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The firm represents treatment centers, sober homes, and sales and marketing professionals under investigation or accused of health care fraud and abuse. Treatment center fraud is increasingly common in South Florida.

Indeed, this week another treatment center fraud prosecution has concluded. Yet, the fact pattern is nothing new and something which I have addressed in previous posts. This prosecution is also a by-product of the treatment center fraud Kenny Chatman prosecution — given that Michael Bonds, an owner of one of the sober homes which referred patients to Chaman, is listed in the factual basis forming the basis for one of the guilty pleas and is likely cooperating — and was spearheaded by the same federal prosecutor that promised to pursue the labs involved in facilitating the sober home-treatment center fraud.

The owners in the newest prosecution out of Palm Beach operated Angel’s Recovery which was a licensed substance abuse service provider (or treatment center) offering clinical treatment services for persons suffering from alcohol and drug addiction and medication-based treatment for opioid addiction. To obtain referrals of patients from sober homes, defendants paid kickbacks, i.e., free or reduced rent or patients attending sober homes, insurance premium payments including deductibles and copays, and other benefits to individuals with insurance who agreed to reside at the sober homes and attend drug treatment. A separate entity paid the insurance premiums on behalf of the sober home patients to disguise the source of the kickbacks. The owners of the treatment center also employed as doctor as a medical director – whose license was eventually suspended but continued to prescribe medication including controlled substances, sign orders, and treat patients.

The patients were also presenting for urinalysis – including more expensive lab tests for confirmatory testing – several times per week. This is again, another yellow flag. While there is some level of discretion for deciding whether, and to what extent, an individual patient should be re-tested or undergo confirmatory testing under applicable SAHSA Guidelines and insurance carrier policies, there must be documented medical necessity for those tests.

Here are the precise facts forming the factual basis for one of the owners’ guilty pleas.

If you are a treatment center operator, or an employee or former employee of a treatment center or sober home operator and you have received a subpoena or you believe you may be under investigation for sober home or treatment center fraud, kickbacks, or patient brokering it is critical to contact a treatment center fraud Attorney.

Opioid fraud and diversion prosecutions continue to hit hard. The Firm represents organizations, pharmacies, and medical professionals accused of or under investigation for opioid fraud and/or diversion of opioids. Since the inception of the Opioid Fraud Unit established by Jeff Sessions the Government has been pretty busy. In October, the DOJ returned the first of its kind indictment against 2 Chinese nationals for the internet sales of millions of dollars in synthetic opioids, including fentanyl.

In the first case originated  from Opioid Fraud Unit, the Government has alleged that a doctor operating a holistic pain management practice prescribed methadone, oxycodone, and hydrocodone outside the usual course of professional practice and not for legitimate medical purpose and that there was a pattern of illegally prescribing opioid painkillers to patients with no legitimate medical purpose and without examination, evaluation or testing. The criminal complaint also makes it clear that the Government had interviewed former and current employees and had relied heavily on data mining in its investigation before filing charges.

In another case, which targeted violations of the Anti-Kickback statute for prescriptions of a fentanyl-based spray, known as Subsys,  the operator of a defunct pain management practice in Rhode Island, pleaded guilty. In his plea, Dr. Rosenberg admitted to soliciting and receiveing kickbacks in return for the prescribing of the drug Subsys, a fast-acting, powerful, and highly-addictive version of the opioid drug Fentanyl that is administered as an under-the-tongue spray.

Subsys is manufactured by Arizona based company Insys Therapeutics, Inc. (“Insys”). This spray was approved by the U.S. Food and Drug Administration in 2012 exclusively for “the management of breakthrough cancer pain in . . . patients who are already receiving and who are already tolerant of opioid therapy for their underlying persistent cancer pain.” Dr. Rosenberg falsely and fraudulently indicated that his patients had breakthrough pain from cancer in order to secure insurance approvals for prescriptions of Subsys. Dr. Rosenberg also conceded that he conspired with Insys officials to receive speaker fees amounting to $188,000 in return for prescribing a high volume of Subsys to patients. As an aside, his son was also a sales representative for Insys whose commissions were, in part, derived from his Subsys prescriptions.

