MEDICAID FRAUD: DRUGSTORE CHAINS SCRUTINIZED

      State and federal officials are investigating "allegations
 that pharmacies nationwide may have billed Medicaid for
 undelivered prescriptions worth an estimated $26 million a year,"
 Scripps Howard/Arizona Republic reports.  The fraud allegations
 originated in several "whistle-blower lawsuits" filed against two
 of the nation's largest drugstore chains, Eckerd and Walgreen. 
 Louis Mueller, a pharmacist employed by Eckerd in Florida, filed
 suits in California, Florida, Illinois and Tennessee -- "the only
 states that allow individuals to recover money for reporting
 false claims filed against the government" --alleging that
 drugstore chains regularly billed Medicaid for prescriptions that
 were not completely filled.  Mark Schlein, the director of the
 Florida attorney general's Medicaid fraud office, emphasized that
 the investigation prompted by the lawsuits is an "industrywide
 issue" involving more than Eckerd and Walgreen.  Eckerd officials
 declined to comment on the issue, but a Walgreen spokesperson
 said the company "denies the charges and is prepared to defend
 itself in court."
      THE ALLEGED PROCESS
      In the Illinois suit, which has been unsealed, Mueller said
 that pharmacists working for Walgreen "commonly don't have enough
 pills to fill prescriptions because of lean inventories."  As a
 result, pharmacists partially fill a prescription and ask
 patients to return later for the remainder.  Many patients never
 return, "so in thousands of cases Medicaid is billed for the full
 prescription while only a partial prescription is dispensed,"
 Mueller charged in the suit.  Illinois officials joined Mueller
 in the suit, estimating that the state paid for 232,000 so-called
 "short" prescriptions in 1995, "costing the state and federal
 government ... more than half a million dollars in overcharges." 
 The suit says the pharmacies' practices amount to "false claims
 against the government," and states that Walgreen could be fined
 as much as $2.3 billion for the 1995 claims alone.  If all chain
 drugstores "short" prescriptions at the same rate as the Illinois
 suit charges, Scripps Howard/Arizona Republic notes that "the
 annual losses to Medicaid nationwide could top $26 million a
 year."
      SETTLEMENTS?
      Mueller is eligible to receive up to 25% of any money
 recovered through court action or settlement.  Illinois officials
 are reportedly in settlement talks with Walgreen, and a
 settlement is "under way in Florida with Eckerd."  Mueller also
 filed a federal suit against the two pharmacy chains.  Though
 federal officials did not comment on the case, Schlein said a
 "'global' resolution is being sought to settle claims against all
 pharmacies involved" (O'Connell, 9/6).