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CVS Pays $1.8M for Failing to Do a Google Search

By Jim Edwards

Updated on: January 11, 2011 / 7:12 PM EST / MoneyWatch

CVS just agreed to pay $1.8 million to settle a case in which it failed to Google the name of an employee it hired even though the man said on his job application that he had a criminal conviction. Athanasios Mastrokostas was a pharmacist who had been banned from doing business with Medicaid, Medicare and other federal health care programs in 2005 due to a felony conviction. When he applied for a job at CVS, he mentioned the conviction on his application forms, according to the New Jersey State Attorney General:

CVS Pharmacy failed to investigate whether Mr. Mastrokostas was a federally excluded pharmacist and allowed him to work as a pharmacist filling these prescriptions even though Mastrokostas indicated on his employment application that he had been convicted of a crime.

Mastrokostas' name is so unique that a simple online search turns up more than enough information to ring alarm bells if you're a pharmacy. CVS's lack of curiosity had a price: It must now pay back every cent of reimbursement triggered by claims Mastrokostas made when he filled prescriptions for the company between 2005 and 2009. That includes $900,000 to New Jersey and another $969,230 to the federal government, out of a total of $2.9 million in outstanding liabilities.

There's nothing wrong with CVS employing a former felon, of course. There's a case to be made that companies ought to make a greater effort to rehabilitate former offenders through gainful employment. CVS's mistake was doing no due diligence at all. It's easy to discover that Mastrokostas was listed as "excluded" in the Federal Register in 2005 for a felony control substance conviction.

And it's easy to find that the New York state register on professional misconduct and discipline had him tagged with "Attempted Criminal Sale of a Controlled Substance in the 3rd Degree, a class C felony" in 2007, and gave him a 12-month suspension the same year.

So why didn't CVS bother? As I've argued before, it's part of the culture in the pharmacy world. You may think your neighborhood chain store is staffed with humble professionals dispensing good advice and reliable products, but the pharmacy business is rife with shysters. In October, CVS settled a case in which it was accused of rigging its electronic record system to assist crystal meth dealers gather pseudoephedrine. That was one of eight unsettled cases against the company alleging various wrongdoing. More generally, pharmacies sometimes buy their drugs from "grey market" suppliers, who have often stolen them from the drug companies that make them.

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Image by Flickr user Hans Gerwitz, CC.