Justice Department Charges 2 New York Pharmacy Owners In $30 Million COVID Fraud Case

Two owners of a dozen New York City-area pharmacies have been charged for their reported involvement in a $30 million health care fraud and money laundering scheme, a press release Tuesday (Dec. 22) from the Department of Justice said.

The release says the two men, Peter Khaim, 40, and Arkadiy Khaimov, 37, both of Forest Hills N.Y., allegedly exploited emergency codes and edits in the Medicare system to submit fake claims for expensive cancer drugs not ordered or provided by medical professionals.

According to the release, Khaim and Khaimov allegedly paid others to pose as the owners of pharmacies, hiring pharmacists to pretend to be supervisors, in order to obtain pharmacy licenses and credentials. Once the pandemic hit in March, they reportedly began profiting off it by using COVID-19 “emergency override” billing codes to put in fake claims for drugs with wholesale prices in the tens of thousands, the release says.

The men were charged with “one count of conspiracy to commit health care fraud and wire fraud, and one count of conspiracy to commit money laundering. Khaim was separately charged with two counts of concealment money laundering and one count of aggravated identity theft. Khaimov was separately charged with two counts of concealment money laundering.”

“The defendants allegedly carried out a $30 million health care fraud and money laundering scheme, siphoning funds meant for patients during the COVID-19 pandemic,” said Special Agent in Charge Jonathan D. Larsen of IRS-Criminal Investigation (IRS-CI). “While Americans across the country are in dire need of medical and financial assistance, the defendants allegedly used the stolen proceeds to purchase real estate and luxury items. IRS-CI and our law enforcement partners will continue to work tirelessly to expose COVID-19 schemes and bring those responsible to justice.”

Fraud has been a persistent issue throughout the pandemic, and healthcare systems have a particularly difficult time of dealing with it as they’ve had to focus most of their resources on helping sick people this year. Fraud, waste and abuse costs in the health care systems are often in the hundreds of billions per year, because of the numerous different parties involved. PYMNTS writes that implementing more artificial intelligence could help do away with the issue.