Law Enforcement Track:Law Enforcement Responses to

Fraud Rings, Burglaries and Robberies

Presenters:• Patricia Daugherty, JD, Assistant District Attorney,

Milwaukee County (WI)• Scott Simons, Task Force Officer, U.S. Drug

Enforcement Administration• Ronald Friedman, JD, Partner, Lane Powell PC

Moderator: Jackie L. Steele, Jr., JD, Commonwealth Attorney, 27th Judicial Circuit, Kentucky, and Vice Chair, Operation UNITE Board of Directors

Dislosures

• Patricia Daugherty, JD, has disclosed no relevant, real or apparent personal or professional financial relationships with proprietary entities that produce health care goods and services.

• Scott Simons has disclosed no relevant, real or apparent personal or professional financial relationships with proprietary entities that produce health care goods and services.

• Ron Friedman, JD, has disclosed no relevant, real or apparent personal or professional financial relationships with proprietary entities that produce health care goods and services.

• Jackie L. Steele, Jr., JD, has disclosed no relevant, real or apparent personal or professional financial relationships with proprietary entities that produce health care goods and services.

Learning Objectives

1. Prepare participants to identify organized Rx drug fraud.

2. Outline the procedures for investigating and prosecuting an Rx drug fraud ring.

3. Describe a law enforcement initiative that eradicated pharmacy burglaries and robberies in Seattle.

Tip of the Iceberg: Investigating and

Prosecuting Organized

Prescription Fraud Rings

Assistant DA Patricia Daugherty (Milwaukee County)

TFO Scott Simons (DEA/Greenfield PD)

Financial Disclosure Statement

ADA Patricia Daugherty and TFO Scott Simons have disclosed no relevant, real or apparent

personal or professional financial relationships with proprietary entities that produce health

care goods and services.

Learning Objectives:

1. Prepare participants to identify organized Rx drug fraud.

2. Outline the procedures for investigating and prosecuting a Rx drug fraud ring.

Scope of The Problem

• Milwaukee County, WI

• From 2010 to 2011, saw approx. 75% increase in criminal case referrals for RX Fraud cases.

• Pre-WI PDMP

• Office established RXDO position @ HIDTA:

• Focus on RX cases, overdose, heroin trafficking, and Len Bias homicides

RX Fraud-Harms

• Cost to the Healthcare system

• Harder for legitimate patients to get needed medications

• Feeds gray market perpetuating addictions and harm

• Significant profit margins

RX Fraud:

• RX Fraud can include:

– Passing fraudulent prescriptions

– Doctor Shopping

– Institutional/Employee diversion

• Today: Focusing on fake prescriptions

Kinds of RX Fraud Org.

• Individuals

• Small Groups

• Large Organizations

– Our focus today

Structure: Large RX Fraud Rings

Runners

• Can be users, getting pills for passing

• Usually paid only a few $$

• Insured to ↑ $$ profits

Recruiters

• Paid more than Runners

– They are usually not drug users

• Responsible for serving as the middleman

– Identifying/Recruiting Runners

– Obtaining Name/DOB for scripts

– Transporting/Monitoring Runners at Pharmacy

– Obtaining the pills and providing to the main actor

Manufacturers

• Make/obtain the fake prescriptions

• Obtain the pills from Runners/Recruiters

• Involved in the redistribution of the pills to end users or street dealers

• Profits the most from the ring

• Unlikely to be a drug user

Profitability

• Script Paper/Ink: $1

• Runner Insurance Co-Pay: $1

• Payment to Runner ($50) and Recruiter ($100)

• Value of 1 Rx (180 Oxy 30mg): $3600-$5400

• Total Cost ($152) vs Potential Profit ($5400)

– 97% profit.

– Significantly higher than street drugs.

