A federal court in Ohio ordered a Toledo pharmacy and two of its pharmacists to pay a $375,000 civil penalty and imposed restrictions related to the dispensing of opioids and other controlled substances.

Pursuant to an agreed consent judgment and permanent injunction, the court enjoined Shaffer Pharmacy, along with pharmacist-owner Thomas Tadsen and pharmacist Wilson Bunton, from dispensing certain opioid prescriptions, including combination opioid and benzodiazepine prescriptions. The order also mandates that the defendants undergo periodic comprehensive reviews of their dispensing practices to ensure compliance with the order and the Controlled Substances Act. The consent decree resolves a civil complaint the government filed on Jan. 6, 2021, in the Northern District of Ohio. The complaint alleged that the defendants repeatedly dispensed opioids and other controlled substances in violation of the Controlled Substances Act by ignoring “red flags” – that is, obvious indications of drug diversion and drug-seeking behavior.

“Pharmacies and pharmacists must abide by the Controlled Substances Act and take active steps to ensure opioids are dispensed based on medical legitimacy,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The Department of Justice is committed to working closely with the Drug Enforcement Administration to combat the opioid addiction crisis.”

“With opioid abuse and overdose deaths again on the rise in the Northern District of Ohio, we must remain vigilant in our prevention efforts and in holding those in the medical profession accountable when they are alleged to be unlawfully prescribing or dispensing opioids,” said Acting U.S. Attorney Bridget M. Brennan for the Northern District of Ohio. “We will continue to utilize all of our available enforcement options to address this threat and those who are alleged to be engaged in these unlawful practices.”

The investigation was conducted by the DEA, FBI, Department of Health and Human Services Office of Inspector General, the State of Ohio Board of Pharmacy, the Ohio Bureau of Workers’ Compensation, and the Ohio Attorney General’s Medicaid Fraud Control Unit.

The case is being handled by Assistant U.S. Attorneys Patricia Fitzgerald and Angelita Cruz Bridges of the U.S. Attorney’s Office for the Northern District of Ohio, and Trial Attorneys Scott Dahlquist and Maryann McGuire of the Civil Division’s Consumer Protection Branch.

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ST. LOUIS – The United States has reached a civil settlement with Olive Street Pharmacy, LLC (Olive Street) and pharmacy technician Irina Shlafshteyn (Shlafshteyn) resolving a civil complaint bringing claims under the False Claims Act (FCA) and Controlled Substances Act (CSA) for damages, statutory penalties, and injunctive relief related to the unlawful dispensing of controlled substances, including controlled substances that were submitted to Medicaid or Medicare for reimbursement. As part of the settlement, Olive Street and Shlafshteyn agreed to pay $1,507,808.50, an amount that was based in part on their ability to pay.

According to the civil complaint filed by the United States, Olive Street, a retail pharmacy located in Creve Coeur, Missouri, and Shlafshteyn, its 25 percent owner and managing employee, repeatedly dispensed prescriptions for controlled substances while disregarding warning signs of diversion, or “red flags,” indicating the prescriptions were not legitimate. The United States alleged that the types of red flags that Olive Street and Shlafshteyn ignored included clear instances of tampering with written prescriptions; dangerous combinations of drugs commonly sought after for recreational purposes; and amounts of opioids that exceeded CDC guidance by as much as 17.5 times the recommended maximum daily dosage.

In the complaint, the United States further accused Olive Street of routinely dispensing prescriptions for Subsys, an oral fentanyl spray, which is subject to heightened FDA restrictions and indicated only for opioid-tolerant patients experiencing breakthrough pain due to cancer. The United States contended that Olive Street and Shlafshteyn knowingly dispensed high dosages of Subsys to patients who did not qualify for the drug, and that the vast majority of the Subsys Olive Street dispensed was prescribed by Philip Dean, M.D. Dean, a Warrenton, Missouri neurologist, pleaded guilty to illegally distributing prescription opioids in 2018, including to women with whom he had lived and with whom he had had personal relationships.

The United States alleged that even though Shlafshteyn knew Dean was having intimate relationships with at least one of the women for whom he was prescribing controlled substances, Shlafshteyn and others at her direction continued to dispense Dean’s controlled substance prescriptions to that patient and to other patients of Dean. Further, according to the civil complaint, as the managing employee of Olive Street, Shlafshteyn had the control and authority to effect compliance with the FCA and CSA.

According to the settlement agreement, effective September 30, 2021, Shlafshteyn surrendered her Missouri pharmacy technician license and Olive Street terminated its enrollment in the Transmucosal Immediate Release Fentanyl Risk Evaluation and Mitigation Strategy (TIRF REMS) Program, the FDA-mandated program that had allowed Olive Street to dispense immediate-release fentanyl drugs like Subsys. The parties further agreed to enter into a consent decree of permanent injunction prohibiting Shlafshteyn from participating in the dispensing of controlled substances or being employed by any establishment that does so, prohibiting Olive Street from seeking enrollment in the TIRF REMS Program, and detailing many additional specific parameters limiting the circumstances under which Olive Street is permitted to continue dispensing controlled substances.

“Medical professionals have the legal obligation to ensure the dispensing of prescriptions are for legitimate medical purposes,” said Inez Davis, the Drug Enforcement Administration’s Diversion Program Manager for the states of Missouri and Kansas, and southern Illinois. “In this case, the pharmacy abandoned its corresponding responsibility and ignored the clear signs that powerful medications, like oral fentanyl spray, were being prescribed far beyond the recommended guidance. This settlement sends a message that DEA will not accept actions that put people’s lives at risk.”

Under the settlement agreement, Shlafshteyn is excluded from participating in the federal healthcare programs for a period of 10 years, and Olive Street is bound by the terms of a corporate integrity agreement governing its ability to continue participating in the federal programs.

“Health care providers who unlawfully dispense controlled drugs risk the health of their patients and pose a threat to society,” said Curt L. Muller, Special Agent in Charge of the Department of Health and Human Services, Office of Inspector General. “We will continue to work with our law enforcement partners to protect the integrity of federal health programs and hold accountable individuals who endanger beneficiaries.”

“The Missouri Attorney General’s Medicaid Fraud Control Unit aids in conducting complex investigations and prosecutions to ensure that those who game the Medicaid system for personal gain are held accountable,” added Missouri Attorney General Eric Schmitt. “We’re proud of our work in this case, and our work across the state to hold bad actors accountable and save taxpayer money.”

The Office of Inspector General of the Department of Health and Human Services, Drug Enforcement Administration, Federal Bureau of Investigation and the Missouri Attorney General’s Medicaid Fraud Control Unit investigated the case. Assistant United States Attorney Amy Sestric handled the case.

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Fox Chase-area Pharmacy was the Top Retail Purchaser of Oxycodone in Pennsylvania

PHILADELPHIA – United States Attorney Jennifer Arbittier Williams announced that the United States filed an amended civil complaint against pharmacist Todd Goodman and pharmacy employees Eric Pestrack and Lee Kamp for their alleged involvement in years-long practices of illegally dispensing opioids and other controlled substances, and systematic health care fraud, at Philadelphia-based pharmacy Spivack, Inc., which previously operated under the name Verree Pharmacy. These individuals were added as defendants in the previously filed lawsuit against Verree and its former owner, pharmacist Mitchell Spivack, for the same alleged schemes. The amended complaint continues to seek civil penalties and civil damages, which could total in the millions of dollars, as well as injunctive relief.

The lawsuit, in which Goodman, Pestrack, and Kamp were added, was the culmination of a multi-year federal-state investigation. The amended complaint alleges that Verree Pharmacy, Spivack, Goodman, Pestrack, and Kamp had a responsibility to dispense opioids and other controlled substances only when appropriate. Instead, the United States alleges that Verree and these individuals dispensed the drugs, even when faced with numerous red flags suggestive of diversion—such as opioids in extreme doses, dangerous combinations of opioids and other “cocktail” drugs preferred by those struggling with addiction, excessive cash payments for the drugs, blatantly forged prescriptions, and other signs that the pills were being diverted for illegal purposes.

