DOJ Indicts 4 Florida Men in $1B Telemedicine Fraud Conspiracy

Private payers, including Blue Cross Blue Shield of Tennessee, were bilked out of about $174 million in the compounding pharmacy scam, which inflated prices for invalidly prescribed pain creams and other drugs.


Seven compounding pharmacies were indicted along with their owners in the scheme.

The scam affected tens of thousands of patients around the country.

The alleged scammers billed private payers for about $931 million in fraudulent claims.

Four Florida men were charged in a multistate telemedicine scheme that billed at least $931 million in fraudulent claims to private insurance companies, the Department of Justice said Monday.

According to a 32-count indictment filed in U.S. District Court in Greeneville, Tennessee, the four defendants, owners of seven compounding pharmacies in Florida and Texas, set up an elaborate telemedicine scheme that solicited insurance and prescription drug information from consumers across the country.

Physicians unwittingly approved the prescriptions for pain creams and other drugs without knowing that the defendants were jacking up the prices of the invalidly prescribed drugs, which were billed to private payers.

Tens of thousands of patients and more than 100 physicians in East Tennessee bore the brunt of the scam, which ran from mid-2015 through April 2018. Private payers in the region, including Blue Cross Blue Shield of Tennessee, were bilked out of about $174 million, prosecutors said.  

BCBS Tennessee issued a statement on Tuesday noting that it was “only one of hundreds of insurers impacted by this case.”

“We remain committed to partnering with our customers, providers and law enforcement to fight fraud, waste, and abuse in the healthcare system,” BCBST said.

All totaled, the indictment alleges that the defendants submitted not less than $931 million in fraudulent claims for payment. It’s not clear how much was paid out.

The four Florida defendants were identified as Andrew Assad, 33, of Palm Harbor, Peter Bolos, 41, of Lutz, and Michael Palso, 44, of Odessa, and Larry Everett Smith, 48, of Pinellas Park.

The companies were identified as: Germaine Pharmacy in Tampa; Synergy Pharmacy Services, in Palm Harbor; Precision Pharmacy Management, Tanith Enterprises, ULD Wholesale Group, and Alpha-Omega Pharmacy, all in Clearwater; and Zoetic Pharmacy in Houston, Texas.

The four defendants were each charged with conspiracy to commit healthcare fraud, mail fraud, and introducing misbranded drugs into interstate commerce.

If convicted, the four men face prison terms of up to 20 years for each mail fraud charge, up to 10 years for conspiracy, and up to three years in prison for introducing misbranded drugs into interstate commerce.

The indictment also seeks forfeiture of approximately $154 million.

The indictments come on the heels of the related Sept. 26 guilty plea by Scott Roix, 52, the CEO of HealthRight LLC, a telemedicine company in Pennsylvania and Florida, for his role in the scheme. Roix and HealthRight also pleaded guilty to wire fraud charges in a separate scheme that fraudulently telemarketed dietary supplements, skin creams, and testosterone.



CHS subsidiary to pay $262M to settle fraud probe

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Franklin, Tenn.-based Community Health Systems subsidiary Health Management Associates has agreed to pay the federal government $262 million to settle fraudulent billing and kickback allegations.

The settlement resolves allegations that HMA billed government payers for inpatient services that should have been billed as less costly observation or outpatient services, paid physicians in exchange for referrals, and submitted claims to Medicare and Medicaid for falsely inflated emergency department facility fee charges.

HMA’s conduct occurred between 2003 and 2012, before CHS acquired HMA. HMA was facing multiple qui tam lawsuits and was the subject of criminal and civil investigations when it was acquired by CHS, and CHS cooperated with the government in its investigation.

“Since acquiring HMA in 2014, it has been our goal to resolve the government’s investigation into all of these allegations which occurred prior to the acquisition and which were already under investigation at the time of the transaction,” CHS said in a press release.

In addition to the $262 million settlement, HMA entered a nonprosecution agreement with the Justice Department. Under the NPA, the government agreed not to bring criminal charges as long as HMA and CHS cooperate with the investigation, report evidence of violations of federal healthcare offenses, and ensure their compliance and ethics programs satisfy the requirements of a corporate integrity agreement between CHS and HHS’ Office of Inspector General.

Under the settlement, Carlisle HMA, the HMA-affiliated entity that formerly operated Carlisle (Pa.) Regional Medical Center, agreed to plead guilty to one count of conspiracy to commit healthcare fraud. CHS divested Carlisle Regional in 2017.

“We are pleased to have reached the settlement agreements so we can move forward now without the burden or distraction of ongoing litigation,” said CHS. “As an organization, we are committed to doing our very best to always comply with the law in what is a very complex regulatory environment and to operate our business with integrity, ethical practices and high standards of conduct.”