Court Holds that Buyer of California Pharmacy Cannot Use Seller's Medi-Cal Provider Number

On March 23, 2010, the California Court of Appeal filed its decision in Advanced Choices Inc. v Department of Health Services. Case No B210116. An Administrative Law Judge, the Superior Court and the Court of Appeal decided that using another's Medi-Cal provider number by power of attorney is an unlawful assignment of the number.

Advanced Choices Inc. purchased Hawaii Pharmacy. The owner of Advanced Choices was not eligible for a Medi-Cal Provider number because she had been convicted of welfare fraud. As part of the deal, the seller of Hawaii Pharmacy granted Advanced Choices Inc. power of attorney to use its Medi-Cal provider number. After an audit, the Department of Health Care Services (previously the Department of Health Services) sought reimbursement in the amount of $1,454,840.10 from Advanced Choices Inc. for all Medi-Cal payments made under the prior owner's Medi-Cal provider number. Assignment of a provider number is prohibited by Section 51501 (d) of the Title 22 of the California Code of Regulations. Section 51501 (d) provides: "No provider shall submit claims to the Medi-Cal program using any provider number other than that issued to the provider by the Department." (Cal. Code Regs., tit. 22, § 51501, subd. (d).)

The decision is attached below.