Possible Charges

• Obtaining CS by Fraud

• ID Theft

• Medical Assistance/Insurance Fraud

• Forgery/Uttering

• Delivery/Possession With Intent to Deliver

• Theft

• Possession

Elements

• Def. possessed a substance (Oxycodone)

• Substance (Oxy) is a controlled substance

• Def. knew the substance was controlled

• Def. obtained possession of Oxy by misrepresentation made with the intent to deceive another and with intent to induce that person to rely and act thereon.

• Pharmacist was deceived by the misrepresentation

Characteristics of Fake Scripts

• Stolen Pad vs. Computer Printed

• May use accomplice phone number in place of the doctor’s actual number

• Frequently printed on legitimate prescription paper that is widely available from office supply stores

Proving It

• Presentation will discuss investigation techniques and considerations

• All designed to create prosecutable cases

• These are complex and involved investigations

Frequency

• During 3 year period:

• 2 very large scale rings identified (30+ defendants, thousands of pills)

• Many medium sized rings (10+ defendants)

• Just in Milwaukee County, Wisconsin

• So these organizations are out there, we just need to identify them.

Computer Printed

• Most Common

• Manufacturers will create a “template” once they hit upon a successful format

• This makes identifying connections and patterns easier, but…

• …also reduces the likelihood of detection

Doctor Information

• From a valid script

• Use of a fake DEA # (some pharmacies don’t check)

• Inside person within doctor/pharmacy office

• DEA #s published on the internet

Identifying Patterns and The Scope of the Organization

Investigation Techniques

• Pharmacy/Doctor Referral

• Pharmacy Records

• PDMP

• Telephone Records/Court Orders

• Use of Confidential Informants

• Suspect Interviews

• Other Techniques

Referrals from Doctor/Pharmacy

• Most common way fraud is initially identified

• Build relationships with Dr/Pharmacy Staff

– Have them report to you when instances of fraud occur

– Have pharmacies flag suspicious script forms in their system and share with regional branches

• Crime Alert Programs or LEO Email Groups

Pharmacy Resources

• Pharmacy Video

– Who are they with in the store?

– Video of parking lot: what kind of car? Someone driving them?

• Script signature logs, copies of IDs, discount cards, and insurance cards

• Cash Register records

– Credit card payment Court order for records

PDMP

• May need a court order depending on state law

• A doctor can review their own PDMP records and report instances of fraud to you

• Run PDMP on 1 suspect to identify other doctors’ names being used– This helps increase the scope of the ring:

• Suspect 1 – PDMP Doctor 2 – PDMP Suspects 2, 3., 4…

Telephone Evidence

• If suspects are using an accomplice phone number on the scripts, get a court order for subscriber info, means of payment etc.

• Warrant for physical phone dump

• Warrant for phone records/cell towers

– ID suspect’s common contact

– Who did they call before, during, after the fraud?

– Cell tower records Suspect in area of pharmacy

Search Warrants

• Warrant for a Residence

– Looking for computers

– Pharmacy paperwork/bottles/drugs/receipts

– Drug ledgers with patient/doctor information

– Calendars showing when scripts are ready

• Keep in mind, this may be electronic (phones etc.)

GPS and Other Orders

• GPS on your suspects’ cars.

– Where are they going? Different Pharmacies?

• Warrant for computers

– Electronically stored patient/doctor/pharmacy information

– Prescription Templates

– Map searches for pharmacy locations

Confidential Informants

• CI buy of scripts from suspect

• Recorded Phone Calls

• Establish PC for warrants/court orders

• Note: Inadvisable to allow CI to deliver real/placebo pills to suspect

Other Techniques

• Review LEO records for suspect’s known associates

– Frequently, in these rings, the suspects are known to each other. Check records of traffic stops etc.

• Facebook/Social Media and compare with PDMP

• Jail Calls

• Fingerprint the fake scripts

Suspect Interviews

• Go beyond the basics

• How did they learn to do this?

• Where did they get the script/paper from?

• How did they get the doctor/patient information?

• Why did they select a specific pharmacy?

• What did they do with the pills afterward?

• Was insurance used?

Interviews

• Who recruited them?

