October a Big Month for Anti-Kickback Cases Involving Compounding Pharmacies
By Christopher Parrella J.D.
Physicians, recruiters and pharmacy owners continue to be the target of ongoing investigations into fraudulent claims involving compounded medications.
A recent spate of arrests, guilty pleas and convictions serve to highlight the government’s increased level of scrutiny over the industry, mostly as it relates to improper relationships between pharmacies and physicians under the Anti-Kickback Statute.
Heightened scrutiny by federal and state regulatory agencies into the financial arrangements being made to prescribe compounded medications has resulted in a growing number of individuals being caught up in fraud and abuse investigations.
The month of October has been a big one for investigators as they continue their crackdown into healthcare fraud involving TRICARE, the health insurance program for members of the military and their families.
The following cases should serve as a warning that the government is serious about going after those who perpetrate healthcare fraud.
On Oct. 24, the Department of Justice announced the indictment of a Mississippi-based nurse practitioner for her alleged role in a multimillion-dollar scheme to defraud TRICARE. She was implicated along with a Mississippi doctor, who was indicted earlier this month.
The indictments alleged that the two participated in schemes to defraud TRICARE by prescribing medically unnecessary compounded medications, some of which included Ketamine, a controlled substance, to individuals they had not examined, for the purpose of having a Hattiesburg-based compounding pharmacy dispense these medically unnecessary compounded medications and to seek reimbursement from TRICARE.
The nurse practitioner is alleged to have received more than $50,000 in kickback payments from a marketer for the compounding pharmacy in exchange for prescribing the compounded medications, as well as having made false statements to the FBI. The doctor is alleged to have submitted falsified patient records in response to an audit conducted by TRICARE to make it appear as though he had examined patients before prescribing the compounding medications.
On Oct. 17, the president of a Dallas-based compounding pharmacy admitted to participating in a scheme to defraud TRICARE out of more than $50 million over a two-year period by submitting fraudulent claims for medically unnecessary prescription compounded medications.
He was arrested in October 2016, along with eight other defendants, for their roles in a $100 million healthcare fraud conspiracy perpetrated against TRICARE.
On Oct. 14, a pharmacist with a compounding pharmacy in New Jersey admitted to paying tens of thousands of dollars in cash bribes to physicians for referring pain cream prescriptions and defrauding healthcare benefit programs out of hundreds of thousands of dollars.
The pharmacist admitted that in November and December 2013 alone, he arranged for a middleman to receive more than $40,000 with the understanding it would be used to pay bribes for the referral of pain cream prescriptions.
Also on Oct. 14, the U.S. Attorney’s Office for the Northern District of Texas announced the arrest of ten people, including doctors, pharmacy owners and marketers, in connection with their roles in a $100 million healthcare fraud conspiracy perpetrated against TRICARE.
On Oct. 5, a Georgia woman pleaded guilty to allegations she defrauded Medicare, TRICARE and the Federal Employee Health Benefit Program of approximately $500,000 by submitting and causing the submission of fraudulent claims for medications that were not medically necessary and not prescribed by a doctor.
She was charged in July, along with more than 400 others, in what HHS said was the largest ever healthcare fraud enforcement action involving approximately $1.3 billion in false billings.
On Oct. 4, a Pennsylvania pharmaceutical sales representative pleaded guilty to defrauding TRICARE by submitting false claims for medically unnecessary compounded prescriptions. It was alleged he recruited a former military member to pay bribes to TRICARE members in exchange for their information and agreement to receive these compounded medications.
Three other defendants previously pleaded guilty to their roles in the scheme.
On Oct. 2, the U.S. Attorney’s Office for the Northern District of Alabama announced that the owner of a compounding pharmacy had been charged with conspiring to defraud TRICARE and two third-party prescription drug program administrators out of $10 million.
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It was alleged that he took part in a conspiracy that employed improper contracts, kickbacks, mislabeled drugs and prescription forgeries to bilk millions of dollars from the federal health insurance program.
These cases are just the latest in a string involving the prescribing of compounded medications by specialty pharmacies. And, from the looks of things, the federal government will continue to keep the pressure on.
One reason these arrangements raise red flags for investigators is that the stakes are high since many of these compounded medications come with big price tags – some in the thousands of dollars per prescription.
The federal Anti-kickback statute prohibits individuals or entities from offering or paying, or from soliciting or receiving, remuneration to induce prescriptions reimbursed by federal healthcare programs (i.e. TRICARE, Medicare, Medicaid). This is not to say every deal involving compensation from a compounding pharmacy violates the Anti-Kickback Statute.
It is imperative for anyone – compounding pharmacy, physician or marketer – who is contacted by an investigator to seek immediate legal counsel.