The U.S. Department of Justice (DOJ) has charged 16 individuals in a Florida federal court as part of an elaborate fraud scheme that allegedly used call centers and kickbacks to generate bogus prescriptions and cheat government and private insurers to the tune of $175 million. The charges include conspiracy to commit racketeering, launder money and commit wire fraud.
A Criminal Information described an enterprise that appears to have operated from 2013 to 2015 and which controlled numerous stops on the supply chain, including selection of ingredients for compounded drugs, solicitation of patients for unnecessary prescriptions and funneling of kickbacks to “corrupt physicians.”
Clifford Carroll, a Boca Raton resident, who faces up to 23 years in prison, is said to be the ringleader of the operation. Potential sentences for the other individuals range from five to 15 years.
According to the information, participants secretly purchased failing pharmacies and they functioned as fronts for the illicit conduct. The fact that the pharmacies held licenses made the operation possible. Drugs produced by the pharmacies were selected based on the amount of money reimbursed by military program TriCare and private insurers. It should be noted that none of the private insurance plans were named in the information. The medications were usually for skin conditions, and the information provided several examples of expensive products, including “a $31,000 tube of compounded cream.” The government claims that more than $175 million was eventually paid out in the scheme.
A key component of the scheme was the use of call centers where staffers obtained information on potential patients, including military veterans, who had previously been prescribed medications. The staffers contacted patients and read from deceptive prepared remarks in an effort to convince the patients to authorize the faxing of prescriptions to doctors’ offices. The information states:
Corrupt co-conspirator physicians issued prescriptions for compounded medications to patients regardless of medical necessity and in exchange for illegal compensation, such as cash, gift cards and free consulting, which also described small payments to patients.
The government says payments were often disguised as reimbursement for “data collection” and were distributed through a sham software company called ClinicalCorp LLC. Other companies that participated were NuMedCare LLC, which purportedly supplied management services to pharmacies, and two failing compounders: Rx of Boca LLC and Dallas-based Texas Compounding Pharmacy. NuMed eventually was advised by in-house counsel that its conduct was illegal, and the lawyer “continued to assist … in the operation of NuMed by providing legal advice and the preparation of legal documents in order to conceal and disguise the criminal activity.”
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