a $2.5 million fine and prohibited him from working in a pharmacy during his year on probation.

U.S. District Court Judge Virginia Emerson Hopkins sentenced Rodney Dalton Logan, 63, of Muscle Shoals, on one count of obstructing a 2012 federal audit of Medicare claims submitted by a pharmacy he owned. Logan pleaded guilty to the charge in July 2016.

Hopkins sentenced Logan to one year’s probation but included the six months of home confinement and the prohibition against him working as a pharmacist as special conditions of his probation.

“This defendant falsified documents so that his businesses could keep money improperly billed to Medicare under its Part D prescription drug component,” Posey said. “Medicare is the federal health insurance program for people 65 and older and for people with disabilities. I applaud the work of the investigative agencies and the prosecutors in this office who have worked at length to bring this defendant to justice.”

Logan owned Leighton Pharmacy Inc., which did business as Sheffield Pharmacy and Homecare in Sheffield, and Russellville Pharmacy in Russellville. At various times, he was the lead pharmacist at both Sheffield and Russellville, according to his plea.

According to court documents, including Logan’s plea agreement with the government, he obstructed a 2012 audit of the Sheffield pharmacy’s claims for Medicare reimbursement on compounded prescriptions as follows: CVS/Caremark Inc. administered prescription drug claims for Medicare Part D and served as an auditor on Medicare’s behalf. Part D prohibited reimbursement to pharmacies for compounded medications made using bulk pharmaceutical powders. Russellville and Sheffield nonetheless sought Part D reimbursement after February 2009 for compounded medications, primarily topical pain creams, made from bulk powders. The pharmacies, however, used the billing code for the tablet or capsule form of the ingredient.

In response to the 2012 audit, Logan caused Sheffield to submit falsified and misleading documents stating that medications in tablet or capsule form were used as ingredients for the compounded prescriptions.

Acting U.S. Attorney Robert O. Posey, Department of Justice Criminal Division Acting Assistant Attorney General Kenneth A. Blanco, FBI Special Agent in Charge Roger C. Stanton, Health and Human Services Office of Inspector General Special Agent in Charge Derrick L. Jackson, and Food and Drug Administration Office of Criminal Investigation Special Agent in Charge Robert J. West announced the sentence. FBI, HHS-OIG and FDA-OCI investigated the case, which Assistant U.S. Attorney Chinelo Diké-Minor and Trial Attorney William S.W. Chang of the Justice Department’s Criminal Division Fraud Section prosecuted.

Today, the Russellville pharmacy is operating in good standing under the ownership of Wes Mayfield, who also serves as pharmacist, and is no longer connected to Logan. Mayfield purchased the business in 2014 and rebranded as Russellville Drugs.