• Who drove them to the pharmacy?

• Who else was in the car? See any scripts?

• What did they profit from this crime?

– Paid in drugs or $$

– For Main Actor: How much total profit? Avenues of pill sales?

Prosecution Considerations

• Focus has been on a thorough investigation, which creates a good, prosecutable case

• Consider logistical complications

• Pros/Cons of “Round Up”

• Detailed Charging Documents

• It is all about organization

Trial/Resolution

• With so many defendants, impractical to do trial all at once

• Break down into similar groups (e.g. recruiters) or specific locations (all at Pharmacy A)

Issues

• Medical Records/Privacy• Could be a whole presentation and very state

specific• WI medical records privacy law is far more

restrictive than HIPAA• Fraudulent/Fake prescriptions are not medical

records, and under WI law, do not implicate records concerns

• But be aware that a defendants RX history from the pharmacy/PDMP may be protected

Issues

• Be aware of victim rights issues – Most commonly insurance companies or State

Medicaid

– Possible issues with Restitution in criminal cases

• Make sure to get certifications for all business records…in most courts you can admit that evidence without having to call a custodian of records

Sentencing Considerations

Challenge is to get judges to view these cases as meaningful and to

appreciate the harms

Sentencing

• Impact on Doctor/Pharmacy time/resources

• Impact on businesses

• Impact on legit patients

– Doctors less likely to RX

– Pharmacy scrutinizing due to fraud

– Insurance company investigations

Sentencing

• Perpetuating the Addiction/Misery of Others

– Even lower level actors play a key link in the chain of distribution

• Increase in property crimes, overdose, heroin, drugged driving etc.

• Impact on Medical Assistance Programs

Case Study: Operation Pill Crush

61 Defendants, 1 Round Up

**All defendants not yet convicted are presumed innocent of all charges

Organization

• Primarily 30mg Oxycodone

• 4 main actors (including 1 pharm tech)

• 10 Recruiters

• Dozens and Dozens of Runners

Profitability

• Several hundred fake Oxycodone prescriptions over the course of 18 months

• Usually for 180 pills Oxy 30mg

• Street value approx. $480,000-$960,000

• 12+ doctors’ names used

• Medical Assistance and Insurance Fraud

Organization

• Runners paid between $15 and $250 per script

• Recruiters paid between $100 and $250 per Runner

• 99% of scripts computer printed, in similar format

• 4 main actors federally indicted, other 57 = state prosecutions

Sentences

• Ranging from low amounts of probation to significant prison sentences

• Restitution for insurance companies and State Medicaid programs

Questions ??

• ADA Trish Daugherty

– pdaugherty@wisconsinhidta.org

– Patricia.Daugherty@da.wi.gov

– 414-278-5183

• TFO Scott Simons

– Scott.F.Simons@usdoj.gov

– 414-336-7989

Law Enforcement Responses

Burglaries and Robberies In Washington State:A Prosecution Model

The Seattle Experiment

Presented ByRonald J. Friedman,

Lane Powell, PC

Disclosures

Ron Friedman, JD, has disclosed no relevant, real or apparent personal or professional financial relationships with proprietary entities that produce health care goods and services.

Ron is a former Assistant United States Attorney in the Western District of Washington.

Learning Objectives

1. Prepare participants to identify organized Rx drug fraud.

2. Outline the procedures for investigating and prosecuting an Rx drug fraud ring.

3. Describe a law enforcement initiative that eradicated pharmacy burglaries and robberies in Seattle.

DEA Incidence Report Database

• Washington 2007 / 67 Burglaries and Robberies• Washington 2008 / 91 Burglaries and Robberies

(1,262 stores)

• Oregon 2007 / 24 Burglaries and Robberies• Oregon 2008 / 13 Burglaries and Robberies

(705 stores)

• New York 2007 / 15 Burglaries and Robberies• New York 2008 / 16 Burglaries and Robberies

(4,468 stores)