The amended complaint alleges that Verree—which was the top retail pharmacy purchasing oxycodone in Pennsylvania—has been a nationwide and regional outlier in its deviant purchasing, dispensing, and billing of controlled substances. To avoid scrutiny from the drug distributors that sold them the pills, Verree through Spivack allegedly made false statements to maintain the façade of legitimacy and keep the pharmacy stocked with pills critical to its profits. Behind that façade, the amended complaint alleges that Spivack drew millions of dollars from the pharmacy while the public suffered the consequences, including one patient who overdosed and died next to Verree Pharmacy bottles dispensed by Spivack.

The United States’ amended complaint also alleges that Verree, Spivack, Goodman, Pestrack, and Kamp were engaging in an expansive health care fraud scheme involving fraudulent billings for drugs not actually dispensed. The alleged cornerstone of the scheme was a code used by the pharmacy employees in their internal computer system: “BBDF” or “Bill But Don’t Fill.” Verree, Spivack, Goodman, Pestrack, and Kamp allegedly used BBDF as a means to cover their losses on other drugs and further the pharmacy’s illicit profits by falsely claiming to insurers, including Medicare, that they had dispensed a drug to a patient, when in fact they had not. According to the amended complaint, this sophisticated fraud—which one of the employees admitted to investigators—resulted in significant losses to Medicare and other federal programs.

The lawsuit seeks to impose civil penalties and damages on Verree, Spivack, Goodman, Pestrack, and Kamp under the Controlled Substances and False Claims Acts. If Verree, Spivack, Goodman, Pestrack, and Kamp are found liable, they could face civil penalties up to $68,426 for each unlawful prescription dispensed, civil penalties up to $23,607 for each false claim they submitted to federal health care programs, and treble damages for the alleged health care fraud against federal programs. The court may also award injunctive relief to prevent the defendants from committing additional controlled substance violations.

If the public has any information regarding Verree Pharmacy or any other health care fraud allegation, individuals should contact the HHS-OIG hotline at 800-HHS-TIPS.

The case is being investigated by the Philadelphia Field Division of the Drug Enforcement Administration, the Pennsylvania Department of State’s Bureau of Enforcement and Investigation, HHS-OIG, and the Pennsylvania Office of the Attorney General, with additional assistance from the Office of Personnel Management Office of Inspector General, the Defense Health Agency, and the Defense Criminal Investigative Service. The civil investigation and litigation are being handled by Assistant United States Attorney Anthony D. Scicchitano and auditors Dawn Wiggins and George Niedzwicki.

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On Dec. 2, a federal jury in Greeneville, Tennessee, convicted Peter Bolos, 44, of Tampa, Florida, of 22 counts of mail fraud, conspiracy to commit health care fraud and introduction of a misbranded drug into interstate commerce, following a month-long trial.

According to court documents and evidence presented at trial, Bolos and his co-conspirators, Andrew Assad, Michael Palso, Maikel Bolos, Larry Smith, Scott Roix, HealthRight LLC, Mihir Taneja, Arun Kapoor, and Sterling Knight Pharmaceuticals, as well as various other companies owned by them, deceived pharmacy benefit managers (PBMs), such as Express Scripts and CVS Caremark, regarding tens of thousands of prescriptions. The PBMs processed and approved claims for prescription drugs on behalf of insurance companies. Bolos and his co-conspirators defrauded the PBMs into authorizing claims worth more than $174 million that private insurers such as Blue Cross Blue Shield of Tennessee, and public insurers such as Medicaid and TRICARE, paid to pharmacies controlled by the co-conspirators.

Court documents and evidence at trial established that Bolos, Assad and Palso owned and operated Synergy Pharmacy in Palm Harbor, Florida. Under their direction, Synergy agreed with Scott Roix, a Florida telemarketer operating under the name HealthRight, to generate prescriptions for Synergy and the other pharmacies involved in the scheme. The prescriptions were typically for drugs such as pain creams, scar creams and vitamins. To obtain the prescriptions, evidence showed Roix used HealthRight’s telemarketing platform as a telemedicine service, calling consumers and deceiving them into agreeing to accept the drugs and to provide their personal insurance information. HealthRight then paid doctors to authorize the prescriptions through its telemedicine platform, even though the doctors never communicated directly with the patients and relied solely on the telemarketers’ screening process as the basis for their authorizations. Because this faulty and fraudulent process made the prescriptions invalid, the drugs were misbranded under the Food, Drug and Cosmetic Act. Synergy and the other pharmacies nonetheless dispensed the drugs to consumers as part of the scheme, so that Bolos could submit fraudulent reimbursement claims.

Court documents and evidence at trial established that during the conspiracy, which lasted from May 2015 through April 2018, Bolos paid Roix more than $30 million to buy at least 60,000 invalid prescriptions generated by HealthRight. Evidence showed Bolos selected specific medications for the prescriptions that he could submit for highly profitable reimbursements. In addition, Bolos used illegal means to hide his activity from the PBMs so that he could remain undetected. Evidence showed that Bolos was responsible for at least $89 million out of the total $174 million in fraudulently paid billings.

“The defendants deceived consumers in order to facilitate the distribution of drugs without proper medical oversight, and overbilled insurers for illegal prescriptions,” said Deputy Assistant Attorney General Arun G. Rao of the Justice Department’s Civil Division. “The Department will continue to investigate and prosecute individuals who use telemedicine to advance fraudulent schemes that violate the Food, Drug, and Cosmetic Act.”

“The United States Attorney’s Office for the Eastern District of Tennessee applauds the unwavering efforts of the multiple agencies involved in this collaborative investigation to bring this extensive healthcare fraud and misbranding scheme to justice,” said Acting U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee. “The scope and nature of this fraud and misbranding scheme shock the conscience. Patients were given medications that they neither requested nor wanted, and the trial proof demonstrated that the prescriptions were specifically chosen by Bolos to maximize the fraudulent scheme’s profits, rather than for the patients’ healthcare needs. The guilty verdict against Bolos and the guilty pleas obtained from his co-defendants should send a strong message that the Department of Justice will aggressively prosecute fraud against health insurance providers.”

“Healthcare fraud is an egregious crime problem that impacts every American,” said Special Agent in Charge Joseph E. Carrico of the FBI’s Knoxville Field Office. “The guilty verdict was a result of a multi-agency investigation into a complex health care fraud scheme that required substantial investigative resources. Along with its law enforcement partners, the FBI remains committed to investigate these crimes and prosecute all those that are intent in defrauding the American public."

“Distributing misbranded prescription drugs in the U.S. marketplace places patients’ health at risk,” said Special Agent in Charge Justin C. Fielder of the FDA Office of Criminal Investigations Miami Field Office. “We will continue to pursue and bring to justice those who put profits ahead of public health.”

“Bolos and his co-conspirators used their pharmacies to fraudulently bill insurance companies hundreds of millions of dollars, and that type of health care fraud impacts everyone,” said Special Agent in Charge John Condon of Homeland Security Investigations (HSI) Tampa. “HSI will continue to work with our law enforcement partners at the federal, state and local level to investigate all fraud and bring those responsible to justice.”

“Bolos and his co-conspirators sought to increase their profits by executing a comprehensive health care fraud scheme involving innocent patients,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services, Office of Inspector General. “This conviction should serve as a warning to individuals who wish to deceive the government and steal from taxpayers. Alongside our law enforcement partners, we will continue to pursue medical professionals who engage in fraudulent activity.”

