Ten, including Pharmacy Owners, Pharmacist, and Nurse Practitioner, Charged in Over $200 Million Prescription Drug Fraud
BIRMINGHAM – Ten defendants were charged in a 103-count indictment, including a nurse practitioner, and the owners, a pharmacist, managers, sales representatives, and billers, of a Haleyville, Ala.-based pharmacy, Northside Pharmacy doing business as Global Compounding Pharmacy. The indictment charges them with fraudulently billing health care insurers and prescription drug administrators for over $200 million in prescription drugs. In one listed instance, the defendants’ fraudulent conduct caused a prescription plan administrator to pay over $29,000 for one tube of a cream advertised as treating “general wounds.”
U.S. Attorney Jay E. Town, 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 John F. Khin, United States Postal Inspector in Charge, Houston Division Adrian Gonzalez, and Internal Revenue Service-Criminal Investigation Special Agent in Charge Thomas Holliman announced the charges.
The indictment filed in U.S. District Court charges the following individuals:
Adams was arrested on Wednesday and arraigned on Thursday in the Northern District of Florida.
“Motivated by greed, the defendants executed a brazen health care fraud conspiracy and scheme that cost health insurance plans, including those that protect the elderly, disabled, military members and veterans, millions of dollars,” Town said. “Their scheme deprived health insurance plans of money that could have gone to assist patients with real medical needs. To date, this investigation has resulted in 28 people being charged. Would-be healthcare fraudsters should be on notice that our Office is dedicated to rooting out this conduct. We applaud the investigative agencies for their hard work.”
“The egregious corruption uncovered in this complex and wide-ranging fraud scheme wasted millions of dollars in American taxpayer funds, and furthermore, deprived U.S. military members and their families of legitimate prescription medications and other needed medical care,” said John F. Khin, Special Agent in Charge, DCIS-Southeast Field Office. “Through our aggressive investigative efforts with our partner agencies, DCIS helped stop this shameful abuse of one of DoD’s most critical programs.”
“Healthcare Fraud continues to impact the cost of healthcare in America and is amplified when trusted professionals abandon their ethical code in the name of greed. These unethical practices are damaging the lives of individuals and families throughout this country,” said Thomas J. Holloman, Special Agent in Charge for IRS Criminal Investigation. “IRS CI will continue to work closely with our law enforcement partners in an effort to prosecute those abusing our healthcare system for profit.”
“This audacious multimillion-dollar fraud scheme posed a significant threat to the integrity of government healthcare programs at the expense of taxpayers,” said Special Agent in Charge Derrick L. Jackson of the HHS Office of Inspector General. “Working closely with our law enforcement partners, our agency will continue to protect Medicare and Medicaid from such costly scams.”
“In addition to undermining public health and safety, health care fraud cheats Americans out of more than eighty billion dollars a year in higher premiums and increased out-of-pocket expenses,” said Adrian Gonzales, Postal Inspector in Charge, Houston Division. “The United States Postal Inspection Service is committed to investigations with our law enforcement partners whenever health care fraudsters try to involve the U.S. Mail in their nefarious schemes, as in this case against Northside Pharmacy of Haleyville, Alabama, doing business as Global Compounding Pharmacy.”
“Pursuing those who perpetrate fraud against VA programs and operations is a priority for VA OIG,” said Veteran Affairs Office of Inspector General Criminal Investigations Division Special Agent in Charge David Spilker. “We will continue to work with our law enforcement partners to ensure the integrity of VA programs designed to help our nation’s veterans and their families.”
According to the indictment, Global, which described itself as “one of the top three largest compounding pharmacies in the United States,” primarily shipped compounded and other drugs from its Haleyville facility, but did most of its prescription processing, billing and customer service at its “call center” in Clearwater, Fla. The company hired sales representatives who were located in various states and were responsible for generating prescriptions from physicians and other prescribers. The company also worked with affiliated pharmacies.
The indictment describes a multi-faceted health care fraud and mail fraud conspiracy and scheme in which the defendants billed for medically unnecessary drugs. Aspects of the scheme included paying prescribers to issue prescriptions; directing employees to get medically unnecessary drugs for themselves, family members, and friends, to be filled and billed by Global and other related pharmacies; altering prescriptions to add non-prescribed drugs including controlled substances such as Tramadol and Ketamine; automatically refilling prescriptions—often as many as 12 times—regardless of patient need; routinely waiving and discounting co-pays to induce patients to obtain and retain medically unnecessary drugs; and billing for drugs without patients’ knowledge and hiding that conduct from patients by mailing the drugs to J. Adams’ home. According to the indictment, when prescription drug administrators attempted to police this fraudulent conduct, the defendants evaded and obstructed those efforts, including by providing false information in response to audits and diverting their billing through affiliated pharmacies. In executing the scheme, the defendants billed health insurance plans and their prescription plan administrators over $200 million and were paid over $50 million.
The indictment states that the defendants targeted multiple health insurance plans, including Global’s, Blue Cross Blue Shield of Alabama, and plans providing health insurance to the elderly, disabled, members of the military, and veterans—Medicare, TRICARE, and CHAMPVA, among others. In addition, the defendants targeted the health insurance plans of Medtronic, a medical device company, and Novartis Pharmaceuticals Corp., pharmaceutical company, both known by some of the defendants to have high-reimbursing health insurance. According to the indictment, Adams and Black would hire individuals known to be on Medtronic and Novartis’s health insurance plans, and direct them to get prescriptions for medically unnecessary drugs for themselves, family members, and friends, and then pay them a commission for these prescriptions.
Some of the conduct described in the indictment includes billing for female sex creams issued to male patients, billing for drugs issued to children that Global stated were contraindicated for use by children, and billing for drugs that patients did not need and therefore simply discarded in the trash.
The indictment also charges the defendants with aggravated identity theft, charges J. Adams, Black, and Edenfield with participating in a kickback conspiracy, and charges J. Adams, Black, and Mays with multiple counts of spending the proceeds of health care fraud and mail fraud. Purchases included for private plane travel and expensive watches.
The charges stem from a larger investigation that has to date resulted in 18 additional individuals being charged and signing plea agreements. Those individuals include Global Vice President of Sales Phillip Marks, Operations Manager Jeffrey South, District Manager Angie Nelson, National Field Trainer and sales representative Bridget McCune; sales representatives Bonita Amonett, Roddrick Boykin, Joshlyn Bowen, Erin Brown, Vanessa Case, Peter Eodice II, Jody Hobbs, Robin Lowry, Kelley Norris and Dawn Whitten; billers Fermin Alfonso, Stacey Cardozo, and Christopher Nunez; and a nurse practitioner, Brandy Lunsford.
The maximum penalty for healthcare and mail fraud conspiracy is 20 years in prison and a $250,000 fine. The maximum penalty for health care fraud is 10 years in prison and a $250,000 fine. The maximum penalty for mail fraud is 20 years and a $250,000 fine. The penalty for aggravated identity theft is a mandatory two years, to run consecutive to other counts. The maximum penalty for the kickback conspiracy charge is 5 years in prison and a $250,000 fine. The maximum penalty for spending proceeds of health care fraud and mail fraud is 10 years in prison and a $250,000 fine.
The FBI, HHS-OIG, DCIS, USPIS, IRS-CI, and a United States Attorney’s Office investigator investigated the cases, which Assistant U.S. Attorneys Chinelo Dike-Minor and Don Long are prosecuting. The Veteran Affairs Office of Inspector General Criminal Investigations Division provided assistance in the investigation.
An indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.