Human Medications, Human Drugs, Animal Medications, Animal Drugs, Pharmacy law, Pharmaceutical law, Compounding law, Sterile and Non Sterile Compounding 797 Compliance, Veterinary law, Veterinary Compounding Law; Health Care; Awareness of all Types of Compounding Issues; Pharmacy Benefit Managers (PBMs), Outsourcing Facilities Food and Drug Administration and Compliance Issues
Mar 08, 2021 · CHARLESTON, S.C. (WCSC) - The US Attorney for the District of South Carolina says the court of appeals has affirmed their $114 million judgement against one man and two testing labs found liable for defrauding federal health care programs. Floyd Calhoun “Cal” …
Department of Justice
HOUSTON – Two Houston area men are now in custody on charges of conspiracy to commit health care fraud relating to a pharmacy fraud scheme, announced Acting U.S. Attorney Jennifer Lowery.
Authorities arrested Mohamed Mokbel, 56, and Fathy Elsafty, 62, both of Houston, today. They are expected to make their initial appearances before U.S. Magistrate Judge Andrew Edison at 2 p.m.
The eight-count indictment alleges Mokbel is the owner of several Houston area pharmacies, while Elsafty is his accountant.
4M Pharmaceuticals Inc. was the parent company for several retail pharmacies that operated in Houston, Fort Worth, South Florida and elsewhere, according to the charges. Mokbel was 4M’s CEO and allegedly had ownership interests in the subsidiary pharmacies. The charges allege Elsafty served as 4M’s accountant and tax preparer as well as nominee owner of the multiple pharmacies.
4M Pharmaceuticals allegedly functioned as an outbound telemarketing call center that solicited Medicare, Medicaid and commercial insurance patients nationwide – many over the over the age of 55. The indictment alleges call center employees offered patients medically unnecessary diabetic supplies and topical creams although many refused the solicitations. However, 4M Pharmaceuticals and pharmacies allegedly billed the patient’s insurance plan anyway. In some cases, 4M pharmacies billed for prescriptions dispensed after a patient’s death, according to the allegations.
The scheme also allegedly targeted doctors. The charges allege 4M Pharmaceuticals sent fax requests for prescriptions that patients often did not authorize. In several cases, the company billed patients for prescription drugs without a valid prescription, according to the allegations. 4M pharmacies also allegedly sent prescription requests to doctors for dead patients.
In several instances, audits required 4M to produce paperwork, according to the indictment. ElSafty allegedly participated in fabricating records.
The indictment alleges that from Dec. 13, 2013, through March 3, 2020, 4M pharmacies collectively received over $134 million in payments from Medicare and other healthcare benefit programs based on fraudulent claims. The funds were allegedly used, in part, to pay for Mokbel’s $1.5 million residence, $15 million in gambling and casino expenses and purchases and payments for a Ferrari and a Bentley automobile. Mokbel also transferred and controlled over $6 million in health care fraud proceeds in certificate of deposit accounts at banks, according to the allegations.
Mokbel and ElSafty are charged with one count of a conspiracy to commit health care fraud, three counts of health care fraud and four counts of money laundering. All carry a possible prison sentence of 10 years in prison and a $250,000 maximum fine. The use of telemarketing to target people over 55 as a means to commit health care fraud carries an additional penalty of 10 years.
Immigration and Customs Enforcement - Homeland Security Investigations, Department of Health and Human Services - Office of Inspector General, Food and Drug Administration - Office of Criminal Investigations, FBI, Texas Attorney General’s Medicaid Fraud Control Unit, IRS - Criminal Investigation, Ohio Medicaid Fraud Control Unit and Texas State Board of Pharmacy conducted the joint investigation.
Special Assistant U.S. Attorney Abdul Farukhi and Assistant U.S. Attorney Zahra Fenelon are prosecuting the case.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.
Department of Justice
NEW ORLEANS - U.S. Attorney Duane A. Evans announced that CHRISTOPHER BLACKSTONE (“BLACKSTONE”), JOSEPH CAMPO (“CAMPO”), and MARIO DELUCA (“DELUCA”) have each pled guilty in federal court relating to their roles in a health care fraud conspiracy.
BLACKSTONE, age 43, a resident of Baton Rouge, Louisiana, pled guilty on February 24, 2021 before U.S. District Judge Lance M. Africk to Count One of a Bill of Information charging him with conspiracy to commit health care fraud, in violation of Title 18, United States Code, Sections 1347 and 1349.
CAMPO, age 78, a resident of New Orleans, Louisiana, pled guilty on February 25, 2021 before U.S. District Judge Susie Morgan to Count One of a Bill of Information charging him with conspiracy to commit health care fraud and money laundering, in violation of Title 18, United States Code, Section 371.
DELUCA, age 37, a resident of Metairie, Louisiana, pled guilty on February 24, 2021 before U.S. District Judge Jane Triche Milazzo to Count One of a Bill of Information charging him with conspiracy to commit health care fraud, in violation of Title 18, United States Code, Sections 1347 and 1349.
According to the charging documents, CAMPO was a licensed pharmacist in the State of Louisiana and worked as the Pharmacist-in-Charge (“PIC”) at Prime Pharmacy Solutions (“Prime”), which was located in Slidell, Louisiana. BLACKSTONE served as the owner of Prime and DELUCA served as the Information Technology (“IT”) Director.
