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2-May-2008 : Indiana Attorney General Steve Carter and Walgreen Co. have settled a 2004 lawsuit that alleged Medicaid fraud on the part of the pharmacy chain.

The settlement provides $337,050 for the state's Medicaid program and $44,800 in investigative costs.

"We have implemented a corporate integrity agreement with Walgreens along with penalties to halt this practice going forward," he said. "We will conduct another audit to ensure the practice has been stopped."

A Muncie Walgreens submitted at least 490 false claims for prescriptions to at least 25 Medicaid recipients who took part in the Restricted Card Program, designed for those whose drug usage indicates a possibility of abuse, Carter said.

Only certain doctors could prescribe medications to members of the RCP, and Carter said his investigation found that the names of doctors were altered 490 times.

And it wasn't just at Muncie, Carter said. Another 124 state stores submitted 4,946 false claims.

The settlement figures are based on triple the alleged fraud at the Muncie store and twice the losses at the other Walgreens stores.

"There were controls in place that seemed to be systemically overridden to achieve an end result," Carter said. "Manipulating the system harms the very people it is meant to protect from prescription abuse."

Walgreens said its actions were not intentional, but rather a mistake. Carter recovered $14 million for the state's Medicaid program in 2007.

Carter is not running for re-election this year.