Telemedicine pharmacy arrangements continue to be of significant interest to fraud enforcement. A 2018 case in which four individuals and seven companies were indicted ended in a month-long jury trial of one of the individuals, a Florida pharmacy owner. The federal jury trial in the billion-dollar telehealth pharmacy fraud scheme resulted in conviction on 22 counts of mail fraud, conspiracy to commit health care fraud and introduction of misbranded drugs into interstate commerce. Sentencing in the case is set for May of 2022. Other co-conspirators entered plea agreements along the way, pleading guilty to various charges including felony conspiracy to commit health care fraud, felony misbranding, conspiracy to commit wire fraud, and fraudulent telemarketing of dietary supplements, skin creams and testosterone. Many of these are still awaiting sentencing, also expected to be scheduled sometime in 2022.
THE SCHEME
The scheme involved several individuals, compounding pharmacies and telemarketers engaged in a conspiracy to commit health care fraud, mail fraud and introducing misbranded drugs into interstate commerce. Peter Bolos, along with two other co-conspirators, owned and operated Synergy Pharmacy in Palm Harbor, Florida. Working with HealthRight, a telemarketer, the co-conspirators generated prescriptions for drugs such as pain creams, scar creams, and vitamins. Using the HealthRight telemarketing platform, they would call consumers and deceive them into providing their personal insurance information and accept the drugs. HealthRight then communicated the prescription requests to physicians who authorized the prescriptions without ever interacting with the patients, and paid those physicians for issuance of the prescriptions. Through this scheme, the co-conspirators were able to solicitate insurance coverage information from consumers across the county for prescription pain creams, fraudulently obtain prescriptions, mark up the prices of the drugs and bill private insurance carriers.
Under the scheme, from June 2015 through April 2018, deceived tens of thousands of patients and more than 100 doctors in order to defraud health care benefit programs out of approximately $174 million and submit nearly a billion in fraudulent claims for payment.
In addition to fines of up to $250,000 each and forfeiture of approximately $154 million, defendants in the case face up to 20 years in prison as to each mail fraud charge, up to 10 years in prison for the conspiracy charge, and up to three years in prison for introducing misbranded drugs into interstate commerce. The companies face fines up to twice the gross loss sustained by the health care plans as a result of the conspiracy.
THE “TELL”
As is often the case, much of the fraud followed a pattern known to law enforcement (the “tell”), making easier for the DOJ to identify and prosecute. In this scheme, multiple “tells” emerged including:
- Use of a telehealth platform in which pharmacies and prescribers participate
- Payment by the pharmacies to the telehealth platform
- Payment from the telehealth platform to the prescriber
- Limited or no prescriber-patient interaction
- Unusually high volume of expensive drugs (often compounded prescriptions)
- Payments to prescribers who did not have a valid prescriber-patient relationship
The U.S. Department of Health and Human Services OIG has said (as quoted in the press release issued December 3, 2021 in this case): “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.”
CLOSING THOUGHTS
The “tell” in all of these schemes is the manipulation of the government, other payers, and patients for personal financial gain. Whenever an arrangement involves a payment between two or more health care entities, absent evidence that the arrangement is commercially reasonable and reflects an arms’ length transaction for which fair market value is paid, the arrangement may give rise to regulatory issues and should be evaluated for compliance with applicable fraud and abuse statutes. If you are involved in an arrangement that includes any of the common “tells” as referenced above, you may need to have that arrangement reviewed further.
