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Press Release

Former City Commissioner Convicted in Health Insurance Fraud Scheme

For Immediate Release
U.S. Attorney's Office, Southern District of Texas

McALLEN, Texas ‐ A 47-year-old former Pharr city commissioner has been convicted in connection with a scheme to defraud Blue Cross Blue Shield of Texas, announced Acting U.S. Attorney Abe Martinez.


Oscar Elizondo participated in a conspiracy to submit more than $1.7 million in fraudulent claims to Blue Cross Blue Shield of Texas for expensive pain patches and scar creams.


As a marketer for Penitas Family Pharmacy (aka Riverside Pharmacy) in Penitas, Elizondo targeted employers that carried employee health insurance through Blue Cross, such as the City of Pharr, Frontera Produce and Point Isabel Independent School District, among others. Working with contacts at those entities, Elizondo and other marketers offered meals, drinks and promises of “free” prescription pain patches and scar creams to entice employees to turn over their insurance information.


Elizondo’s co-conspirators then used the insurance information, along with fraudulent prescriptions, to submit fraudulent and medically unnecessary claims to Blue Cross. The insurance company was billed for prescriptions for individuals who never received pain patches or scar creams or who never saw a doctor to obtain a valid prescription. Other employees saw a doctor, but it was a doctor involved in the scheme who received kickbacks, including prescription pain medication, to write prescriptions for all patients Elizondo and other co-conspirators brought him.


In addition, Penitas Family Pharmacy billed Blue Cross for prescription refills that were never requested by, or delivered to, patients.


Elizondo faces up to 10 years in federal prison and a $250,000 maximum fine. Sentencing has been set for Feb. 7, 2018, before U.S. District Judge Randy Crane. 


The FBI, Mission Police Department, Texas Department of Insurance – Fraud Unit and Texas Health and Human Services Commission conducted the investigation. Assistant U.S. Attorney Andrew Swartz is prosecuting the case.

Updated November 29, 2017

Health Care Fraud