“The verdict in this case sends a clear message that these types of schemes will not be tolerated,” said Special Agent in Charge Matthew Modafferi of the U.S. Postal Service Office of Inspector General in the Northeast Area Field Office. “The Special Agents of the U.S. Postal Service Office of Inspector General will continue to work closely with the U.S. Attorney’s Office and our law enforcement partners to bring to justice those who commit these kinds of offenses.”

Roix, Assad, Palso, Smith, Maikel Bolos and various associated business entities previously pleaded guilty to their roles in the conspiracy. Taneja, Kapoor, and Sterling Knight pleaded guilty to felony misbranding in a conspiracy with Bolos. U.S. District Judge J. Ronnie Greer set sentencing for Bolos for May 19, 2022, in the United States District Court for the Eastern District of Tennessee at Greeneville. Sentencings for the other defendants will be set for dates in 2022.

The trial and plea agreements resulted from a multi-year investigation conducted by the U.S. Department of Health & Human Services Office of Inspector General (Nashville); Food and Drug Administration Office of Criminal Investigations (Nashville); U.S. Postal Service, Office of Inspector General (Buffalo); Federal Bureau of Investigation (Knoxville and Johnson City, Tennessee); Office of Personnel Management Office of Inspector General (Atlanta); and the Department of Homeland Security, Homeland Security Investigations (Tampa). The U.S. Marshals Service also assisted in the investigation and the forfeiture of assets.

Assistant U.S. Attorneys TJ Harker and Mac Heavener for the Eastern District of Tennessee and Trial Attorney David Gunn of the Department of Justice Civil Division’s Consumer Protection Branch in Washington, and a former Assistant U.S. Attorney in Knoxville, prosecuted and tried the case. They were assisted by Barbra Pemberton, Bryan Brandenburg and April Denard from the U.S. Attorney’s office.

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GREENEVILLE, Tenn.– Today, Larry Everett Smith, 50, of Tampa, Florida, pleaded guilty before Senior District Judge Ronnie Greer to one count of conspiracy to commit health care fraud. Sentencing has been set for October 25, 2021 at 3:00 p.m., in United States District Court in Greeneville. Smith faces a term of up to 10 years in prison.

The First Superseding Indictment, returned December 1, 2020, charged Smith and others with a nationwide conspiracy to defraud pharmacy benefit managers out of $174,202,105 by submitting $931,356,936 in bills to the pharmacy benefit managers for fraudulent prescriptions purchased from a telemarketing company. The indictment alleges the conspiracy began in mid-2015 and lasted through the first months of 2018.

In a written plea agreement, Smith admitted to conspiring with Scott Roix, Mihir Taneja, Arun Kapoor, Sterling-Knight Pharmaceuticals LLC, HealthRight LLC, Alpha-Omega Pharmacy LLC, Germaine Pharmacy Inc., Zoetic Pharmacy, and Tanith Enterprises, and others to defraud pharmacy benefit managers into paying for fraudulent prescriptions for topical pain creams, vitamins, and other products. Smith agreed to pay restitution of $24,919,254 and forfeit approximately $3,052,215.

On September 26, 2018, Roix and HealthRight pleaded guilty to conspiracy to commit health care fraud for their roles in the scheme and agreed to pay restitution of $5,000,000. Roix faces a term of up to 10 years in prison. Sentencing for Roix is set for October 25, 2021.

Smith’s guilty plea follows pleas by Mihir Taneja, Arun Kapoor, Maikel Bolos, and Sterling-Knight Pharmaceuticals in December 2020. In those plea agreements, Taneja, 46, of Tampa, Florida, and Kapoor, 47, of Temple Terrace, Florida, pleaded guilty to felony mis-branding. Maikel Bolos, 35, of Tampa, Florida, pleaded guilty to conspiracy to commit health care fraud and mail fraud, and Sterling-Knight Pharmaceuticals, a Nevada company operated out of Tampa, Florida, pleaded guilty to conspiracy to commit health care fraud. Taneja, Kapoor, and Sterling-Knight agreed to pay restitution of $20,981,786. Sterling-Knight also agreed to forfeit $6,168,398. Taneja and Kapoor, each, face a term of up to 3 years in prison. Bolos faces a term of up to 5 years in prison. Sentencing for Taneja, Kapoor, Bolos, and Sterling-Knight is set for October 18, 2021.

“The protection and integrity of our health care programs are vital to the citizens they serve. Many Tennesseans rely on these health care programs to maintain a healthy quality of life, and it is critical we protect the viability of these programs,” said U.S. Attorney J. Douglas Overbey.

“Telemarketing fraud is a major threat to the integrity of government and commercial insurance programs,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “After improperly soliciting patient information, these marketing companies obtained approvals through contracted telemedicine prescribers, then sold those costly prescriptions to pharmacies in exchange for kickbacks.”

“Health care fraud can affect everyone, and Homeland Security Investigations (HSI) is committed to stopping these criminals in their tracks,” said HSI Tampa acting Special Agent in Charge Kevin Sibley. “This investigation highlights the importance of law enforcement partnerships across the nation and around the world.”

“The U.S. Office of Personnel Management Office of the Inspector General is committed to protecting the federal health care programs from schemes that undermine the integrity of the program,” said Norbert E. Vint, Deputy Inspector General Performing the Duties of the Inspector General. “I am very proud of our investigative staff and partners at the Department of Justice for their hard work on behalf of American taxpayer.”

“Today’s announcement demonstrates that companies and individuals who place profits above patient safety will be held accountable for their actions,” said Special Agent in Charge Justin C. Fielder, FDA Office of Criminal Investigations Miami Field Office. “We will continue to work with the Department of Justice and our law enforcement partners to bring to justice those who jeopardize the U.S. public health.”

“Health care fraud is a severe crime problem that impacts every American. The FBI, with its law enforcement partners, will continue to allocate resources to investigate these crimes and prosecute those that are intent on defrauding the health care system,” said Special Agent in Charge Joseph Carrico of the FBI Knoxville Field Office.

The trial of the remaining defendants will commence July 13, 2021, in the district court in Knoxville, Tennessee.

The prosecution and plea agreements were coordinated by Assistant U.S. Attorneys TJ Harker, Mac Heavener, Anne-Marie Svolto, and Gretchen Mohr of the U.S. Attorney’s Office for the Eastern District of Tennessee, and Trial Attorney David Gunn of the Department’s Consumer Protection Branch. Assistant U.S. Attorneys TJ Harker and Mac Heavener, and Trial Attorney David Gunn will try the matter for the government and represent the government at court proceedings.

These plea agreements resulted from a multi-year investigation conducted by the U.S. Department of Health & Human Services Office of Inspector General (Nashville); Food and Drug Administration Office of Criminal Investigations (Nashville); U.S. Postal Service, Office of Inspector General (Buffalo, New York); Federal Bureau of Investigation (Knoxville and Johnson City, Tennessee); Office of Personnel Management Office of the Inspector General (Atlanta); and the Department of Homeland Security, Homeland Security Investigations (Tampa). The U.S. Marshals Service also assisted in the investigation and the forfeiture of assets.

The case is United States v. Andrew Assad et al (2:18-CR-140). Related cases are United States v. Mihir Taneja (2:20-CR-111), United States v. Arun Kapoor (2:20-CR-110), United States v. Sterling-Knight Pharmaceuticals LLC (2:20-CR-113), United States v. Maikel Bolos (2:20-CR-112), and United States v. Scott Roix and HealthRight LLC (2:18-CR-133).

https://www.justice.gov/usao-edtn/pr/four-men-and-seven-companies-indicted-billion-dollar-telemedicine-fraud-conspiracy;

https://www.justice.gov/usao-edtn/pr/telemarketer-and-his-companies-agree-pay-25-million-settle-allegation-they-operated

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NEWARK, N.J. – A Palm City, Florida, man today admitted participating in a compounded medication kickback scheme that he and others ran out of a pharmacy in Clifton, New Jersey, U.S. Attorney Philip R. Sellinger announced.

