Two Middletown Township residents were among four men indicted in what federal prosecutors called a “massive compounded medication fraud and kickback scheme” run out of New Jersey.
Last week, a federal grand jury sitting in the District of New Jersey indicted Jeffrey Andrews, 68, of Bryn Mawr, Montgomery County; Chad Beene, 47, of Philadelphia; and Adam Brosius, 55, and Robert Schneiderman, 77, both of Middletown Township’s Langhorne section, on charges of conspiracy to commit health care fraud, health care fraud, conspiracy to violate the Anti-Kickback Statute, and violations of the Anti-Kickback Statute.
Advertisements
Here’s how U.S. Attorney Craig Carpenito’s office laid out the case:
In early 2014, Brosius, Beene, Andrews, and Schneiderman started using Main Avenue Pharmacy, a mail-order pharmacy with a storefront in Clifton, New Jersey, to run a large fraud and kickback scheme involving compounded drugs like scar creams, pain creams, migraine mediation, and vitamins.
The scheme revolved around identifying compounded drugs that would yield exorbitant reimbursements from health insurers, including both federal and commercial payers. The defendants figured out which compounds were paying the highest reimbursements by having its pharmacists engage in a practice known as “test billing:” the pharmacist would submit a phony claim to insurance to see which compound would generate the highest reimbursements. Main Avenue also received tips from other pharmacies and marketing companies about which compounds were generating the highest reimbursements.
Once Main Avenue identified lucrative formulas for compounds, it would create large prescription pads with precisely those formulas on it. The prescription pad was extremely easy to use – it included check boxes for doctors to select a particular compounded formula. This increased the likelihood that the doctor would not alter the high-paying formula. There was also a place to select up to a dozen refills and a box authorizing the pharmacy to alter the ingredients itself in case an insurer wasn’t covering a particular compounded medication.
Once the prescription pad was set, Main Avenue would disseminate it to marketers across the country with whom it had contractual relationships. The marketing companies would in turn distribute the prescription pad to telemedicine companies and doctors with whom they had a financial arrangement.
By and large, the doctors who signed prescriptions for compounded medications that were filled at Main Avenue had never even spoken to or examined the patient. Once the prescriptions were signed by a doctor, they would be returned to the marketing company, which would transmit the prescription to Main Avenue Pharmacy. Main Avenue would then fill the prescription and submit claims to health care benefit programs for reimbursement. They did so with federal payers like Medicare and Tricare and with commercial payers in New Jersey and elsewhere.
After Main Avenue obtained reimbursement from the health insurers, they would pay kickbacks to the marketers who had generated the prescriptions based on the overall adjudication amount. Main Avenue signed contracts with many of the marketers, and the contracts themselves spelled out the kickback arrangement, which called for Main Avenue to pay each marketer money based on the volume of referrals of compounded prescriptions and the reimbursement amount that Main Avenue received.
Main Avenue would routinely waive copayments of the patients to whom they were sending multiple prescriptions. They did this to ensure that the patients would keep the medications that Main Avenue had sent regardless of whether the patient wanted them. On some occasions, Brosius paid the copayments on behalf of the patients, and falsified money orders from the patients to Main Avenue to make it appear as if the patients had paid their copayments when they had not.
Federal prosecutors said Main Avenue received more than $34 million in reimbursements from health care benefit programs on just compounded medications. Of the $34 million, $8 million was paid by for by federal health care benefit programs, including Medicare and Tricare, the U.S. Department of Defense health care program.
The investigation was handled by the FBI, U.S. Department of Defense Office of the Inspector General, Defense Criminal Investigative Service, and the U.S. Department of Health and Human Services Office of Inspector General.
Advertisements
Editor’s Note: All individuals arrested or charged with a crime are presumed innocent until proven guilty. The story was compiled using information from police and public court documents.
Report a correction via email | Editorial standards and policies
Advertisements