The doctor’s plea also fell on the heels of the indictment against the CEO of Insys, John Kappor, in what the Government hopes will be a successful Yates prosecution against Mr. Kapoor in the District of Massachusetts.  Although Mr. Kapoor’s indictment is largely based on allegations related to violations of the Anti-Kickback statute related to speaker fees and heavy prescribing of Subsys fentanyl spray, a central theme in that prosecution is that Kapoor and the sales representatives who operated under the umbrella of Insys throughout the United States peddled a heavily addictive opioid based spray to doctors in exchange for lucrative speaker fees, resulting in patients receiving addictive, potentially life threatening sprays that were intended to treat cancer.

Since then, in December, there have been additional indictments related to opioid fraud or diversion, including a recent indictment against another Pennsylvania doctor, Dr. Gartland. The indictment alleges that the doctor perpetrated a scheme to defraud two health care benefit programs, WellSpan Health of York, PA and Medicare, by writing 221 prescriptions between September 2014 and August 2017, for Hydrocodone, Oxycodone, Fentanyl, Morphine and other controlled substances. According to the indictment, the prescriptions were issued by Gartland and were never intended for the medical care or treatment of the family members, but instead were intended for Dr. Gartland’s personal use. The indictment further alleges that  Gartland deceived the pharmacies into giving him the pills by making them believe they were intended for his family member and that WellSpan and Medicare were allegedly defrauded when they paid claims submitted by the pharmacies for the prescriptions.

The takeaway from these prosecutions is straightforward – there will be an uptick in investigations and prosecutions related to opioids and opioid fraud. The ongoing nationwide investigation into speaker fees received from doctors prescribing Subsys is also continuing and will only ramp up as the Government edges closer and closer to a trial against the CEO of Insys and seeks to collect as much data and information from witnesses – sales reps and doctors – to avoid, in the aftermath of Yates, another humiliating trial loss against an executive in that District.

Compounding pharmacy fraud related to Tricare is still alive and well. In a recent settlement, Express Plus Pharmacy, LLC, a Florida pharmacy, and its owner, agreed to pay $170,000 to resolve allegations that they violated the False Claims Act by submitting fraudulent claims to Tricare for compounded medications such as pain creams. According to the Settlement Agreement, Express Plus Pharmacy knowingly submitted claims to TRICARE for compounded medications that were not reimbursable because they were not issued pursuant to valid physician-patient relationships; the prescriptions were issued after brief phone calls with patients that violated applicable laws on telemedicine; the prescriptions were medically unnecessary; and/or the prescriptions were tainted by kickbacks to marketers.

John F. Khin, Special Agent in Charge, DCIS Southeast Field Office said  “[t]he Defense Criminal Investigative Service is committed to protecting the integrity of the U.S. military health care program to provide top quality medical care to America’s warfighters and their families, while ensuring that health care providers and facilities comply with Federal laws.”

Benjamin G. Greenberg, Acting United States Attorney for the Southern District of Florida also underscored that   “[t]his case demonstrates the United States Attorney’s Office’s commitment to combat compounding pharmacy fraud, which targets federal health care programs and especially TRICARE,” said “Our office will aggressively pursue those who abuse federal health care programs for personal profit.”

            Unlike many of the previous compounding pharmacy fraud investigations in the Southern District of Florida (and elsewhere) which have brought about dozens of indictments, this case resulted in a civil settlement. The civil settlement may have been due to the amount of funds at issue in this case – a mere $170,000.00 which pales in comparison to some of the multi-million dollar compounding pharmacy frauds previously reported. Another reason that DOJ might have stayed civil with this case is that, although the press release indicates that there were “kickbacks,” the remaining conduct appears to be conduct based on the violation of state laws relating to telemedicine and/or to medically unnecessary procedures but does not include details about false documentation or false diagnoses. In addition, pharmacies and pharmacists typically maintain a corresponding responsibility by statute to ensure that a prescription is for a legitimate purpose but a pharmacy or pharmacist is not tasked with the responsibility of validating whether a doctor had a legitimate doctor-patient relationship.