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Ten people have been charged in a 103-count indictment alleging hundreds of millions of dollars in fraud in connection to an Alabama-based pharmacy, according to the U.S. Attorney’s Office for the Northern District of Alabama.
The indictments, announced Monday, involve a nurse practitioner, and the owners, a pharmacist, managers, sales representatives, and billers, of Haleyville, Alabama-based pharmacy Northside Pharmacy. The company was doing business as Global Compounding Pharmacy.
Many of those arrested are from Florida, where Global had a “call center.”
The list of defendants, their connections to the company, and the number of counts they face include:
1. J. J. Adams, 38, of Panama City Beach, Florida, an owner and president of Global, charged in 38 counts; Adams was arrested on Wednesday and arraigned on Thursday in the Northern District of Florida.
2. A. Adams, 36, of Santa Rosa Beach, Florida, director of HR for Global, charged in 10 counts;
3. J. Black, 54, of Destin, Florida, an owner and vice president and COO of Global, charged in 18 counts;
4. J. A. Mays, III, 43, of Winfield, Alabama, a pharmacist at Global, charged in 20 counts;
5. J. Linton, 36, of Clearwater, Florida, the manager of the billing team at Global, charged in 24 counts;
6. L. Holmes, 40, of Troy, Alabama, a district manager supervising sales representatives at Global, charged in 12 counts;
7. J. Gladden, 49, of Tallahassee, Florida, a district manager supervising sales representatives at Global, charged in 9 counts;
8. C. Cunningham, aka Christi Mook, 34, of Crestview, Florida, a sales representative at Global, charged in 9 counts;
9. J. Rodriguez, 41, of Tampa, a biller at Global, charged in 6 counts; and
10. L. D. Edenfield, 45, of Marianna, Florida, a nurse practitioner, charged in 32 counts.
According to the DOJ, the indictment charges the defendants with fraudulently billing health care insurers and prescription drug administrators for over $200 million in prescription drugs.
According to the indictment, Global, which described itself as “one of the top three largest compounding pharmacies in the United States,” primarily shipped compounded and other drugs from its Haleyville facility, but did most of its prescription processing, billing and customer service at its “call center” in Clearwater, Fla. The company hired sales representatives who were located in various states and were responsible for generating prescriptions from physicians and other prescribers. The company also worked with affiliated pharmacies.
In one listed instance, the defendants’ alleged fraudulent conduct caused a prescription plan administrator to pay over $29,000 for one tube of a cream advertised as treating “general wounds,” the office of U.S. Attorney Jay Town said.
In other instances, the indictment says insurance companies were billed for female sex creams issued to male patients, billed for drugs issued to children that Global stated were contraindicated for use by children, and billed for drugs that patients did not need and therefore simply discarded in the trash.
“Motivated by greed, the defendants executed a brazen health care fraud conspiracy and scheme that cost health insurance plans, including those that protect the elderly, disabled, military members and veterans, millions of dollars,” Town said. “Their scheme deprived health insurance plans of money that could have gone to assist patients with real medical needs. To date, this investigation has resulted in 28 people being charged. Would-be healthcare fraudsters should be on notice that our Office is dedicated to rooting out this conduct. We applaud the investigative agencies for their hard work.”
The indictment describes a multi-faceted health care fraud and mail fraud conspiracy and scheme in which the defendants billed for medically unnecessary drugs. Aspects of the scheme included paying prescribers to issue prescriptions; directing employees to get medically unnecessary drugs for themselves, family members, and friends, to be filled and billed by Global and other related pharmacies; altering prescriptions to add non-prescribed drugs including controlled substances such as Tramadol and Ketamine; automatically refilling prescriptions—often as many as 12 times—regardless of patient need; routinely waiving and discounting co-pays to induce patients to obtain and retain medically unnecessary drugs; and billing for drugs without patients’ knowledge and hiding that conduct from patients by mailing the drugs to J. Adams’ home. According to the indictment, when prescription drug administrators attempted to police this fraudulent conduct, the defendants evaded and obstructed those efforts, including by providing false information in response to audits and diverting their billing through affiliated pharmacies. In executing the scheme, the defendants billed health insurance plans and their prescription plan administrators over $200 million and were paid over $50 million.
The indictment states that the defendants targeted multiple health insurance plans, including Global’s, Blue Cross Blue Shield of Alabama, and plans providing health insurance to the elderly, disabled, members of the military, and veterans—Medicare, TRICARE, and CHAMPVA, among others. In addition, the defendants allegedly targeted the health insurance plans of Medtronic, a medical device company, and Novartis Pharmaceuticals Corp., pharmaceutical company, both known by some of the defendants to have high-reimbursing health insurance. According to the indictment, Adams and Black would hire individuals known to be on Medtronic and Novartis’s health insurance plans, and direct them to get prescriptions for medically unnecessary drugs for themselves, family members, and friends, and then pay them a commission for these prescriptions.
The indictment also charges the defendants with aggravated identity theft, charges J. Adams, Black, and Edenfield with participating in a kickback conspiracy, and charges J. Adams, Black, and Mays with multiple counts of spending the proceeds of health care fraud and mail fraud. Purchases included for private plane travel and expensive watches.
The charges stem from a larger investigation that has to date resulted in 18 additional individuals being charged and signing plea agreements. Those individuals include Global Vice President of Sales Phillip Marks, Operations Manager Jeffrey South, District Manager Angie Nelson, National Field Trainer and sales representative Bridget McCune; sales representatives Bonita Amonett, Roddrick Boykin, Joshlyn Bowen, Erin Brown, Vanessa Case, Peter Eodice II, Jody Hobbs, Robin Lowry, Kelley Norris and Dawn Whitten; billers Fermin Alfonso, Stacey Cardozo, and Christopher Nunez; and a nurse practitioner, Brandy Lunsford.
The maximum penalty for healthcare and mail fraud conspiracy is 20 years in prison and a $250,000 fine.
The maximum penalty for health care fraud is 10 years in prison and a $250,000 fine.
The maximum penalty for mail fraud is 20 years and a $250,000 fine.
The penalty for aggravated identity theft is a mandatory two years, to run consecutive to other counts.
The maximum penalty for the kickback conspiracy charge is 5 years in prison and a $250,000 fine.
The maximum penalty for spending proceeds of health care fraud and mail fraud is 10 years in prison and a $250,000 fine.