In late summer we issued a client alert describing a healthcare fraud scheme that had hit two New Jersey state health benefits programs for over $25 million by submitting fraudulent prescriptions for compounded medications. At the time of the initial alert, five conspirators had submitted guilty pleas to an assortment of charges. Just two months later and that total is now up to 10, with the latest plea coming in just a few days ago.

The latest conspirator to plead guilty, Michael Neopolitan, is one of eight pharmaceutical sales representatives caught up in the investigation. The remaining guilty pleas have come from a firefighter and a physician. Neopolitan pleaded guilty to health care fraud and has agreed to pay back $200,000 that he gained via the scheme and also an additional restitution of nearly $700,000. He still faces further fines and up to 10 years in prison for his role in the conspiracy when he is sentenced in January 2018.

The fraud took place between January 2015 and April 2016. During that time, the ringleader of the conspiracy and his “recruiters” are alleged to have persuaded a number of teachers, firefighters, municipal police officers, State police and other public employees to obtain unnecessary prescriptions in exchange for kickbacks. The group persuaded doctors who never saw nor evaluated the “patients” to submit prescriptions for up to a 12- month supply of medications (usually pain, scar, antifungal, and libido creams) to a compounding pharmacy or pharmacies. The conspirators received a kickback from the compounding pharmacy or pharmacies for each prescription filled. They in turn distributed money and other benefits to doctors who signed the prescriptions and the public employees and other individuals who agreed to provide their health insurance information and receive the mail-order drugs.