Iowa Pharmacist Acquitted of Insurance Fraud Charges in Hemophilia Drug Case

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Jurors acquitted an Iowa pharmacist of health care fraud, rejecting allegations that he fraudulently billed Iowa’s largest health insurance company for life-saving drugs sent to hemophilia patients.

The federal jury in Des Moines returned the verdict in the case of Michael Stein, the owner of Pharmacy Matters in Iowa City. It was a defeat for the U.S. Attorney’s office and Des Moines-based Wellmark Blue Cross and Blue Shield.

“We have looked forward for months to the opportunity to tell our side of this case to a jury,” Stein said in a statement. “My family and I are very happy that once we did that, justice prevailed.”

Prosecutors had argued Stein billed Wellmark for expensive drugs to treat hemophilia, an inherited disorder that causes internal bleeding, when his pharmacy actually did little or no work in dispensing those drugs. They argued his pharmacy acted as a “pass-through entity” for Florida drug companies who were seeking access to customers covered through the nationwide Blue Cross and Blue Shield network. Stein was a provider for Wellmark, and therefore part of the nationwide network.

Drugs from the Florida companies briefly passed through Stein’s pharmacy before going to Blue Cross and Blue Shield customers across the nation, prosecutors said, and then Stein would file claims for reimbursement with Wellmark. In a few cases, he billed for drugs that never passed through his pharmacy because they were sent directly to patients who needed them urgently to save their lives.

Stein’s attorneys argued that all of the patients who received hemophilia medication through Stein’s pharmacy were entitled to have it covered through a Blue Cross Blue Shield-affiliated insurer. They also said prosecutors failed to prove Stein made any false statements or intended to defraud Wellmark.

Attorney Mark Weinhardt, who represented Stein, told the jury that the case was a tragic and unjust prosecution that was driven by Wellmark.

“This is a contract dispute between a pharmacy and an insurance company that never should have gotten personal and never should have seen the inside of a criminal courtroom,” he said in a statement Monday.

A spokesman for U.S. Attorney Nick Klinefeldt declined comment on the acquittal.

The case has been unusual from the beginning. Stein’s pharmacy sued Wellmark in 2009 after the insurer refused to pay millions of dollars in reimbursements for so-called factor drugs that had been dispensed to hemophilia patients. Wellmark said those claims were not allowed under its contract.

There was also a lengthy civil trial in 2012. But just as an Iowa judge was preparing to rule last year, Stein was indicted criminally over the same claims that were at issue in the civil case. Experts disagreed on whether Stein was providing services for which he could bill Wellmark on behalf of covered patients.