The chief executive of the Omaha pharmaceutical services company where federal authorities executed a search warrant Wednesday is accused of participating in a scheme to defraud clients of a Texas health care system of $5.8 million.
The health care system alleges in a civil case that Douglas M. Pick of Omaha and his company, Pharmaceutical Technologies Inc., overcharged the health care system’s clients and agreed to pay bribes to a Texas hospital official in exchange for the official’s continued business. The hospital system alleges that from 2004 to 2011, Pick and the official conspired to add a $2.90 fee to the price of each prescription filled, with PTI redirecting at least $1.6 million of the money, 75 cents per prescription, to the official through a company incorporated for that purpose.
No criminal charges have been filed against Pick or PTI. A copy of the search warrant executed in Omaha was not available for public inspection. The search was led by the Office of Inspector General of the U.S. Department of Health and Human Services, a federal agency that investigates Medicare and Medicaid fraud and abuse.
Pick did not respond to requests for comment left at his office and home.
Dr. Bill Fleming, chairman of the board of PTI, said Monday the warrant is “related” to the lawsuit but not part of it. He directed questions to company attorneys. Fleming said PTI and its subsidiary are still operating.
“Everything is business as usual and we expect it to continue that way,” he said.
PTI attorney Brian Bewley of Husch Blackwell in Kansas City, Mo., declined to provide details of what investigators are looking for, saying, “We really don’t know.”
“There have been no findings of illegal or unlawful activity,” he said. “PTI is taking any allegations very seriously and, with respect to the federal government, we are cooperating with them.”
Bewley, formerly an attorney with the same agency that is investigating PTI, said to his and PTI’s knowledge it has never been under federal investigation before. He said he is not representing PTI in the Texas lawsuit. That attorney did not respond to requests for comment.
The Omaha company “provides legitimate and valuable services around the country,” Bewley said. “It’s made up of Omaha people and Omaha families that are very hardworking and responsible.”
PTI subsidiary National Pharmaceutical Services employs 175 people, most of them in Omaha. The business includes a mail-order pharmacy, a prescription drug discount card and pharmacy benefits management services. PTI was founded in 1993 by pharmacists including Pick, a Hartington, Neb., native who in 2011 received the Creighton University School of Pharmacy and Health Professions’ Alumni Merit Award.
According to court documents filed in the Texas case, PTI provided pharmacy benefit services to clients of HealthFirst, a subsidiary of the East Texas Medical Center Regional Healthcare System based in Tyler, Texas.
The health care system alleges that its employee, HealthFirst chief executive officer Thomas W. Slack, Jr., directed HealthFirst’s business to PTI in exchange for kickbacks.
Slack was fired for unrelated reasons in July 2011 and the fees were discovered by the CEO who replaced him. Slack died in December 2012, a month after making a written confession. Slack said that in 2004 he and Pick arranged in phone conversations to increase the “PTI Administrative Fee” to $2.90 per prescription, up from $2.15.
“Representatives of PTI and I agreed that PTI would pay me the $0.75 on the entire HealthFirst book of business and that PTI would pay the money to an airplane company I set up for that purpose called Sharper Aviation Solutions,” according to the statement signed by Slack. “PTI and Pick knew that I intended to and did keep the existence of the $0.75 payments from PTI to Sharper Aviation secret from my employer.”
The suit also names PTI’s chief financial officer, Angella Pieper, as a defendant.
PTI and Pick in court documents denied participating in any scheme and said emails and other documents produced as evidence do not support a claim of illegal activity.
An attorney for the health care system said he was not authorized to speak about the case. Jury selection in the case is scheduled for June 3, and a trial is expected to follow. The health care system said it has repaid HealthFirst clients for the $5.8 million in extra fees.
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