Two Men Plead Guilty to Compound Medication Fraud

Unless you have a serious health problem, you probably don’t know this exists. But compound pharmacies can provide you with individual pills that meet multiple needs as indicated by doctors. These pharmacies provide niche services to the industry and patients who require specific medications that are not routinely available. Compound pharmacies charge a lot of money. So do durable medical equipment companies. The defendants are accused of filing false claims with insurance companies to purchase unnecessary equipment and medication. They would pay kickbacks to doctors for submitting requests and bilked both public and private insurance companies of nearly $25 million. They are further accused of laundering the proceeds through a series of bank accounts all set up by the defendants.

Kickback schemes: How do they work?

Essentially, a medical equipment company or compound pharmacy reaches out to doctors or health care providers as recruits. They say they’ll give the party such and such amount of money to fill an order for their equipment. The money is paid to the doctor, who files a claim on behalf of a “patient” whose insurance company is billed for the cost of the equipment. The doctor and medical equipment company then split the proceeds while public insurance programs like Medicaid eat the bill. The process is so lucrative that it has permeated every aspect of the medical industry. It is also illegal, but hard to identify.

What specifically is illegal?

Doctors are offered deals by medical equipment companies all the time. However, that is not (necessarily) illegal as long as they are providing compensable services for the company. By contrast, recommending patients get specific treatments that they don’t really need so you can bilk their insurance carrier for as much as you possibly can is not legal. Not only does it constitute health care fraud, insurance fraud, and medical malpractice, it completely abuses the public’s trust in health care, a problem which we are now seeing as fatal consequences.

So, to tally up all of the illegal things that the defendants did in perpetrating the fraud:

  • Health care fraud
  • Insurance fraud
  • Wire fraud
  • Money laundering
  • Transacting in criminal proceeds
  • Violations of the anti-kickback statute

If we tally up the maximum penalties, the defendants face 65 years in federal prison.

Defenses to health care fraud

Generally speaking, the defendant begins in the posture that the state has it wrong and what they were doing was legal. While kickbacks are considered illegal, consultation fees and relationships with medical device manufacturers are not. Further, it isn’t fraud to make sure that patients get the best care they deserve, even when a cheaper alternative is available. Fraud is specifically making a false statement for the purpose of taking money that isn’t yours. In this case, the fraud was committed against the insurance companies, not the patients. However, the patients will be key to determining whether or not the defendants were providing medical equipment to those who needed it, or to those who didn’t.

Talk to a Wire Fraud Attorney Today

Most fraud counts are charged by the federal government. The Skier Law Firm, P.A. handles federal cases. If you have been charged under a federal fraud statute, contact our experienced West Palm Beach criminal attorneys today. We can help.


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