Healthcare Fraud

November 16, 2023

A Florida man who was the Chief Compliance Officer of pharmacy holding company A1C Holdings LLC has been ordered to pay $21.7 million in restitution for his role in a $50 million fraud scheme against Medicare.  Pharmacies associated with Steven King and his co-conspirators allegedly secured prescriptions and refills for medically unnecessary lidocaine and diabetic testing supplies, and took steps to avoid oversight by registering as brick-and-mortar pharmacies, concealing their ownership, and shipping expensive prescriptions without patient authorization.  DOJ

November 16, 2023

A doctor and a clinic owner were sentenced to 10 years and 12 years in prison for their roles in a $5 million pill mill scheme.  Jonathan Rosenfield, M.D. owned and operated two clinics with co-owner and co-operator Elmer Taylor.  Together, the two issued prescriptions for over 750,000 oxycodone pills and nearly 420,000 hydrocodone pills that were ultimately diverted to the illegal market.  DOJ

November 6, 2023

One of Puerto Rico’s largest distributors of pharmaceutical drugs, Droguería Betances LLC has been ordered to pay $12 million following a DOJ complaint that it failed to report hundreds of suspicious ordered to the DEA.  According to the complaint, the suspicious orders included at least 655 for fentanyl and 113 for oxycodone.  Additionally, Betances committed recordkeeping violations by filling orders for these drugs using defective order forms and reporting inaccurate shipping and delivery information to the DEA.  Betances must now make extensive improvements to its compliance program.  DOJ

November 6, 2023

Drogueria Betances LLC will pay $12 million and will make extensive compliance and reporting improvements as required under a consent decree, for its failures to report suspicious orders and make required reports to the DEA. One of Puerto Rico's largest pharmaceutical drugs distributors, Betances failed to report to the DEA hundreds of "suspicious orders" for fentanyl and oxycodone from 2016 through at least June 2019. Additionally, from May 2017 to July 2018, Betances failed to report to the DEA all of the more than 7.8 million dosage units of Schedule II opioids distributed, committed hundreds of recordkeeping violations, filled orders placed with defective order forms, and gave inaccurate shipping or delivery information to the DEA. DOJ

October 30, 2023

Nostrum Laboratories Inc. and its founder, Nirmal Mulye, Ph.D., have agreed to pay up to $50 million, with a minimum of $3.8 million, to resolve allegations of defrauding Medicaid in connection with one of their drugs.  As part of the settlement, Nostrum and Mulye admitted that they knowingly failed to pay required drug rebates to Medicaid, in violation of the False Claims Act, despite being notified by CMS that they should do so.  DOJ

October 18, 2023

The president of a California-based medical technology company has been sentenced to 8 years in prison and ordered to pay $24 million in restitution in the first COVID-related criminal securities fraud case charged by DOJ and the first COVID-related criminal healthcare fraud case brought to trial.  Among many things, Mark Schena of Arrayit Corporation was found to have taken advantage of the pandemic by claiming he and his company had developed a technology to test for just about any disease, including COVID, using a single drop of blood.  In doing so, Schena and Arrayit lied to investors to give them a false sense of credibility, paid illegal kickbacks to marketers to run deceptive plans about the accuracy of its tests, and submitted false claims to Medicare and private insurers for medically unnecessary allergy testing.  DOJ

October 10, 2023

Mobile cardiac PET scan provider Cardiac Imaging Inc. (CII), and its founder and owner Sam Kancherlapalli, have agreed to pay over $75 million and over $10 million, respectively, to resolve a qui tam case by former billing manager Lynda Pinto, which alleged the company, Kancherlapalli, and part-owner Richard Nassenstein defrauded Medicare.  In violation of the Anti-Kickback Statute, Stark Law, and False Claims Act, CII and Kancherlapalli allegedly paid kickbacks to referring cardiologists in the form of fees, ostensibly for supervising PET scans, that were far above fair market value.  The alleged misconduct occurred over a ten year period.  DOJ