Florida Man Pleads Guilty to $8.3 Million Health Care Fraud Scheme

Earlier this month, the DOJ announced that a pharmacy owner pleaded guilty to conspiracy to commit health care fraud for his involvement in an $8.3 million scheme. The individual was an owner of three pharmacies that paid kickbacks to telemarketers and telemedicine providers in exchange for medically unnecessary prescriptions referrals for which the pharmacies submitted claims to Medicare.  

From November 2019 through March 2021, the pharmacies paid telemarketing companies to recruit Medicare beneficiaries who would accept prescriptions for medically unnecessary medications that predominantly included topical creams. After obtaining the recruited patients’ information, the pharmacies paid kickbacks to telemedicine companies that employed or contracted with physicians who authorized the unnecessary prescription products for the individuals without establishing a physician-patient relationship, and often without ever communicating with the patient. Upon receipt of the prescriptions, the pharmacies submitted claims for payment to Medicare, sometimes multiple times over for the same prescription in a practice known as “recycling.” The pharmacy owner faces a maximum of 10 years in prison.

The DOJ’s activities reinforce the government’s focus on identifying and prosecuting fraudulent health care schemes. Telemarketing and telemedicine arrangements must be structured appropriately to avoid improper kickbacks and comply with applicable federal and state laws.

In the current circumstance, prescribers were paid by a telemedicine company in exchange for issuing medically unnecessary prescription referrals without properly evaluating patients, which creates exposure not only for the prescriber, but also for the entities to whom the prescriptions are transmitted, such as the pharmacies. Here, the pharmacy owner was the source of those prescribers’ payments, a fact that may or may not have been disclosed to the prescribers. While telehealth may present an opportunity for additional revenue, the totality of each model must be evaluated for compliance. Prescribers and pharmacies engaged in telehealth arrangements are advised to seek competent healthcare counsel to evaluate the propriety of the models in which they participate. Additionally, prescribers should be cautious of entering any arrangement that offers a professional service fee in exchange for limited (or no) communication with a patient. Ancillary providers are likewise advised to seek counsel regarding their marketing models, particularly those that include telehealth, to avoid implicating federal and state laws related to kickback prohibitions.

How Frier Levitt Can Help

Frier Levitt attorneys have advised pharmacies, practitioners, other ancillary providers, marketers, and technology companies on developing and restructuring telehealth business models to comply with applicable federal and state law while considering obstacles such as licensing, prescribing, and insurance reimbursement concerns that are unique to each arrangement. Our attorneys also represent clients in connection with criminal investigations and prosecutions and civil and administrative actions involving allegations of unlawful prescribing, issuance or receipt of payments, and/or filling of prescriptions and orders associated with virtual health models. If you are seeking to Launch a Telemedicine Practice or Telehealth Startup, want to ensure your compliance in an existing model, have received a subpoena or other investigative demand, or have otherwise been put on notice you may be under investigation in connection with your participation in a telehealth arrangement, contact us to speak to an experienced telehealth attorney.