There’s No Medication for Fraud

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Pills spilling out of a prescription bottle on 100 dollar paper currency

A multi-year investigation of various health care fraud schemes has resulted in six criminal convictions and the recovery of $8.7 million in forfeitures, restitution, and civil settlement payments. The schemes involved a Delaware County pharmacy, Heritage Therapeutics, LLC, and some of its employees. (Long investigations may get tiring, but when multiple criminals face justice, the time spent is worth it.)

Between 2013 and 2015, Heritage created expensive compounded medications including pain creams, scar creams, and vitamins. Heritage paid commissions to several of its sales representatives to entice medical providers to prescribe the compound medications to TRICARE beneficiaries. (TRICARE is a federally funded health care program for military members, retirees, and their families. So it’s particularly egregious when scammers go after those who protect our nation.)

Lead sales representative, Michael Bemis, paid kickbacks to a Philadelphia-area physician, Dr. Scott Kurzrok, in exchange for issuing prescriptions to TRICARE beneficiaries that he had never examined or treated. Bemis also recruited and encouraged other sales representatives to pay kickbacks to medical providers, and to pay TRICARE beneficiaries to allow unnecessary prescriptions to be filled and refilled in their names. Heritage submitted claims for these medications and paid commissions to Bemis and other sales representatives. (If fraudsters can be counted on for one thing, it’s that they are known for recruiting others to join them in their illegal activities. The more the merrier.)

Bemis was sentenced to two and a half years in prison, ordered to pay criminal restitution of more than $3.3 million and required to forfeit over $930,000 for his charge of conspiracy to commit health care fraud. (This sentence seems surprisingly light considering he was the head honcho.)

Several of Bemis’ recruits – Charles Hollister, Andrew Balick, Benjamin Tewes, and Benjamin Fidelie – were also charged and sentenced after committing similar crimes as Bemis. (It’s no mystery as to how they learned how to carry out their illegal actions.)

Hollister was sentenced to more than one year in prison and ordered to pay over $1 million in criminal restitution jointly and severally with Bemis after also being charged with conspiracy to commit health care fraud. Balick was sentenced to over one year in prison and was ordered to pay criminal restitution of more than $1.8 million jointly and severally with Bemis.

Tewes paid kickbacks to physician assistant, Thomas Hersch. This resulted in Tewes being sentenced to 3 years of probation, a $15,000 fine, and restitution in the amount of $276,000 after pleading guilty to one count of paying kickbacks in connection with a federal health care program. Hersch pleaded guilty to one count of receiving kickbacks in connection with a federal health care program. (You apparently can’t trust your sales representatives or your medical providers.)

Fidelie, who was both a Heritage sales representative and a medical assistant at an orthopedic practice in Oklahoma, pleaded guilty to one count of paying kickbacks in connection with a federal health care program.

Several medical providers who were recruited under Bemis and his fellow sales representatives also had a part in the fraud schemes. Dr. Scott Kurzrok, Tanya Dyer, Andrew Dykstra entered into settlement agreements to resolve civil claims under the False Claims Act. Sales representative Kristine Sewell also entered into a settlement agreement. (At least they were smart enough to enter into settlement agreements.)

Finally, Heritage, its president, David Raffaele, principals Kevin O’Brien and Stephen Seiner, former pharmacist-in-charge Gary Umland, and sales assistant Michael D’Antonio entered into a settlement agreement to resolve civil claims against the entity and associated individuals under the False Claims Act. (These leaders are anything but leadership material.)

Except for facts admitted to in the guilty pleas, the claims resolved by the civil settlements are only considered allegations and no liability has been determined. (“Allegedly.”)

Today’s Fraud of the Day comes from the Department of Justice press release, “Federal Civil and Criminal Investigations Result in Six Convictions and Recovery of over $8.7 Million in Connection with Compounded Medications Formulated by DelCo Pharmacy,” published on March 30, 2022.

PHILADELPHIA – United States Attorney Jennifer Arbittier Williams announced the criminal and civil resolutions of multi-year investigations of various health care fraud schemes involving prescriptions for compounded medications formulated by Heritage Therapeutics, LLC, a Delaware County pharmacy. The investigations yielded six criminal convictions and recovered over $8.7 million in criminal forfeitures, criminal restitution, and civil settlement payments.

From 2013 into 2015, Heritage formulated expensive compounded medications such as pain creams, scar creams, and vitamins. These compounded medications were prescribed to, among others, beneficiaries of TRICARE, a federally funded health care program for military members, retirees, and their families. The investigations revealed that Heritage paid commissions to some of its sales representatives for referring Heritage’s compounded medications to medical providers who prescribed them to TRICARE beneficiaries. Some of these sales representatives, in turn, paid kickbacks to the medical providers to induce them to issue those prescriptions.

 

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.