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DOJ goes after an alleged $1B telemedicine fraud scheme
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DOJ goes after an alleged $1B telemedicine fraud scheme

11.12.18

 The Justice Department has shown sustained interest in cracking down on individuals and corporations involved in healthcare fraud.

Four individuals and seven pharmacies located in Florida and Texas were indicted in the U.S. District Court for the Eastern District of Tennessee and charged with allegedly operating a billion-dollar telemedicine fraud scheme related to large markups of misbranded drugs and pain creams.

DOJ alleges that Andrew Assad, Peter Bolos, and Michael Palso — along with their compounding pharmacies Precision Pharmacy Management and Synergy Pharmacy Services — and Larry Smith and his companies — Tanith Enterprises, ULD Wholesale Group, Alpha-Omega Pharmacy, Zoetic Pharmacy, and Germaine Pharmacy — engaged in a fraudulent telemedicine scheme in which the defendants fraudulently solicited insurance coverage information and prescriptions.

According to the Justice Department, the defendants’ telemedicine fraud scheme resulted in at least $931 million worth of fraudulently submitted claims from June 2015 and April 2018. The scheme ultimately deceived “tens of thousands of patients and more than 100 doctors located in the Eastern District of Tennessee and elsewhere for the purpose of executing a scheme and artifice to defraud health care benefit programs, and to obtain by means of false and fraudulent pretenses, representations, and promises.”  Private payors in the region, including Blue Cross Blue Shield of Tennessee, were defrauded of $174 million.

The individuals and their companies face multiple charges, including conspiracy to commit healthcare fraud, mail fraud and introducing misbranded drugs into interstate commerce.  If convicted, the companies may face fines up to twice the gross loss from the conspiracy.  The four individuals may each face up to a combined 33 years in prison for their involvement, up to $250,000 in fines, and three years of supervised release for each count.

The pharmacies were working alongside HealthRight, a telemedicine company located in Florida and Pennsylvania.  HealthRight and its CEO, Scott Roix, pled guilty to felony conspiracy in September to their role in the healthcare fraud scheme.  Roix’s sentencing is scheduled for February 13, 2019.  He faces a five-year maximum sentence.

The recently unsealed indictment outlines the general course of business for a telemedicine company and concludes that a “telemedicine company typically [has] no reason to obtain health and prescription insurance information from patients.”  However, a doctor consulting with a patient through a telemedicine company may issue a prescription through the patient’s pharmacy.  In turn, the pharmacy would submit a claim for the prescription to the patient’s insurer and collect a copay from the patient prior to dispensing the medication.

Pursuant to an agreement between the numerous defendants, HealthRight was alleged to have obtained health insurance information directly from patients and delivered signed prescriptions to the seven pharmacies involved in the scheme.  Additionally, the medications prescribed were pre-selected based upon increasing profits for the defendants and required that every patient have health insurance with prescription coverage.  The companies disguised the true nature of their arrangement by making it appear as though the entities were purchasing bona fide marketing services instead of purchasing prescriptions in violation of federal law.

The indictment also alleges that HealthRight additionally interfered with the creation of a valid physician-patient relationship by submitting substantially all patient consultations in an electronic or “e-consult” format as opposed to telephonic format.  Ninety-five percent of the patients never spoke to the prescribing doctors.  HealthRight utilized e-consults to prevent doctors from speaking freely with patients who may complain about paying for inflated wholesale prices for their prescriptions, thus revealing to the doctor that the patient never requested the prescription as HealthRight had led on.  The physicians that approved the prescriptions were allegedly unaware that the defendants were inflating the prices of the invalidly prescribed drugs, which were then billed to private payers.

The case is United States v. Assad, No. 18-cr-1 (E.D. Tenn.), indictment unsealed Oct. 12, 2018.

Tayler Chambless contributed to this report.



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