3 Sentenced in Florida for $175 Million Drug Compounding Fraud Scheme

11 Indest-2008-8By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

On March 24, 2017, three participants were sentenced in Florida federal court, for a scheme that used call centers and kickbacks to generate fake prescriptions for compounding pharmacies. The scheme was able to scam the government and private insurers for $175 million.

U.S. District Judge Daniel T.K. Hurley, sentenced one of the defendants, Todd Stephens, to ten years. He sentenced Todd Hanson to eight years and one month. He sentenced Christopher Mucha to 30 months in prison. Each defendant also received three years of supervised release (probation) after they are released from prison.

Illegal Enterprise.

Stephens, Hanson and Mucha were among 16 defendants the federal government charged in September 2016. The U.S. Department of Justice (DOJ) described an extensive enterprise that operated from 2013 to 2015. According to the DOJ, the enterprise controlled numerous stops along the supply chain, including the selection of ingredients for compounded drugs, solicitation of patients for unnecessary prescriptions, and funneling of kickbacks to “corrupt physicians.”

To learn more about the defendants being charged, click here.

According to prosecutors, the participants purchased pharmacies that functioned as fronts for the illegal conduct and held licenses that made the operation possible. Specific drugs were chosen and produced by the pharmacies based on the amount of money reimbursed by the military health care program TriCare, as well as other private insurers. More than $175 million was eventually paid out in false claims, prosecutors alleged.

Key Component of the Scheme.

The defendants used call centers as a major part of the scheme to generate bogus prescriptions. The call center staff obtained information on potential patients, including military veterans, who had previously been prescribed medications. They then proceeded to contact the patients to convince them to authorize the faxing of the medically unnecessary prescriptions to doctors’ offices.

A group of “corrupt” physicians would then issue prescriptions for compounded medications for the patients regardless of the absence of medical necessity. It was alleged that this was done in exchange for illegal compensation to the doctors such as cash, gift cards and free consulting. The defendants disguised the illegal payments as reimbursement for “data collection.” These were allegedly distributed through a phony software company called ClinicalCorp LLC, prosecutors said.

To read the sentencing memorandum in full, click here.

To read about a similar health care fraud case involving TRICARE, click here to read one of my prior blogs.

Contact Health Law Attorneys Experienced in Representing Pharmacists, Pharmacies, and Other Health Care Providers.

At the Health Law Firm we provide legal services for all health care providers and professionals. This includes pharmacists, pharmacies, physicians, nurses, dentists, psychologists, psychiatrists, mental health counselors, Durable Medical Equipment suppliers, medical students and interns, hospitals, ambulatory surgical centers, pain management clinics, nursing homes, and any other healthcare provider. We represent facilities, individuals, groups and institutions in contracts, sales, mergers and acquisitions.

To contact The Health Law Firm, please call (407) 331-6620 or visit our website at www.TheHealthLawFirm.com.

Sources:

Hale, Nathan. “3 Sentenced In Fla. For $175M Health Care Fraud Scheme.” Law360. (March 24, 2017). Web.

McMahon, Paula. “Feds charge 16 in massive $175M prescription cream fraud based in South Florida.” Sun-Sentinel. (September 1, 2016). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

KeyWords: Legal representation for allegations of violating Anti-Kickback Statute, TRICARE false claims legal defense attorney, TRICARE physician representation, pharmaceutical fraud lawyer, compounding pharmacy attorney, legal representation for military physicians, fraudulent practices of pharmaceutical companies, financial interest in physician referrals, TRICARE fraud attorney, compounding pharmacy lawyer, legal defense of military physicians, legal defense of TRICARE providers, attorney reviews of The Health Law Firm, Veterans Administration (VA) physician defense attorney, The Health Law Firm attorney reviews, Health care fraud defense attorney, legal representation for health care fraud, legal counsel for allegations of health care fraud, AKS defense attorney, False Claims Act (FCA) defense attorney, legal representation for FCA claims, legal representation for illegal kickback schemes, health care fraud defense lawyer, health care fraud scheme, legal representation for DOJ investigations, DOJ investigation defense attorney

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Wisconsin Supermarket Violated FCA With Illegal Kickbacks, Pharmacist Claims

8 Indest-2008-5By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

On December 20, 2016, a pharmacist and whistle blower told an Illinois federal court that Wisconsin and Chicago-area chain of grocery stores, Roundy’s Supermarket, Inc. (Roundy’s), knew gift cards it was providing Medicare and Medicaid beneficiaries were actually illegal kickbacks. In defense of his False Claims Act (FCA) Suit, the whistle blower claims the chain proceeded to hand them out anyway despite knowing they were illegal.