• Illinois 2007 / 20 Burglaries and Robberies• Illinois 2008 / 14 Burglaries and Robberies

(2,342 stores)

The Problem

• Lattes fine, Burglaries & Robberies Not

• Two Parts to Problem:

»Diversion Side

»Human Side: Pharmacists & Customers

Strategy to Address

• 1. Assembled Joint Task Force (OCDETF: “Operation Midnight Express”

• 2. Federal Leadership

• 3. To Leverage:• Resources

• Investigative Techniques

• Statutory Exposure

Statutory Exposure

• Title 18, USC 2118(a)

– “Whoever takes or attempts to take, from the person or presence of another, by force, violence, or intimidation, ANY quantity of a controlled substance from a DEA registrant =

A felony: punishable by 20 years imprisonment(Pharmacy Robbery)

Statutory Exposure

• Title 18, USC 2118(b)

– “Whoever, without authority enters, or attempts to enter the business premises of a DEA registrant with the intent to steal ANY quantity of a controlled substance =

A felony: punishable by 20 years imprisonment(Pharmacy Burglary)

Resources

• DEA – Multiple Diversion Investigators

• Local Police in Idaho, Oregon, and California

• Regular Meetings to Discuss New Events

• Item 1 on Agenda: Figure out what was happening and why????

Investigative Techniques

• Began w/ focus on Burgs.• Compiled database of ALL incidents• Identified common Modus Operandi

– Means of entering– What taken– Counter-Surveillance techniques used by groups– Repeated patterns of targeting– Where were we seeing drugs end up

• Identified suspected Cell Phones and Used Pens and Trap and Trace

• Assembled Charts of Names and Faces (>40)• Watched in Real-Time

Finally, a Break, Thanks to Walmart

• Phone Call to Pharmacy in Oregon at 3AM

• Tarp found at junction box

• Walmart Sold Tarp and Bolt Cutters

• Walmart Produced Film

= Suspect and Ringleader fully identified.

Continued Investigation

• Continued Monitoring of Phones

• Identification of Suspected Garage Pharmacy

• Search warrant and seizures

• Crossroads re. Approach:• How to Reach the Largest Targeted Audience of Crooks

and Solve the Greatest number of Unsolved Crimes

Send Invitation Letter

• Would you like to participate in the making of your future or would you like your future to happen to you?

• One by one, one after another…

• Laid out over 150 robberies and burglaries on map over 4-State area

• 48 people identified and pleaded guilty– Burglars, Sellers, Protectors– Child of alarm company manufacturer

Sentencings and Seizures

• 5 to 10 years in prison

• Orders to pay restitution to each pharmacy for the value of the drugs taken and nay damage caused to the building

• 25 firearms recovered

• 48,000 dosage units of controlled substances seized

• $240,000.00 criminal assets forfeited, restitution orders entered

Key to Success was How We Handled the Investigation

• Philosophy was not just to arrest a group of people, pat ourselves on back and go home

• That achieves nothing

• Point was to change the picture… change the dynamic

• And leverage the results to widest audience

Method

• Began with proffers and treating Ds with respect

• Heard their stories, sought their input

• Ds visited school and did press pieces

• Use press heavily, every guilty plea, every sentencing …

Key to Success was How We Handled the Investigation

• At end of burglary phase, we had to circle back on robbers

• Not organized…crimes of desperation

• 90% fleeing from scene

• Same approach to leveraging

Press Summary

• 30-40 press releases and articles in local and regional print media – including interviews of pharmacists

• NPR Spots featuring robbers and burglars

• National Media, Al Roker (“Generation RX”) (https://archive.org/details/MSNBC_20090705_190000_Al_Roker_Reporting)

BLANKETED THE MEDIA WITH MESSAGE

Final Step

• Met with pharmacy chains

• Serious meetings

• Focus on their protocols

Conclusion

• Numbers since, dramatically down.

• 20% of former numbers.

• But remember the bouncing ball and Unintended Consequences

Conclusion