After two years of steadfast denial, Walgreen Co. acknowledged this week that one of its pharmacies mistakenly dispensed synthetic heroin to a 7-year-old New Mexico boy, instead of his doctor-prescribed Ritalin, then used a forged prescription to cover up the error.

Officials of the Deerfield-based company have apologized for the misfilled prescription. They say no one in corporate management knew about the forgery until it was revealed in August in state court in Tierra Amarilla, N.M., and that they should not be punished for "the apparent wrongful conduct of a renegade employee."

But lawyers for the mother of Joshua Dunbar, now 8, allege "direct knowledge of this fraud at high levels" within Walgreens.

They want Judge Timothy Garcia to fine Walgreens at least $25 million for unethical behavior and are seeking millions more in damages for Joshua, who spent six days in a coma and was left with permanent brain damage.

The forgery has pitted Walgreens against its own pharmacist and the pharmacist against the company's former lawyer, creating a knotty legal predicament that shows no sign of resolving itself quickly.

On Monday, a Walgreens spokesman said the company admitted in legal papers filed last week that it misfilled the prescription.

"As we reviewed all of this information since [the trial], we determined that there is a strong possibility that we misfilled the prescription," said spokesman Michael Polzin. "So we're accepting responsibility for that."

Miriam Dunbar filed suit last year, saying a Walgreens pharmacy in Espanola, N.M., gave her a 60-pill bottle of methadone, labeled as Ritalin, and she unknowingly gave her son the powerful painkiller, used to wean addicts off heroin.

The methadone built up silently in Joshua's body for 3 1/2 days before triggering a strange, overwhelming sleepiness and catapulting Dunbar into every parent's nightmare: a suddenly ill child, a rush to the emergency room, panic and confusion and dire warnings that the boy might not live.

Dunbar's lawyers say the mix-up probably stems from the similar spelling of methadone and methylphenidate, the generic name for Ritalin. Last year, the U.S. Food and Drug Administration warned pharmacies not to confuse the two drugs, citing six cases in which there was a mix-up, including one that killed an 8-year-old boy in 1999.

At a trial in August, Walgreens officials denied making a mistake, saying the pharmacy could account for all of its methadone. But that defense crumbled when a pharmacy manager said a key prescription used to balance the books was a fake.

"It is not an authentic prescription," testified Rick Mascarenas, manager of the Espanola pharmacy. "I have no proof of who altered that prescription. I can speculate."

Mascarenas said the prescription had been given to him by Michele Estrada, a lawyer for Walgreens who later denied any wrongdoing in a sworn affidavit.

Investigation launched

Garcia, who called the situation a travesty, declared a mistrial due to the conflict of interest between Walgreens and its lawyer. He referred the forgery allegations to the district attorney, who turned the case over to the New Mexico state police. The investigation is now being handled by the state Board of Pharmacy.

Estrada's law firm withdrew as Walgreens' lawyers. A new trial is scheduled for March. Dunbar's lawyers will argue for sanctions at a hearing set for Nov. 7.

"A great deal of intent and planning went into this [fabrication]," said Margaret Branch, an attorney for Dunbar. "I think the evidence will show that it's Walgreens' crime."

In court papers filed last week, Walgreens broke ranks with Mascarenas, saying there is "strong evidence" that he fabricated the prescription and Walgreens had no part in it.

In fall 2001 Joshua was a friendly 7-year-old, enamored with soccer and basketball, and a quick study in his 1st-grade class, said Miriam Dunbar, 29, a customer service representative for a phone company.

He had begun taking Ritalin for hyperactivity that summer, Dunbar said. She filled his prescriptions at a Walgreens about a five-minute drive from their apartment.

But on the morning of Nov. 10, a Saturday, Joshua began acting strangely, his mother said. He fell asleep at breakfast, slumping over his waffles. On a trip to the store, he slept in the car, forcing her to carry him back into the house.

His sleepiness seemed so odd that Dunbar called the hospital. But when a staff member asked if her son had a fever, nausea or diarrhea, Dunbar answered no to all three questions. She was told to let Joshua sleep.

Later that night, Joshua's breathing turned heavy and gasping, Dunbar said, and she took him to the hospital.

Chaos in ER

The emergency room scene quickly became frantic, Dunbar said. Medical staff ripped off Joshua's clothes, inserted intravenous lines and administered tests.

Finally, a pediatrician approached Dunbar with a question. "He asked me, did I know where Josh could have gotten methadone?" Dunbar said. "I said, `What is methadone?'"

Joshua was airlifted to another hospital. Doctors warned Dunbar that her son might not live.

To Dunbar and her lawyers, there is no doubt about the source of the methadone. State police found 53 methadone pills in the 60-pill bottle that Dunbar had picked up from Walgreens, said attorney Margaret Branch.

Then came Walgreens' defense: Their pharmacy was not missing any methadone.

"I was kind of in disbelief," Dunbar said. "I knew that the pills did not come from me."

At the trial Dunbar's lawyers quickly became suspicious of the pharmacy's books. They saw that the "inventory log," which appeared to account for all of the methadone pills, had many entries that were crossed out and written over.

One prescription--for which lawyers had only a photocopy--looked especially odd. It was dated Dec. 1, 2001, indicating it was written and filled on a Saturday. The prescription number was out of sequence with prescriptions filled around the same time. It was for 60 methadone pills.

Dunbar's lawyers met with the doctor whose name was on the prescription. He said he never wrote it.

Moreover, the prescription seemed identical to a photocopy of another prescription, dated Dec. 21, 2001. The only difference seemed to be that the "2" in "21" had disappeared, making it appear to be a separate prescription written three weeks earlier.

No original prescription

Garcia ordered Walgreens to produce the original prescription. But pharmacy officials could not locate it.

Confronted with the photocopy at the trial, Mascarenas testified that he believed there was no original because the Dec. 1 prescription was a fake. He insisted he had nothing to do with creating the altered document.