Between 2014 and 2016, Prime operated as a primarily closed-door pharmacy that was in the business of mixing and filling prescriptions for compounded medications that were reimbursed by health care benefit programs, including TRICARE, a health care benefit program for United States military personnel and their families.
BLACKSTONE, CAMPO, DELUCA, and other co-conspirators, acting on behalf of Prime, selected formulas for compounded medications, not based on scientific evaluations of effectiveness or individualized patient need, but rather, to maximize reimbursement from TRICARE and other health care benefit programs. Prime then mass produced these High-Yield Compounded Medications and created a series of preprinted prescription forms encouraging and directing prescribers/doctors to prescribe these High-Yield Compounded Medications.
“Individuals involved in this scheme illegally bilked TRICARE out of close to $15 million and I am pleased that the U.S. Attorney’s Office is requiring justice,” said Special Agent in Charge Cynthia Bruce, Defense Criminal Investigative Service, Southeast Field Office. “There are no victimless crimes and DCIS agents will continue to pursue unscrupulous greedy individuals who steal from our military health care system and all taxpayers.”
The Court set sentencing of BLACKSTONE and DELUCA for August 11, 2021 and CAMPO for August 19, 2021. CAMPO faces a maximum term of imprisonment of five (5) years, a maximum $250,000 fine, three (3) years supervised release following any term of imprisonment, a $100 special assessment fee and restitution in the amount of $3,015,579.17 to be paid to TRICARE. BLACKSTONE and DELUCA face a maximum term of imprisonment of ten (10) years, a maximum $250,000 fine, three (3) years supervised release following any term of imprisonment, and a $100 special assessment fee. BLACKSTONE has agreed to pay restitution in the amount of $10,689,005 to TRICARE, and DELUCA has agreed to pay restitution in the amount of $777,749.20 to TRICARE.
U.S. Attorney Evans praised the work of the Defense Criminal Investigative Service – Office of Inspector General, the Department of Homeland Security, the Department of Veterans Affairs – Office of Inspector General, and the United States Postal Service – Office of Inspector General.
The prosecution of the case is being handled by Assistant U.S. Attorney Kathryn McHugh.
FDA is working to provide guidance to states and compounders on issues associated with compounding drugs during the COVID-19 pandemic. The agency’s guidance aims to protect patients from unsafe, ineffective and poor-quality compounded drugs, while preserving access for patients.
The agency issued a guidance for temporary compounding of certain drugs by outsourcing facilities during the COVID-19 public health emergency. Hospitals that cannot obtain FDA-approved drugs covered by the guidance and seek to use compounded drugs for their patients should first contact outsourcing facilities, which produce compounded drugs under more robust quality standards than those made by state-licensed pharmacies or federal facilities not registered as outsourcing facilities. Hospitals can use the product report to help determine which outsourcing facilities are compounding drugs used for hospitalized patients with COVID-19.
Compounded drugs are not FDA-approved. This means they have not undergone premarket review for safety, effectiveness or manufacturing quality. Because they are subject to a lower regulatory standard, compounded drugs should only be used to meet the needs of patients whose medical needs cannot be met by an FDA-approved drug. The agency recommends FDA-approved drugs be used to treat patients whenever possible. FDA has concerns about the use of certain drugs prepared by compounders to treat patients with COVID-19:
FDA is responding to stakeholder inquiries on issues associated with compounding drugs during the COVID-19 emergency. Contact compounding@fda.hhs.gov with any questions.
More information on Coronavirus (COVID-19) | Drugs
Department of Justice
NEWARK, N.J. – A former police officer with the North Brunswick police department today admitted his role in a multimillion-dollar scheme that defrauded state health benefits programs through the submission of medically unnecessary prescriptions for compounded medications, Acting U.S. Attorney Rachael A. Honig announced.
Daniel Passafiume, 45, of Monroe, New Jersey, pleaded guilty by videoconference before U.S. District Judge Michael A. Shipp to an information charging him with conspiring to commit health care fraud.
According to documents filed in this case and statements made in court:
Between January 2014 and November 2016, Passafiume and a conspirator, identified as CC-1 in the information, marketed certain prescription “compounded medications,” including vitamins and pain creams, to beneficiaries of New Jersey state insurance plans, including the State Health Benefits Program (SHBP). These insurance plans paid thousands of dollars for compounded medications, which are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient because, for example, the patient is allergic to a dye or other ingredient or requires the medication in a different form.
Passafiume and his conspirator had agreements with pharmacies to collect large commission payments for each prescription they obtained for the pharmacy. Passafiume and CC-1 found individuals with these insurance plans and connected them with doctors who were willing to sign prescriptions without an examination or a determination that the individuals needed the compounded medications. Those recruited to obtain prescriptions included employees of a New Jersey police department, family members of these employees, and Passafiume’s own family members. At times, Passafiume provided beneficiaries with cash, checks, and gift cards for agreeing to obtain these prescriptions.
The conspiracy charge carries a maximum potential penalty of 10 years in prison and a fine of $250,000 fine, or twice the gain or loss from the offense, whichever is greater. As part of his plea agreement, Passafiume must forfeit $284,659 in criminal proceeds and pay restitution of $3.27 million. Sentencing is scheduled for July 12, 2021.
Acting U.S. Attorney Honig credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s guilty plea.
The government is represented by Senior Trial Counsel Leslie Faye Schwartz of the Special Prosecutions Division and Assistant U.S. Attorney Osmar J. Benvenuto of the Health Care Fraud Unit in Newark.