The Whistle Blower and the Alleged Scheme.

The whistle blower in the suit, pharmacist Jefferey Kotwica, alleged the company was involved in illegal kickbacks, thus allegedly defrauding government health care programs, by offering gift cards to pharmacy customers that exceeded legal limits. Roundy’s enacted a Script Saver Program that gave all customers “pharmacy club coupons” for pharmacy purchases. When they reached five of those coupons, they could be redeemed for a $10 gift card, the complaint states. At some stores, the number of coupons necessary for a gift card was lowered to three, Kotwica said.

Roundy’s has mounted a defense to these allegations. Despite that defense, the whistle blower maintains the gift cards were more than the legal nominal value allowed. The whistle blower claimed additionally that the “retailer reward exception” failed because the gift cards were tied to the services the government health care programs reimbursed and were meant to induce customers to transfer prescriptions to the store.

The pharmacist and whistle blower in the case, claimed that he heard corporate executives discussing having Medicare and Medicaid recipients excluded from the program because they were concerned their inclusion was illegal, but never acted on that concern. Therefore, Kotwica said that this shows that Roundy’s had the intent to violate the FCA. The whistle blower also claimed that the company retaliated against him for speaking out to the point where he resigned his position as a pharmacist with it.

The case was originally filed in June 2015. Like all federal False Claims Act (FCA) cases, it remained sealed until ordered unsealed by the court. It was unsealed in July 2016 after the U.S., and the states of Illinois, Minnesota and Wisconsin declined to intervene in the case. Click here to read the response in this case.

Fighting Government Fraud and Abuse.

This case was brought under the federal False Claims Act (FCA) or federal “whistle blower law.” This law contains standards for both civil and criminal penalties against those filing false claims for services paid for by the government. False Claims Act cases, such as this recent one, are typically filed in a qui tam (or whistle blower) proceeding. This type of action involves a private party filing a lawsuit on behalf of the government against a defendant who allegedly defrauded the government. The “whistle blower” receives a percentage of the money recovered by the government (if any), through any judgment or settlement of the case. Often the amounts awarded to the whistle blower are in the millions of dollars. Whistle blowers are often protected from receiving any potential civil liability or prosecution for their involvement in the matter.

Our firm has been on both sides of both federal and state whistle blower or qui tam cases. We have represented nurses, physicians, pharmacists and other health professionals in bringing such cases. We have also defended physicians, health care providers, medical groups and health facilities in such cases.

We have also represented relators or plaintiffs bringing such actions to recover money on behalf of the government. A qui tam relator can receive up to 30% of the amount recovered on behalf of the government. This means, for example, that of a defendant settles with the government paying back $5 million, the relator or whistle blower can receive up to $1.5 million, plus his attorney’s fees and costs. Usually, the biggest obstacle to bringing any such case is being able to show an actual false claim that was filed.

If you have information concerning health care fraud by overbilling federal health care programs such as Medicare or Medicaid, do not hesitate to take action. The government urges health care providers to step forward and report illegal and fraudulent activities as soon as they are uncovered. The False Claims Act provides a system of rewards that encourages whistle blowers to bring these issues to the government’s attention.

Contact Health Law Attorneys Experienced with Health Care Fraud and Qui Tam or Whistleblower Cases.

The Health Law Firm’s attorneys routinely represent physicians, nurses, dentists, orthodontists, medical groups, clinics, pharmacies, assisted living facilities (AFLs), home health care agencies, nursing homes, group homes and other healthcare providers in bringing or defending against False Claims Act, whistle blower or qui tam cases. We also defend health care providers in Medicare and Medicaid investigations, audits and recovery actions. We represent plaintiffs and defendants in complex health care litigation in state or federal courts.

Attorneys with The Health Law Firm also represent health care professionals and others who may desire to file a qui tam, False Claims Act or whistle blower suit. We work with physicians, nurses and other professionals to investigate, document and file such cases. We have developed relationships with recognized experts in health care accounting, health care financing, utilization review, medical review, filling, coding and other services that assist us in such matters. We have represented number of doctors and other licensed health professionals as relators in bringing qui tam or whistle blower cases. Our attorneys are also available to defend physicians, medical groups and health care providers in qui tam or whistle blower cases.

