Last week the U.S. Attorney’s Office for the Western District of Texas announced that a Houston area pharmacist, Nermin Awad El-Hadik, had agreed to pay over $5 million in restitution for her role in a kickback scheme that defrauded the U.S. Department of Labor’s health care program of millions of dollars. In addition to restitution, El-Hadik is facing up to five years in prison. 

El-Hadik engaged in the scheme in conjunction with chiropractor Garry Wayne Craighead from March to December of 2015. El-Hadik paid Craighead cash in return for the referral of federally insured patients that required prescriptions—prescriptions that would be filled at El-Hadik’s Hope Pharmacy. Craighead also used his influence to encourage physicians to refer additional drug compounding business to El-Hadik. By pleading guilty, El-Hadik admitted she paid kickbacks totaling $5,334,303.04 to Craighead. Earlier this year, Craighead was sentenced to 14 years in prison and ordered to pay over $17 million in restitution following a guilty plea for one count of solicitation and receipt of illegal remunerations in federal health care programs and one count of engaging in monetary transactions in property derived from specified unlawful activity.

The Craighead/El-Hadik investigation provides a current example of the increasing scrutiny of pharmacies that accept payment from federal healthcare programs by federal law enforcement agencies, which includes the Department of Labor and Federal Employee programs. The uptick in investigations and enforcement actions was previously noted in our June alert (available here), where we also issued a reminder that the False Claims Act and Anti Kickback statute are now being applied by federal law enforcement agencies to pharmacists and pharmacies with a level of vigor previously reserved for others in the healthcare industry.

Pharmacies and other healthcare providers should take a proactive approach now to ensure their compliance programs are effectively implemented and ready to withstand a government investigation. Given the complexity and aggressiveness of the enforcement activity, it would be prudent to discuss your legal rights with counsel. The FisherBroyles Pharmacy and Health Care Law team is well versed in these matters and welcomes your questions.