Anderson Triggs, 42, pleaded guilty by videoconference before U.S. District Judge John Michael Vazquez to an information charging him with one count of conspiracy to violate the Anti-Kickback Statute.

According to documents filed in this case and statements made in court:

From 2014 through 2016, Triggs and his conspirators used Main Avenue Pharmacy, a mail-order pharmacy with a storefront in Clifton, New Jersey, to run a kickback scheme involving compounded drugs like scar creams, pain creams, migraine mediation, and vitamins. Compounded drugs are prescribed by a physician when an FDA-approved drug did not meet the health needs of a particular patient, such as when a dye or preservative triggers an allergic reaction, or when a patient can’t swallow an FDA-approved pill.

Triggs started as a consultant to Main Avenue Pharmacy and later became a board member of its corporate parent. The scheme revolved around identifying compounded drugs that would yield exorbitant reimbursements from health insurers, including both federal and commercial payers.

The physicians who signed prescriptions for compounded medications that were filled at Main Avenue frequently had never even spoken to the patients or examined them. Once the prescriptions were signed by a doctor, they would be returned to the marketing company, which would transmit the prescription to Main Avenue Pharmacy, which would fill them and submit claims to health care benefit programs for reimbursement

On compounded medications alone, Main Avenue received over $34 million in reimbursements from health care benefit programs, approximately $8 million of which was paid by federal payers. Triggs earned over $900,000 through the course of the scheme.

The charge of conspiracy to violate the Anti-Kickback Statute carries a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greatest. Sentencing is scheduled for June 21, 2022.

U.S. Attorney Sellinger credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; the Department of Defense Office of Inspector General, Defense Criminal Investigative Service under the direction of Special Agent in Charge Patrick J. Hegarty; and special agents of the Department of Health and Human Services, Office of the Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, with the investigation leading to the charges.

The government is represented by Senior Trial Counsel Jason S. Gould of the Health Care Fraud Unit of the U.S. Attorney’s Office in Newark.

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SYRACUSE, NEW YORK - Jennifer Caloia, age 57, a licensed pharmacist who owned and operated Dougherty Pharmacy in Morrisville, New York, from 1998 to 2015, was sentenced today in federal court in Utica to serve a two-year term of probation, perform 80 hours of community service, a fine in the amount of $10,000.00, a special assessment of $100 after previously pleading guilty to one felony count of health care fraud.

The announcement was made by Acting United States Attorney Antoinette T. Bacon; Janeen DiGuiseppi, Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation (FBI); Scott J. Lampert, Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of Inspector General (HHS OIG); Ralph D. Tortora III, Regional Director, New York Attorney General’s Medicaid Fraud Control Unit, Syracuse Office; Carol S. Hamilton, Regional Director, U.S. Department of Labor Employee Benefits Security Administration (DOL EBSA); and Shirin Emami, Acting Superintendent, New York State Department of Financial Services.

In pleading guilty previously, Jennifer Caloia admitted that between 2011 and 2015 she defrauded public and private health insurance programs by submitting false and fraudulent claims for prescription drugs that the pharmacy did not dispense. Caloia also admitted that customers submitting prescriptions for medications had their health insurance providers billed for more expensive drugs than those prescribed. To facilitate this scheme, Caloia changed the names of some of the prescription drugs in the software she used to communicate with insurance companies and to print drug labels, which allowed her to submit her fraudulent claims while providing the customer with the appropriate labels and instructions. Evidence presented to the court in support of Caloia’s guilty plea also revealed that in at least a few instances she dispensed a drug different than what a customer’s doctor had prescribed as part of her scheme to defraud. Caloia no longer owns or operates Dougherty Pharmacy.

In sentencing Caloia, United States District Judge David N. Hurd also ordered her to pay restitution in the amount of $110,431.02 to the public and private insurers affected by her fraud scheme.

In separately negotiated civil settlements with the Civil Division of the United States Attorney’s Office for the Northern District of New York and the New York State Attorney General’s Office, Caloia and her company agreed to pay $92,308.76 related to her submission of false claims to public insurers such as Medicare and Medicaid. The civil settlement resolves a whistleblower lawsuit filed under the qui tam provisions of the federal and New York False Claims Acts, which allow private persons, knowns as “relators,” to file civil actions on behalf of the government and share in any recovery. The relator in this case will receive $18,461.75 of the settlement proceeds. The federal civil case is docketed with the United States District Court for the Northern District of New York under number 6:17-cv-92 (BKS/ATB).

This case was investigated by the Federal Bureau of Investigation (FBI); the U.S. Department of Health and Human Services, Office of Inspector General (HHS OIG); the U.S. Drug Enforcement Administration (DEA), the U.S. Department of Labor-Employee Benefits Security Administration (DOL EBSA), New York Attorney General’s Medicaid Fraud Control Unit; and the New York State Department of Financial Services, and it is being prosecuted by Assistant U.S. Attorney Michael F. Perry. The civil investigation is being handled by Assistant United States Attorney John Hoggan and New York Attorney General’s Medicaid Fraud Control Unit, Syracuse Office Regional Director Ralph D. Tortora III.

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ST. LOUIS – Earlier this week a federal grand jury indicted Michael McCormac with one count of health care fraud and three counts of violations of the Anti-Kickback Statute. The indictment was suppressed until today.

The indictment charges Michael McCormac, the former owner of GoLiveWell Pharmacy in Creve Coeur, Missouri with one count of health care fraud and three counts of violations of the Anti-Kickback Statute. McCormac is accused of paying kickbacks to marketing companies for referrals of prescriptions for topical creams, oral medications, and antibiotic and antifungal drugs referred to as “foot bath” drugs, which were filled by GoLiveWell and reimbursed by federal health insurance.

McCormac is accused of paying the kickbacks to marketing companies as various percentages, or “margins,” which are net profits on each prescription. The indictment also alleges that McCormac was aware that patients often did not have a valid doctor/patient relationship with the providers who signed the prescriptions and that the prescriptions were not medically necessary.

GoLiveWell primarily functioned as a mail-order pharmacy, which filled prescriptions for federal health insurance beneficiaries throughout the United States between on or about March 17, 2017 and November 30, 2019. Through the health care fraud and kickback scheme alleged in the indictment, Medicare paid at least $4.7 million to GoLiveWell to which it was not entitled, Missouri Medicaid paid at least $490,000 to GoLiveWell to which it was not entitled, and Ohio Medicaid paid at least $330,000 to GoLiveWell to which it was not entitled.

“Individuals who seek to enrich themselves through kickback fraud schemes -- as alleged in this case -- undermine the taxpayer-funded Medicare and Medicaid programs and drive up health care costs for everyone,” said Special Agent in Charge Curt L. Muller, of the U.S. Department of Health and Human Services Office of Inspector General. “We remain committed to working closely with our law enforcement partners to swiftly investigate such fraud allegations.”

Charges set forth in the indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.

The case was investigated by the Office of Inspector General for the United States Department of Health and Human Services and the Federal Bureau of Investigation.

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SAN ANTONIO – Federal authorities have charged a pharmacy technician at the Veterans Affairs Medical Center in Kerrville (VAMC) with stealing hydrocodone and oxycodone prescriptions from the VAMC mailroom and from mailboxes at some 40 locations in Kerrville, Ingram and Center Point.

A federal criminal complaint charges 35-year-old Kerrville resident Scott M. Brown with one count of theft of U.S. Mail. According to the complaint, the Kerr County Sheriff’s Office received several theft reports from victims beginning in March 2021. Victims reported that their prescriptions sent from the VAMC were missing. According to the complaint, Brown allegedly stole packaged narcotics from inside the VAMC mailroom as well as residential mailboxes between March and April 2021.