To contact The Health Law Firm, please call (407) 331-6620 or visit our website at www.TheHealthLawFirm.com.

Sources:

Kass, Dani. “Wis. Supermarket Should Face FCA Suit, Pharmacist Says.” Law360. (December 20, 2016). Web.

“Wis. Supermarket Should Face FCA Suit, Pharmacist Says.” Make Me Feed. (December 21, 2016). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

KeyWords: False Claims Act (FCA) defense attorney, whistle blower defense attorney, qui tam defense attorney, legal representation for FCA claims, legal representation for qui tam cases, legal representation for whistle blower defense cases, Medicare and Medicaid fraud defense attorney, legal representation for Medicare and Medicaid fraud, legal representation for illegal kickback schemes, health care fraud defense lawyer, health care fraud scheme, legal representation for Medicare and Medicaid fraud investigation, Florida FCA defense attorney, Colorado FCA defense attorney, Kentucky FCA defense attorney, Louisiana FCA defense attorney, District of Columbia FCA defense attorney, Virginia FCA defense attorney, The Health Law Firm reviews, reviews of The Health Law Firm attorneys, complex health care litigation attorney, legal defense of complex health care business disputes, complex litigation defense counsel

“The Health Law Firm” is a registered fictitious business name of and a registered service mark of The Health Law Firm, P.A., a Florida professional service corporation, since 1999.
Copyright © 2016 The Health Law Firm. All rights reserved.

Florida Pharmacy Owner Admits to $23 Million Health Care Fraud Scheme

5 Indest-2008-2By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

A co-owner and operator of three Miami-area pharmacies pleaded guilty on December 6, 2012, for his part in a $23 million health care fraud scheme. The pharmacy owner allegedly admitted in the Florida Southern Federal District Court to one count of conspiracy to commit health care fraud and one count of conspiracy to pay illegal health care kickbacks, according to a Department of Justice (DOJ) press release.

Click here to read the entire press release from the DOJ.

Pharmacy Owner and Co-Conspirators Used a Network of Beneficiaries to Bill Medicare and Medicaid.

According to court documents, the pharmacy owner allegedly admitted to paying illegal kickbacks to an unnamed number of co-conspirators in return for Medicare and Medicaid beneficiary information. That information was then used to submit fraudulent claims. A majority of the beneficiaries referred to the owner’s pharmacies reportedly resided at assisted living facilities (ALFs) in Miami.

The court documents state that the pharmacy owner also allegedly paid kickbacks to physicians in exchange for prescription referrals which were also billed to Medicare.

Unused and Partially Used Medications Were Also Allegedly Used in Scheme.

As part of the scheme, the pharmacy owner allegedly instructed drivers working for his pharmacies to pick up unused medications from ALFs around Miami. The medications were then allegedly placed back into pill bottles. Unused and partially used medications were billed back to Medicare and Medicaid, according to court documents.

Click here to read the court documents on this case.

The pharmacy owner and his co-conspirators allegedly submitted more than $23 million in false and fraudulent claims to Medicare and Florida Medicaid programs.

Don’t Wait Until It’s Too Late; Consult with a Health Law Attorney Experienced in Medicare and Medicaid Issues Now.

The attorneys of The Health Law Firm represent healthcare providers in Medicare audits, ZPIC audits and RAC audits throughout Florida and across the U.S. They also represent physicians, medical groups, nursing homes, home health agencies, pharmacies, hospitals and other healthcare providers and institutions in Medicare and Medicaid investigations, audits, recovery actions and termination from the Medicare or Medicaid Program.

For more information please visit our website at www.TheHealthLawFirm.com or call (407) 331-6620 or (850) 439-1001.

Comments?

What do you think of this case? Is the Miami area just a hotbed for Medicare and Medicaid schemes? Please leave any thoughtful comment below.

Sources:

United States of America v. Jose Carlos Morales. Case Number 12-23374, Preliminary Injunction and Supporting Memorandum of Law. (September 14, 2012). From: http://www.thehealthlawfirm.com/uploads/USA%20v%20Morales.pdf

Department of Justice. “Pharmacy Owner Pleads Guilty in Miami for Role in $23 Million Health Care Fraud Scheme.” Department of Justice . (December 6, 2012). From: http://www.justice.gov/opa/pr/2012/December/12-crm-1461.html

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida, area.  www.TheHealthLawFirm.com  The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone:  (407) 331-6620.

“The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999.

Copyright © 1996-2012 The Health Law Firm. All rights reserved.