MARGATE — The flow of new information on a federal prescription-drug investigation among city employees on Absecon Island this week has slowed, but city officials have released some financials to quell concerns about city involvement or knowledge of the scheme.
“For months there has been rumor and speculation about an FBI probe of prescription fraud involving doctors, pharmacies and public employees within Atlantic County,” Margate Business Administrator Rich Deaney said during the July 20 commission meeting.
Three towns — Atlantic City, Ventnor and Margate — have confirmed they were subpoenaed in June for information on employees using certain prescription plans.
Last week, Margate officials tried to get ahead of those rumors, laying out health benefits costs to taxpayers after concerns arose about the possible financial impact to the city.
“It has been reported that Margate’s costs for prescriptions have risen substantially in the past three years. That is simply not true. Our premiums have been relatively stable, varying by less than 4 percent over a three-year period,” Mayor Mike Becker said at the City Commission meeting.
According to numbers presented by Margate, the total cost of health insurance premiums to the city between 2014 and 2016 has risen from $2.4 million to $2.8 million.
But it wasn’t the cost to taxpayers that drew attention. It was the rise in the gross cost of brand-name prescriptions being filled, a burden paid by the insurance plans to the pharmacies.
In 2010, Margate employees filled prescriptions for 2,207 brand-name drugs with a cost of $539,114. In 2014, 1,265 prescriptions were filled costing $713,935. But in 2015, 1,394 prescriptions were filled totaling $3.4 million.
Deaney said prescription-drug fraud is not unique to Downbeach.
“Nationwide, there reportedly has been a 3,000 percent increase in the dispensing of compound drugs in the past several years,” he said.
Longport Mayor Nick Russo, who said the borough did not receive a subpoena, said that he had seen similar types of schemes during his time as a state supervisor of investigations with the New Jersey Division of Criminal Justice and teacher of graduate-level courses in criminal justice through the University of Phoenix.
Russo described one federal case in the southern part of the U.S. in which a number of public employees had been caught up in a scheme that kicked back to people who filled prescriptions for supplements intended to improve health, fitness or weight loss. While those supplements purchased over-the-counter could be very expensive, a person with a good health insurance plan could have them filled by prescription.
Russo said he has no firsthand knowledge about such a scheme in Atlantic County, but just what he has read and researched. He added there could be a disproportionate number of people who are in public safety who work hard to stay in shape, making them a target.
And, Russo pointed out, getting a prescription filled is not a crime if you have a legitimate need for it and if the doctor has prescribed it.
Any indictments or charges handed down in a multijurisdictional medical fraud case will come from the federal grand jury, whose proceedings are done in secret.
Deaney said that neither Margate nor any other of the 700 local governments participating in the State Health Benefits Plan receive reports listing claim experience unless they specifically request them.
“The only way to get reports sorted by municipality is to request a special report to be produced at a fee of several thousand dollars each,” he said. “Your professionals are not here to manage prescription claims (a private matter between doctors and patients); your professionals are here to manage costs which are being contained.”
— Staff Writers Suzanne Marino and Nanette LoBiondo Galloway contributed to this report