U.S. Attorney Ashley C. Hoff; Drug Enforcement Administration (DEA) Special Agent in Charge Daniel C. Comeaux, Houston Field Office; U.S. Postal Inspection Service (USPIS) Inspector in Charge Adrian Gonzalez, Houston Division; U.S. Department of Veterans Affairs Office of Inspector General (VAOIG) Special Agent in Charge Jeffrey Breen, South Central Field Office; and Kerr County Sheriff L.L. Leitha made today’s announcement.

Upon conviction, Brown faces up to five years in federal prison. He remains in custody awaiting a detention hearing scheduled for 10:45 a.m. on Monday in San Antonio before U.S Magistrate Judge Henry Bemporad.

The DEA, USPIS, VAOIG and the Kerr County Sheriff’s Office are investigating this case. Assistant U.S. Attorney Priscilla Garcia is prosecuting this case.

A criminal complaint is merely a charge and should not be considered as evidence of guilt. The defendant is presumed innocent until proven guilty in a court of law.

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Veterans could be in for a surprise when they try filling a prescription at the local drug store on Monday.

Starting then, the outfit that administers the Tricare Pharmacy Benefit Program for active and retired Veterans is shrinking its nationwide drug store network by 15,000 stores or 30%, according to the National Community Pharmacists Association, an Alexandria, Va.-based trade group that is fighting the cut.

Express Scripts Inc. is the St. Louis, Missouri-based pharmacy benefit giant that administers the prescription program for Tricare members. In August, it was awarded a $4.3 billion Department of Defense contract to run the program.

The pharmacists association estimated that some 400,000 or about 4% of Tricare’s 9.7 million pharmacy benefit beneficiaries will be affected.

The cut by Express Scripts angered some pharmacists and Veterans, even though the company promised that more than 90% of beneficiaries will have an in-network drugstore within a 15-minute drive of their home after the downsizing.

“The families defending our country are being pushed through a system of greed and profiteering,” said Chris Antypas, president and CEO of Asti’s South Hills Pharmacy in Castle Shannon. “These are people we’ve taken care of forever. It’s hard to walk away from that. It’s an absolute disaster.”

A preferred pharmacy network increases the margin for payers by creating consumer incentives to shop where payer costs are lowest.

In a statement Thursday, Express Scripts said the company would help beneficiaries find an in-network pharmacy, which will include 41,000 chain, grocery and independent drugstores. Giant Eagle, Rite Aid, CVS Health, and Walgreens are among the local pharmacies that will be in-network for Tricare. Walmart will not.

The company declined to confirm the number of stores that would go out of network on Monday, but even some drugstores that remain on the in-network list may disappear soon.

CVS Health announced last year that it was closing about 900 of its retail pharmacies in the U.S. Adam Fein, CEO of Philadelphia-based consultant Drug Channels Institute, blamed the closings on increased competition, expanded prescription of low-margin generic drugs and other factors.

Locally, the number of Veterans who will be affected by the Express Scripts decision was difficult to pin down.

There were 745,909 civilian Veterans in Pennsylvania in 2018, according to the U.S. Census. That includes between 7.6% and 10.1% of the populations of Allegheny and the six surrounding counties. But not all Veterans have Tricare pharmacy benefits and not all will be affected by the smaller network.

Still, one group worried about access to medicines as the result of the downsizing.

“The cut to the Tricare pharmacy network is unprecedented and shortsighted” and it “will likely create insurmountable barriers to accessing essential medications for many beneficiaries,” the Military Officers Association of America, an Alexandria, Va.-based advocacy group wrote in an Oct. 19 editorial.

Like other community pharmacists, Erich Cushey, owner of three Curtis Pharmacy stores in Washington and Fayette counties, said he refused to sign a new contract with Express Scripts, which set the reimbursement he would receive for filling Tricare prescriptions. The payments were below his cost for the medicines, he said.

“It was a take-it-or-leave-it contract,” said Mr. Cushey, whose staff has administered COVID-19 vaccines to Veterans in addition to filling their prescriptions. “We can’t afford to sign that contract. We should be helping Veterans wherever they choose to get prescriptions.”

Asti’s South Hills Pharmacy’s Mr. Antypas said his losses on filling Tricare prescriptions in the new contract would range between $10 and $100 or more, depending on the price of the drug.

Express Scripts runs its own mail-order pharmacy in addition to serving as a pharmacy benefit manager, so a loss of customer from a small drugstore is a likely gain for the bigger company, he said.

“They want us to disappear because if we disappear, those prescriptions go to them,” he said.

What’s different between the local pharmacy and mail-order prescriptions from Express Scripts is service and a human face, said John Stavovy, who retired after 32 years in the military and co-founded Washington, Pa.-based home builder Mesa Wood Ltd. Mr. Stavovy, 74, said he’s had problems with Express Scripts’ mail order system.

“They mess up everything,” he said. “It’s all online, you can’t talk to anybody. They’re just very difficult to work with.”

In a prepared statement, Express Scripts spokesman Meaghan MacDonald said the company couldn’t speak to Mr. Stavovy’s experience, but its pharmacy fills about 100 million prescriptions a year, with 99% accuracy and “consistently high levels of patient satisfaction.”

At Curtis Pharmacy in Washington, three miles from Mr. Stavovy’s home, he said his questions are answered promptly and prescriptions are filled without a hitch. Curtis will be out of his network of providers on Monday.

“I call and they’ll give me the owner,” Mr. Stavovy said. “They’re so nice down there. Curtis Pharmacy is really a hometown thing.”

Mr. Stavovy said he hadn’t yet figured out the location of the nearest in-network Express Scripts pharmacy.

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MOBILE, Ala. (WPMI) — Heritage Compounding Pharmacy, based in Mobile on Midtown Park East, has settled a federal fraud case for more than $1.9 Million.

A federal complaint filed in October alleged that Heritage and its owners Christopher and Marti Burgess defrauded TRICARE and CHAMPVA, both of which provide healthcare benefits for U.S. Military members, of more than $2.8 Million between January 2013 and May 2015.

The settlement agreement filed in November requires Heritage and the Burgesses to pay $450,000 within 10 days of the agreement being accepted and $2,500 per month beginning in December until the settlement amount of $1,910,392 is fulfilled.

Online records indicate that Heritage Compounding Pharmacy closed in June 2018 and that in 2015 Christopher Burgess formed Rockwell Pharmaceuticals, LLC located in Daphne.

Marti Burgess’ Facebook page indicates she has been a pharmacist for Walmart since July 2016.

According to the Alabama Board of Pharmacy website, both Burgesses have valid state licenses with no disciplinary actions listed.

Federal prosecutors allege that between January 2013 and Mid-2015 the defendants would submit “false claims to TRICARE and CHAMPVA that were tainted by illegal kickbacks.”

Court documents also show that federal authorities believe that the defendants used pre-printed prescriptions for Ketamine, a Schedule III controlled substance, that “were not medically necessary or prescribed by a physician who had a legitimate physician-patient relationship.”

U.S. Magistrate Judge Sonja Bivens signed the Stipulation of Settlement and Consent Judgement Monday.

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TUSCALOOSA, Ala. – This week, Chief U.S. District Judge L. Scott Coogler sentenced two dozen defendants who were part of a major conspiracy to commit health care fraud, announced U.S. Attorney Prim F. Escalona, Federal Bureau of Investigation Special Agent in Charge Johnnie Sharp, Jr., U.S. Department of Health and Human Services, Office of Inspector General, Special Agent in Charge Derrick L. Jackson, Defense Criminal Investigative Service Special Agent in Charge Cynthia Bruce, United States Postal Inspector in Charge, Houston Division, Adrian Gonzalez, and Internal Revenue Service Criminal Investigation Special Agent in Charge James E. Dorsey.

