Drug Enforcement Administration

Washington, DC

Jesse R. Fong, Special Agent in Charge

June 14, 2013

Contact: Public Information Officer

Phone Number: (202) 305-8426

Hagerstown Pharmacist Pleads Guilty To Health Care Fraud For Improperly Billing Medicare And Medicaid

BALTIMORE - David Russo, age 62, of Hagerstown, Maryland pleaded guilty today to health care fraud in connection with a scheme to defraud Medicare and Medicaid by billing for prescriptions that Russo knew were not written for a legitimate medical purpose.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Karl C. Colder of the Drug Enforcement Administration - Washington Field Division.

“As prescription pharmaceutical abuse grows, so too does the resolve of DEA to investigate and uncover the illicit activities which fuel this problem,” stated Karl C. Colder, Special Agent in Charge of the Drug Enforcement Administration, Washington Field Division.

According to his plea agreement, Russo, a licensed pharmacist, owned and operated a pharmacy known as "Russo’s Rx," located at 25 North Cannon Avenue in Hagerstown.  Russo admitted that from January 2009 through December 2010, he filled prescriptions for oxycodone, methadone and benzodiazepines that he knew were issued outside of the legitimate medical course and fraudulently billed Medicare and Medicaid for those prescriptions.  The sheer number of prescriptions for oxycodone and methadone indicated that the prescriptions were not valid.

In addition, Russo accepted cash for Schedule II drugs when the drugs were not covered by Medicaid or Medicare.  Schedule II drugs, including oxycodone and methadone, are approved for medical use and also have a very high abuse potential.  They are regulated by the DEA.  Another indicator that Russo knew the prescriptions were not for a legitimate medical purpose is that he "split" prescriptions, accepting an amount of cash at the time of a transaction and then accepting the remaining amount at a later time. Russo also filled two prescriptions for a Schedule II drug on the same day for the same patient but charged one to insurance and accepted cash for the other.  The investigation showed that: customers would call ahead of time to ask Russo if he had oxycodone “in stock” and how much it would cost; customers traveled from out of state or in van loads to his pharmacy; and many customers were receiving the same “cocktail” prescription of oxycodone, Roxicodone and Xanax, which are well known in medicine and pharmacy as being extremely dangerous when combined because of the severe side effects and potential for addiction and abuse.   
Further, Russo made gross sales of nearly $700,000 a month for several months in 2010 - a dramatic increase over previous months.  He also made at least 55 cash deposits between December 1, 2009 and June 15, 2010 totaling $862,000.   Russo even maintained a cash counting machine in his pharmacy.

In December 2010, the DEA executed a search warrant at Russo’s Rx and seized $39,000 in cash from the pharmacy - cash that was earned from unlawful dispensation of oxycodone, methadone and benzodiazepines.  Since that date, Russo admitted that he deleted thousands of unlawful prescriptions from his prescription database.  From January 1, 2009 through December 31, 2010, Russo’s Rx dispensed over 700,000 dosage units of oxycodone and 117,000 dosage units for methadone for the invalid prescriptions.  The vast majority of the remaining invalid prescriptions were for other schedule II narcotics and benzodiazepines.  For all these prescriptions, Russo improperly billed, and received payment for, over $109,207.26 to Medicare and at least $90,939.07 to Medicaid, with a total approximate loss of $200,146.33.  

As part of his plea agreement, Russo will be required to pay restitution in the full amount of the loss, and to forfeit the $39,000 in cash seized during the search of the pharmacy in 2010.

Russo faces a maximum sentence of 10 years in prison, although Russo and government have agreed to jointly recommend a sentence of 30 months in prison.  U.S. District Judge George L. Russell III has scheduled sentencing for August 22, 2013 at 2:00 p.m.

United States Attorney Rod J. Rosenstein praised the DEA for its work in the investigation and thanked the Maryland Division of Drug Control and the Maryland Board of Pharmacy for their assistance in the investigation.  Mr. Rosenstein thanked Assistant U.S. Attorneys Sandra Wilkinson, Thomas Corcoran and Ayn M. Ducao, who are prosecuting the case.

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