Chief Executive Officer Of Louisiana Compounding Pharmacy Used To Defraud State Health Benefits Programs Pleads Guilty
CAMDEN, N.J. – The chief executive officer of Central Rexall Drugs Inc., a Louisiana pharmacy used by numerous individuals to defraud New Jersey health benefits programs and other insurers out of more than $50 million, has admitted her guilt, U.S. Attorney Craig Carpenito announced.
Hayley Taff, 37, of Hammond, Louisiana, pleaded guilty by videoconference before U.S. District Judge Robert B. Kugler to an information charging her with one count of conspiracy to commit healthcare fraud.
According to documents filed in this case and statements made in court:
Central Rexall was a retail pharmacy in Louisiana that prepared compounded medications, which are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Hayley Taff was Central Rexall’s chief executive officer and 22 percent owner. In 2013, Taff entered into an agreement with two individuals, identified as Individual 1 and Individual 2, to expand the compounding business, with Individual 1 and 2’s company receiving 90 percent of the profits.
Taff and her conspirators learned that certain insurance plans administered by an entity referred to in the information as the “Pharmacy Benefits Administrator” would reimburse thousands of dollars for a one-month supply of certain compounded medications – including pain, scar, antifungal, and libido creams, as well as vitamin combinations. The health plans for New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers, had this insurance coverage.
Taff’s conspirators designed compounded medications and manipulated the ingredients in the medications in order to obtain high insurance reimbursements rather than serve the medical needs of patients. To determine which ingredients and combinations resulted in the high insurance reimbursement, Taff’s conspirators sent the Pharmacy Benefits Administrator false prescription claims to test out different combinations of ingredients, but the prescriptions did not exist. By trial and error use of these false claims, Taff’s conspirators designed compounded medications with combinations of ingredients that were chosen solely based on the amount of money that insurance would pay rather than on the medications’ ability to serve the medical needs of patients. At Taff’s direction, Central Rexall sent compounded medications to patients based solely on financial gain.
When the Pharmacy Benefits Administrator stopped covering one combination, Central Rexall would develop a compounded medication with a different combination of ingredients based solely on the insurance reimbursement and without considering the medical necessity or effectiveness of the new combination. Central Rexall then would send that new compounded medication to patients, even though the new combination of ingredients was not medically equivalent to the combination originally prescribed for the patients and without telling the patients or their doctor about the differences.
Taff admitted that during the conspiracy, Central Rexall stopped being concerned about the health of its compounded medication patients or the medical necessity of its compounded medications. Instead, she admitted, Central Rexall devoted itself solely to making money.
At Taff’s direction, Central Rexall also stopped requiring that patients make copayments in order to receive medications, even though Central Rexall told the Pharmacy Benefits Administrator that it was collecting copayments. Taff admitted that Central Rexall continued shipping medications to individuals who had not paid their copayments because Central Rexall was making so much money on its medications.
Taff and her conspirators caused numerous fraudulent insurance claims for compounded medications that were not medically necessary. The Pharmacy Benefits Administrator paid Central Rexall over $50 million for compounded medications shipped to New Jersey. Taff received $1,553,616 from Central Rexall during the conspiracy.
Taff faces a maximum of 10 years in prison and a $250,000 fine, or twice the gain or loss from the offense. As part of the plea agreement, Taff must pay restitution of $51,670,251 and forfeiture of $1,553,616. Sentencing for is scheduled for Dec. 1, 2020.
U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Acting Special Agent in Charge Joe Denahan in Newark; IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; and the U.S. Department of Labor, Office of Inspector General, New York Region, under the direction of Special Agent in Charge Michael C. Mikulka, with the investigation leading to the guilty plea. He also thanked the Division of Pensions and Financial Transactions in the State Attorney General’s Office, under the direction of Attorney General Gurbir S. Grewal and Division Chief Aimee Nason, for its assistance in the investigation.
The government is represented by Assistant U.S. Attorneys R. David Walk Jr. and Christina O. Hud of the U.S. Attorney’s Office in Camden and Assistant U.S. Attorney Barbara Ward, Senior Trial Counsel of the Asset Recovery and Money Laundering Unit.
Defense counsel: J. Garrison Jordan Esq., Hammond, Louisiana