The defendants sentenced included an array of company executives and managers, a prescriber, billers, and sales representatives. Among those sentenced this week were:

John Jeremy Adams, 40, of Panama City Beach, Florida, the president and CEO of Global Compounding Pharmacy (Global), who directed the fraud and made millions from it, was sentenced to 170 months in prison on one count of conspiring to commit health care fraud and mail fraud, 19 counts of health care fraud, one count of conspiring to pay kickbacks to a prescriber, and 8 counts of spending the proceeds of health care fraud. Adams pleaded guilty to the charges in May 2020.

James A Mays, III, 45, of Winfield, Ala., was sentenced to 102 months in prison on one count of conspiring to commit health care fraud and mail fraud, twelve counts of health care fraud, and three counts of money laundering based on spending the proceeds of health care fraud. Mays was the pharmacist who handled Global’s compounding operation and made millions during the conspiracy. Mays pleaded guilty to the charges in February 2021.

Jessica Linton, 38, of Clearwater, Florida, was sentenced to 132 months in prison on one count of conspiracy, thirteen counts of health care fraud, three counts of mail fraud, and seven counts of aggravated identity theft. Linton was the manager in charge of Global’s billing center; she altered and added prescriptions, billed insurers for medically unnecessary prescriptions, and helped hide the fraud from auditors. In February 2021, a federal jury convicted Linton of these charges.

John Gladden, 51, of Tallahassee, Florida, was sentenced to 64 months in prison on one count of conspiracy, six counts of health care fraud, one count of mail fraud, and one count of aggravated identity theft. Gladden, a district manager for Global during most of 2015, directed his sales representatives to get medically unnecessary prescriptions for themselves and their family members and profited from the scheme. In February 2021, a federal jury convicted Gladden of these charges.

Phillip Marks, 52, of St. Augustine, Florida, was sentenced to 36 months in prison on one count of conspiracy and twelve counts of health care fraud. Marks served as a manager of the sales managers and, in 2015, pressured subordinates to get unnecessary prescriptions for themselves and their family members. Marks made more than $400,000 during his time at Global. He pleaded guilty to the charges in September 2018.

“The health care fraud conspiracy and scheme executed by these defendants caused health insurance companies to lose millions of dollars,” U.S. Attorney Escalona said. “These defendants manipulated the system for their own personal gain without regard for patient need or medical necessity. I applaud our prosecutors and law enforcement partners for their commitment and hard work on this complex investigation and prosecution.”

The sentencings came after an extensive investigation into a prescription drug billing scheme involving a Haleyville, Ala.-based pharmacy, Northside Pharmacy, doing business as Global Compounding Pharmacy. More than two dozen defendants pleaded guilty to charges, and two additional defendants went to trial in February 2021.

From 2013 to 2016, this large-scale conspiracy billed insurers for massive quantities of medically unnecessary prescription drugs. The scheme involved directing employees to get medically unnecessary drugs for themselves, family members, and friends, changing prescriptions to add non-prescribed drugs because insurance would pay for them, automatically refilling prescriptions regardless of patient need, routinely waiving and discounting co-pays to induce patients to get and keep medically unnecessary drugs, and billing for drugs without patients’ knowledge. When prescription drug administrators attempted to police this conduct, the conspirators hid their fraud and obstructed detection efforts—including by lying to auditors and diverting their billing through affiliated pharmacies. The scheme targeted multiple health insurance plans, including the pharmacy’s Blue Cross Blue Shield of Alabama plan, as well as plans providing health insurance to the elderly, disabled, members of the military, and Veterans—Medicare, TRICARE, and CHAMPVA, among others.

The scheme resulted in pharmacy benefit managers paying Global nearly $50 million in claims in just a two-year period. Global received more than $13 million from prescriptions written by prescribers who were either paid cash to write them or whose spouses worked as Global sales reps. One nurse practitioner who wrote prescriptions was paid kickbacks in paper bags filled with thousands of dollars in cash and left in her car. Global also received over $8.4 million for prescriptions Global employees got for themselves—including from doctors they had never seen as patients. In some cases, Global was paid as much as $30,000 or more for a single tube of compounded cream.

The FBI, HHS-OIG, DCIS, USPIS, and IRS-CI investigated the cases. Assistant U.S. Attorneys J.B. Ward, Edward Canter, and Don Long prosecuted the case. The U.S. Department of Veterans Affairs Office of Inspector General, Criminal Investigations Division, aided in the investigation.

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WILMINGTON, N.C. – A Pembroke woman pleaded guilty today to Conspiracy to Commit Healthcare Fraud.

According to court documents, Melisha Oxendine West pleaded guilty to Conspiracy to Commit Healthcare fraud. The charge to which West pled guilty alleges that from 2006 through July of 2017, West was employed at Townsend’s Pharmacy, located at 111 S. Main Street in Red Springs, North Carolina. During that time, West conspired with the owner of the pharmacy and others to bill fraudulent claims to Medicare, Medicaid, and private health insurers, such as Blue Cross and Blue Shield of NC. According to the charge, West and others did this by fraudulently reauthorizing previously existing prescriptions from licensed medical providers, and billing health care benefit programs as though those drugs had been dispensed.

West pleaded guilty to a violation of Title 18, United States Code, Section 1349, and faces a statutory maximum of 10 years in prison and a fine amounting to as much as twice the gross gain or loss from the offense. The sentencing before United States District Judge Louise W. Flanagan will not occur earlier than 90 days from today.

Michael Easley, U.S. Attorney for the Eastern District of North Carolina made the announcement after United States Magistrate Judge Robert Jones accepted the plea. The United States Department of Health and Human Services Office of the Inspector General is investigating the case and Assistant U.S. Attorney William M. Gilmore is prosecuting the case.

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Active-duty military families, retirees and their families and others will pay more for their medicine, starting Jan. 1.

After holding the line on pharmacy costs for 2021, Tricare officials are increasing co-payments for 2022, with increases ranging from $1 to $8.

The increase, however, doesn’t affect active-duty service members themselves, who pay nothing for their covered medications through military pharmacies, retail network pharmacies and through the home delivery benefit. The increase also doesn’t apply to survivors of active-duty service members, or to medically retired service members and their family members, according to an announcement by Tricare officials.

The military pharmacy is still the lowest cost option for military beneficiaries; as always, there’s no cost for covered generic and brand-name drugs at these pharmacies.

The increases will apply to all categories of drugs: generic formulary drugs, brand-name formulary drugs and non-formulary drugs, and costs will depend on the type of pharmacy used.

Tricare formulary drugs are generic and brand-name prescription drugs that are covered by Tricare. You can search the list of formulary drugs here.

Tricare covers most prescription drugs approved by the Food and Drug Administration. Prescription drugs may be covered under the pharmacy benefit or the medical benefit.

The changes in co-pays taking effect Jan. 1:

Tricare Pharmacy Home Delivery (up to 90-day supply)

*Generic formulary drugs co-pays increase from $10 to $12

*Brand-name formulary drugs increase from $29 to $34

*Non-formulary drugs increase from $60 to $68

Tricare retail network pharmacies (up to 30-day supply)

*Generic formulary drugs increase from $13 to $14

*Brand-name formulary drugs increase from $33 to $38

*Non-formulary drugs increase from $60 to $68

Non-network pharmacies (up to 30-day supply)

*Generic formulary drugs and brand-name formulary drugs will increase from $33 to $38, or the co-pay will be 20 percent of the total cost of the drug, whichever is greater, after meeting the annual deductible.

*Non-formulary drugs will increase from $60 to $68, or the co-pay will be 20 percent of the total cost of the drug, whichever is greater, after meeting the annual deductible.

Non-network pharmacy costs stay the same for those who use a Tricare Prime plan, where you pay a 50-percent cost-share after meeting your point-of-service deductible for covered drugs.

Some brand-name maintenance drugs — taken for long-term conditions —can only be filled twice at retail network pharmacies. After the second refill, beneficiaries must use the home delivery option or a military pharmacy.

