Multimillion-Dollar Telemedicine Pharmacy Scheme Brought Down

Betty Q. Hixson

May 24, 2022. Telemedicine for prescribing pharmaceuticals is supposed to bring convenient care to patients, not be a new way to deal drugs. A multi-year investigation concluded in a criminal trial, with two leaders of a multimillion-dollar telemedicine pharmacy fraud scheme paying approximately $50 million in restitution and facing 17 years in prison. A group of eight co-conspirators schemed to defraud pharmacy benefit managers (PBMs) of tens of thousands of prescriptions, for which the PBMs submitted claims to private and federally-funded health insurance programs. The fraudsters captured profits from their false claims because the PBMs paid claims to pharmacies owned by the co-conspirators, according to court documents. A whistleblower at one of the pharmacies or PBMs could have reported this scheme. Whistleblowers filing successful qui tam lawsuits may receive 15-25% of the government’s recovery.

According to court documents, this large-scale fraud scheme entailed several pharmacy owners hiring a telemarketer to drum up prescriptions for their pharmacies. The telemarketer duped the people it cold-called into accepting prescriptions and obtained their health insurance information in order to submit claims. The telemarketer paid physicians to sign off on the prescriptions without any patient interaction. One of the defendants even “selected specific medications for the prescriptions that he could submit for profitable reimbursements at inflated prices,” gaming the PBM system. In three years, the co-conspirators sought reimbursement for at least 60,000 invalid prescriptions.

The Special Agent in Charge of the FDA Office of Criminal Investigations (OCI) Miami Field Office commented about the seriousness of the case, “Distributing misbranded prescription drugs in the U.S. marketplace places patients’ health at risk.” The Special Agent in Charge of the Department of Health and Human Services, Office of Inspector General (HHS-OIG) also added, “Providers who solicit beneficiaries’ personal information and use it to defraud federal health care programs not only undermine the integrity of those programs; they also divert valuable taxpayer dollars for self-serving purposes.”

Prescription fraud costs both taxpayers and participants in private health insurance plans in the form of increased premiums to cover carriers’ losses and increased scrutiny when medications are prescribed legitimately. Abuse of telemedicine systems erodes provider and patient trust that scrupulous healers and truly needy patients are meeting safely and securely through technology.

A whistleblower can report pharmaceutical fraud and Medicare and Medicaid fraud to the government and be rewarded for doing so in a qui tam lawsuit.

© 2022 by Tycko & Zavareei LLP
National Law Review, Volume XII, Number 144

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