7 People Sentenced in Telemedicine Pharmacy Fraud Scheme

A federal judge in Greeneville, Tennessee, sentenced seven people and seven related corporate entities for deceiving pharmacy benefit managers (PBMs) regarding tens of thousands of prescriptions. The scheme involved using telemedicine to authorize prescriptions and gain insurance information.

The leader in the fraud scheme, Peter Bolos, was convicted in December by a federal jury. They found that Bolos, along with co-conspirers Michael Palso, Andrew Assad, Scott Roix, Larry Smith, Mihir Taneja, Arun Kapoor, and Maikel Bolos defrauded PBMs, such as Express Scripts and CVS Caremark, leading them to authorize claims for prescription drugs that insurers paid to pharmacies the conspirators controlled.

Bolos received a 14-year prison sentence and $2.5 million in forfeiture on May 16. The court also sentenced Palso to nearly three years in prison. The two individuals will each pay $25 million in restitution.

Penalties for the other co-conspirers involved in the case include probation, imprisonment, and millions of dollars in restitution.

“The significant sentences imposed by the court reflect the seriousness of this large-scale fraud scheme, in which the defendants deceived consumers to facilitate the distribution of drugs without proper medical oversight and overbilled insurers for illegal prescriptions,” said Deputy Assistant Attorney General Arun G. Rao, head of the Civil Division’s Consumer Protection Branch, in the press release. “The department will continue to work with law enforcement partners to prosecute those who take advantage of telemedicine to perpetrate fraud schemes that violate the Food, Drug, and Cosmetic Act."

The evidence reviewed in court revealed that Bolos, Assad, and Palso, who owned Synergy Pharmacy, partnered with Roix, who ran a telemarketing platform called HealthRight, to obtain more than 60,000 prescriptions for Synergy and other involved pharmacies. Riox used HealthRight as a telemedicine service and convinced consumers to accept the prescriptions and provide their insurance information. HealthRight then paid doctors to authorize the prescriptions through the telemedicine platform. Those accused selectively chose the medications for which they could receive profitable reimbursements.

Cases involving healthcare fraud schemes are common, and penalties vary depending on the severity of the crime.

In April, the Department of Justice charged orthopedic surgeon Elemar Raffai, MD, with submitting false claims to Medicare. The scheme involved Raffai signing prescriptions through alleged telemedicine services to obtain unnecessary medical equipment. Raffai could face up to 10 years in prison if convicted.

In May, a doctor in California received an eight-year prison sentence due to his involvement in a Medicare fraud scheme. Donald Woo Lee was found guilty of recruiting Medicare beneficiaries to his workplace and performing unnecessary diagnoses and procedures. The case involved him billing Medicare for $12 million.