If you have other health insurance that includes a pharmacy benefit, you can’t use the Tricare pharmacy home delivery option unless your other health insurance doesn’t cover that prescription, or you’ve reached the dollar limit of your other plan.

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DETROIT - An indictment was unsealed today charging two patient recruiters and the owner and operators of a pharmacy with conspiracy to illegally distribute prescription drugs, and other opioid-related charges, Acting U.S. Attorney Saima Mohsin announced today.

Mohsin was joined in the announcement by Special Agent in Charge Timothy Waters, Federal Bureau of Investigation, Detroit Division, and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office.

Charged in the indictment are:

• Dangelo Terrell Stephens, 38, of Detroit;

• Latasha Maria Neely, 38, of Detroit;

• Hassan Samir Saad, 33, of Dearborn; and

• Ali Hussein Keblawi, 26, of Dearborn.

The indictment alleges that from June 2020 through July 2021, Stephens and Neely worked as patient recruiters/marketers, who would bring “patients” or patient information to area doctors and clinics. Those doctors and clinics, which include the owner, operators, and physician at Tranquility Wellness Center, who have been indicted in a companion case, would write or cause the writing of controlled substance prescriptions in the “patient” names, without medical necessity and outside the scope of professional medical practice, in exchange for cash payments.

As part of the conspiracy, Stephens and Neely needed the cooperation of area pharmacies, including their owners and employees. Saad was a licensed pharmacy technician who worked at and owned Heritage Medical Pharmacy, LLC, in Redford, Michigan. Keblawi was an employee at Heritage. In exchange for cash, Saad and Keblawi filled the unlawful prescriptions obtained by Stephens and dispensed, or caused the dispensing, of controlled substances to Stephens, and not to the patients to which they were prescribed. And Saad and Keblawi knew that the prescriptions were illegitimate, and, by dispensing the controlled substances, they failed to exercise their corresponding professional responsibility to determine that the prescriptions were issued for a legitimate medical purpose. Stephens and Neely then sold the controlled substances on the street.

The primary prescription drug-controlled substances illegally prescribed, filled at pharmacies, and distributed included Schedule II controlled substances Oxycodone, Oxymorphone, and Oxycodone-Acetaminophen (Percocet). These drugs were in high demand on the illegal street market, particularly Oxycodone 30mg and Oxymorphone 40mg.

Stephens is also charged with three counts of distributing Oxycodone pills, and Stephens, Saad, and Keblawi are charged with one count of distributing and aiding and abetting the distribution of Oxycodone pills.

According to the indictment, Stephens and Neely unlawfully distributed a combined total of more than 28,000 dosage units of Schedule II opioid prescriptions during the conspiracy. These controlled substances had a conservative street value more than $775,000.

Also, during the conspiracy, Saad and Keblawi unlawfully dispensed a combined total of more than 5,500 dosage units of Schedule II controlled substances, carrying a conservative estimated wholesale street value of more than $150,000.

While most of the unlawful controlled substance prescriptions were paid for in cash, both controlled and non-controlled “maintenance” medications were billed to health care benefit programs by pharmacies. Billings to the Medicare and Medicaid programs for medically unnecessary prescription drug medications and maintenance medications during this conspiracy exceeded $200,000

“The road to addiction often begins with prescription drugs, “said Acting US Attorney Mohsin. “It is for this reason we are focusing our efforts on removing individuals who contribute to the devastating opioid crisis in this country,”

“The FBI is focused on stemming the supply of illegal opioids into our communities, especially those illegally distributed by doctors and clinics,” said Timothy Waters, Special Agent in Charge of the FBI’s Detroit Division. “While we continue to work with our partners to combat this crisis that devastates communities, we ask for the public’s help by reporting any information related to the illegal sale and distribution of opioids.”

“The investigation into the unlawful prescribing and distribution of medically unnecessary controlled and/or non-controlled substances remains a priority of the OIG,” said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region. “The opioid epidemic is only exacerbated by those who seek profit over the health and safety of their patients. The OIG will continue to work with our law enforcement partners to identify instances where providers engage in the illegal distribution of opioids and waste vital taxpayer dollars.”

This case is being prosecuted by Assistant United States Attorneys Andrew J. Lievense and Alison Furtaw. The Eastern District of Michigan is one of the twelve districts included in the Opioid Fraud Abuse and Detection Unit, a Department of Justice initiative that uses data to target and prosecute individuals that are contributing to the nation’s opioid crisis.

The case was investigated by special agents and task force officers of the Federal Bureau of Investigation and the Department of Health and Human Services-Office of the Inspector General.

An indictment is only a charge and is not evidence of guilt. Each defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

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TRENTON, N.J. – The former co-owner of a Union City, New Jersey, pharmacy was sentenced today to 41 months in prison for his role in a scheme to pay bribes to health care professionals and evading taxes on $33.9 million in income, Acting U.S. Attorney Rachael A. Honig announced.

Igor Fleyshmakher, 59, of Holmdel, New Jersey, previously pleaded guilty before U.S. District Judge Michael A. Shipp to an information charging him with conspiring to violate the federal anti-kickback statute and tax evasion. Judge Shipp imposed the sentence today in Trenton federal court.

According to documents filed in this case and statements made in court:

The Prime Aid Pharmacies – now closed – operated as “specialty pharmacies” out of locations in Union City, New Jersey, and Bronx, New York. They processed expensive medications used to treat various conditions, including Hepatitis C, Crohn’s disease, and rheumatoid arthritis. Igor Fleyshmakher was a co-owner of Prime Aid Union City. Samuel “Sam” Khaimov was the other co-owner of Prime Aid Union City and the lead pharmacist of Prime Aid Bronx. Yana Shtindler was Khaimov’s wife and managing director of Prime Aid Union City. Ruben Sevumyants was Prime Aid Union City’s operations manager, and Alex Fleyshmakher worked at Prime Aid Union City and was an owner of Prime Aid Bronx. Eduard “Eddy” Shtindler (Yana Shtindler’s brother) was a Prime Aid Union City employee.

Starting in 2010, to obtain a higher volume of prescriptions, Igor Fleyshmakher, Khaimov, Sevumyants, Alex Fleyshmakher, Eddy Shtindler, and other Prime Aid employees paid bribes to doctors and doctors’ employees to induce doctors’ offices to steer prescriptions to the Prime Aid Pharmacies. The bribes included expensive meals, designer bags, and payments by cash, check, and wire transfers. The bribes and kickbacks were paid to, among others, doctors and doctors’ employees in New Jersey and New York.

As part of his plea agreement, Igor Fleyshmakher agreed that the improper benefit conferred as part of the conspiracy to violate the federal anti-kickback statute was between $3.5 million and $9.5 million.

In addition, between 2012 and 2014, Igor Fleyshmakher diverted a substantial amount of Prime Aid Union City income into a secret bank account that he opened and controlled. He concealed the account from the pharmacy’s tax preparers and did not report any of the funds he deposited into it on his personal income tax returns. In total, he diverted $33.9 million of income into the secret account, all of which he failed to report to the IRS. As a co-owner of the pharmacy, his conduct resulted in a $5.8 million tax loss to the IRS on his share of that income for tax years 2012 through 2014.

In addition to the prison term, Judge Shipp sentenced Fleyshmakher to three years of supervised release and ordered him to pay $5.8 million in restitution and a $100,000 fine.

Khaimov, Yana Shtindler, and Sevumyants have been charged together by superseding indictment with health care fraud offenses and violations of the anti-kickback statute, and that matter is pending. In addition, the following individuals associated with the Prime Aid Pharmacies have pleaded guilty for their respective roles in the kickback and bribery scheme described above: Joel Grimshaw, a former Prime Aid sales representative, Yudelka “Vicky” Ayala, a doctor’s employee who received over $200,000 in bribes and kickbacks as part of the scheme, and Alex Fleyshmakher, who also pleaded guilty to conspiring to defraud the IRS, resulting in losses to the IRS of over $9,000,000. Eddy Shtindler also pleaded guilty for his role in a related kickback conspiracy. These four defendants have not yet been sentenced.

