7 pharmacies indicted in $1B telemedicine fraud scheme

The U.S. District Court for the Eastern District of Tennessee unsealed a 32-count indictment charging four individuals and seven companies in a more than $1 billion healthcare fraud scheme on Oct. 12.

The same day, the court unsealed an additional two plea agreements and information charging another individual and his company for their role in the scheme.

Here are five things to know:

1. The Justice Department named four individuals and their seven compounding pharmacies — all located in Florida and Texas — as defendants in the case. The entities were charged with conspiracy to commit healthcare fraud, mail fraud and introducing misbranded drugs into interstate commerce.

2. On Sept. 26, telemedicine company HealthRight and its CEO pleaded guilty to felony conspiracy for their roles in the telemedicine healthcare fraud scheme, and pleaded guilty to conspiring to commit wire fraud in a separate scheme for fraudulently telemarketing dietary supplements, skin creams and testosterone.

3. According to the indictment, the defendants — along with several other entities — conspired to deceive tens of thousands of patients and more than 100 physicians in eastern Tennessee to defraud private healthcare benefit programs like Blue Cross Blue Shield of Tennessee out of approximately $174 million between June 1, 2015, and April 1, 2018. The indictment also alleges the defendants submitted roughly $931 million in fraudulent claims.

4. Through the scheme, HealthRight fraudulently solicited insurance coverage information and prescriptions from consumers across the country for prescription pain creams and other similar products. The Justice Department alleges the physicians approved the prescriptions, which the defendants massively marked up in price unbeknownst to the physicians. The defendants then billed patients' private insurers for the services.

5. The four individuals named as defendants appeared in court Oct. 11 and were released on bond. Their arraignment is scheduled for Oct. 25. If convicted, the individuals face up to 20 years in prison for mail fraud, up to 10 years in prison for conspiracy and up to three years in prison for introducing misbranded drugs into the market. They also face fines of up to $250,000 and up to three years of supervised release related to each count. The companies face fines up to twice the gross loss in income from the conspiracy and the forfeiture of $154 million.

To access the full report, click here.

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