Acting U.S. Attorney Honig credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez; special agents of the Department of Health and Human Services-Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; and the N.J. Office of the State Comptroller, under the direction of Acting Comptroller Kevin D. Walsh, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Joshua L. Haber of the Health Care Fraud Unit of the U.S. Attorney’s Office in Newark.

The charges against and allegations in the information pertaining to Khaimov, Yana Shtindler, and Sevumyants are merely accusations, and those three defendants are presumed innocent unless and until proven guilty.

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A New York woman was sentenced today to 78 months in prison for defrauding health care programs, including more than $6.5 million from Medicare Part D plans and Medicaid drug plans.

According to court documents, Aleah Mohammed, 37, of Queens, pleaded guilty to one count of mail fraud, one count of health care fraud, and one count of conspiracy to commit health care fraud.

According to court documents, Mohammed was an owner and operator of five pharmacies: Superdrugs Inc., Superdrugs I Inc., Superdrugs II Inc., S&A Superdrugs II Inc. and Village Stardrugs Inc. Between 2015 and 2020, Mohammed used these pharmacies to defraud health care programs, including Medicare and Medicaid, by submitting claims for prescription drugs that were not dispensed, not prescribed as claimed, not medically necessary, or that were purportedly dispensed during a time when the pharmacy was no longer registered with the State of New York. The fraudulent claims included claims for expensive prescription drugs for the treatment of the human immunodeficiency virus (HIV). Mohammed used proceeds of the scheme to purchase herself luxury items, such as jewelry and a Porsche.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division; U.S. Attorney Breon Peace for the Eastern District of New York; Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Office of Investigations; Assistant Director Luis Quesada of the FBI's Criminal Investigative Division; and Assistant Director-in-Charge Michael J. Driscoll of the FBI’s New York Field Office made the announcement.

HHS-OIG and the FBI investigated the case.

Trial Attorneys Andrew Estes and Patrick J. Campbell of the Criminal Division’s Fraud Section prosecuted the case.

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Defendant Used Proceeds of Schemes to Purchase Luxury Items, Including a Porsche and Jewelry

BROOKLYN, NY – Earlier today, in federal court in Brooklyn, Aleah Mohammed pleaded guilty before United States District Judge Eric N. Vitaliano to mail fraud, health care fraud, and conspiracy to commit health care fraud stemming from multiple schemes to defraud health care programs, including obtaining more than $6.5 million from Medicare Part D Plans and Medicaid drug plans. When sentenced, the defendant faces up to 40 years’ imprisonment. As part of her plea agreement, Mohammed has agreed to forfeit $5.1 million and pay over $6.5 million in restitution.

Mark. J. Lesko, Acting United States Attorney for the Eastern District of New York; Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG); announced the guilty plea.

“With today’s guilty plea, Mohammed is held accountable for stealing millions of dollars from the taxpayer-funded Medicare and Medicaid programs to line her own pockets,” stated Acting U.S. Attorney Lesko. “This Office and our law enforcement partners are committed to safeguarding these vital health care programs and recovering ill-gotten proceeds from corrupt healthcare operators.”

“In attempting to finance a lavish lifestyle, Mohammed stole millions of dollars intended to provide medical and health services to the elder population, individuals with disabilities, and other HHS beneficiaries,” stated HHS-OIG Special Agent-in-Charge Lampert. “HHS-OIG, in collaboration with our law enforcement partners, is boldly committed to investigating illegal acts that target Federal health care programs and bringing the fraudsters to justice.”

According to court filings, Mohammed, 36, of Queens, New York, was an owner and operator of Superdrugs Inc., Superdrugs I Inc., Superdrugs II Inc., S&A Superdrugs II Inc. and Village Stardrugs Inc. From approximately May 2015 to January 2018 and December 2018 to March 2020, Mohammed submitted fraudulent claims to Medicare and Medicaid, for reimbursement for prescription drugs that were not dispensed, prescribed as claimed, or medically necessary, or that were purportedly dispensed during a time when Village Stardrugs was no longer registered with the State of New York. The fraudulent claims included claims for prescription drugs for the treatment of the human immunodeficiency virus (HIV). Mohammed used the proceeds of the scheme, among other things, to purchase luxury items such a Porsche and jewelry.

The FBI and HHS-OIG are investigating the case, which was brought as part of the Medicare Fraud Strike Force under the supervision by the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section. Trial Attorney Andrew Estes of the Fraud Section is in charge of the prosecution.

The Defendant:

ALEAH MOHAMMED

Age: 36

Queens, New York

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LOS ANGELES – A West Los Angeles pharmacist was sentenced today to 30 months in federal prison for orchestrating a scheme that fraudulently obtained millions of dollars for compounded drugs in a scheme that paid illegal kickbacks for patient referrals and fraudulently paid patients’ copayments.

Navid Vahedi, 42, of Brentwood, was sentenced by United States District Judge Christina A. Snyder. Vahedi and his West Los Angeles-based company, Fusion Rx Compounding Pharmacy, pleaded guilty in February 2021 to one count of conspiracy to commit health care fraud and payment of illegal remunerations.

On January 18, Judge Snyder sentenced Fusion Rx Compounding Pharmacy to five years of probation. She has ordered Vahedi and his company to jointly pay $4,400,525 in restitution.

Fusion Rx was a provider of compounded drugs, which are tailor-made products doctors may prescribe when FDA-approved alternatives do not meet the health needs of patients. Vahedi, a licensed pharmacist, and Fusion Rx routed millions of dollars in kickback payments through the businesses of two marketers to steer prescriptions for compounded drugs to Fusion Rx.

As part of the scheme, Vahedi and the two marketers provided physicians with preprinted prescription script pads that offered “check-the-box” options on the form to maximize the amount of insurance reimbursement for the compounded drugs. From May 2014 to at least February 2016, Fusion Rx received approximately $14 million in reimbursements on its claims for compounded drug prescriptions.

As part of its contracts with various insurance networks, Fusion Rx was obligated to collect copayments from patients. Because the copayments might discourage patients from requesting expensive and potentially unnecessary compounded drug prescriptions, Fusion Rx did not collect copayments with any regularity and, in other instances, it provided gift cards to patients to offset the amount of the copayments, according to court documents.

After an audit raised concerns that Fusion Rx’s failure to collect copayments would be discovered, Vahedi directed Fusion Rx funds to be used to purchase American Express gift cards, which were then used to make copayments for certain prescriptions without the patients’ knowledge. Fusion Rx then submitted claims on these prescriptions to various insurance providers, falsely representing that patients had paid the required copayments.

“As a pharmacist offering compounded medications, [Vahedi] had a real opportunity to use his skills to help patients in need, individuals whose unique health challenges made it impossible for them to depend on the FDA-approved medications others rely on,” prosecutors wrote in a sentencing memorandum. “Instead, defendant converted his pharmacy into an assembly line for his own enrichment.”

The two marketers involved in the scheme – Joshua Pearson, 42, of St. George, Utah, and Joseph Kieffer, 41, of West Los Angeles – previously pleaded guilty in this case. Judge Snyder sentenced Kieffer to six months in federal prison and ordered him to pay $1.25 million in restitution. Pearson was sentenced to three years of probation.

The Defense Criminal Investigative Service, the FBI, the Amtrak Office of Inspector General, the Office of Personnel Management’s Office of Inspector General, and the Office of Inspector General for the United States Department of Health and Human Services investigated this matter.

Assistant United States Attorneys Alexander B. Schwab of the Major Frauds Section and Jonathan S. Galatzan of the Asset Forfeiture Section prosecuted this case.

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