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New Jersey Man Admits Role in Massive Pharmacy Compounding Scheme
A Pennsylvania man has pleaded guilty to participating in a massive compounded-medication kickback scheme that he and others ran out of a pharmacy in Clifton, New Jersey, U.S. Attorney Philip R. Sellinger announced.
Robert Schneiderman, 79, pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to two counts of an indictment charging him with one count of conspiracy to commit health care fraud and one count of conspiracy to violate the Anti-Kickback Statute.
According to documents filed in this case and statements made in court, from 2014 through 2016, Schneiderman and his conspirators used Main Avenue Pharmacy, a mail-order pharmacy with a storefront in Clifton, to run a fraud and kickback scheme involving compounded drugs like scar creams, pain creams, migraine medication, and vitamins.
The scheme revolved around identifying compounded drugs that would yield exorbitant reimbursements from health insurers, including both federal and commercial payers. Once Main Avenue identified lucrative formulas for compounds, it would create large prescription pads with precisely those formulas on it.
Main Avenue would disseminate the prescription pad to its stable of marketers across the country, with whom it had contractual relationships. The marketing companies would in turn distribute the prescription pad to telemedicine companies and doctors with whom they had a financial arrangement.
Physicians who signed prescriptions for compounded medications that were filled at Main Avenue often had never even spoken to the patient, let alone examined him or her. Once the prescriptions were signed by a doctor, they would be returned to Main Avenue Pharmacy. Main Avenue would then fill the prescription regardless of its medical necessity and then submit claims to health care benefit programs for reimbursement.
After Main Avenue obtained reimbursement from the health insurers, they would pay kickbacks to the marketers who had generated the prescriptions based on the overall adjudication amount. Main Avenue signed contracts with many of the marketers, and the contracts themselves spelled out the kickback arrangement, which called for Main Avenue to pay each marketer money based on the volume of referrals of compounded prescriptions and the reimbursement amount that Main Avenue received.
Main Avenue would routinely waive co-payments of the patients to whom they were sending multiple prescriptions. On some occasions, Main Avenue Pharmacy paid the co-payments on behalf of the patients, and falsified money orders from the patients to Main Avenue to make it appear as if the patients had paid their co-payments when they had not.
On compounded medications alone, Main Avenue received over $34 million in reimbursements from health care benefit programs. Approximately $8 million of that total was paid by federal payers. Schneiderman himself earned over $400,000 through the course of the scheme.
The count of conspiracy to commit health care fraud carries a maximum penalty of 10 years in prison. The count of conspiracy to violate the Anti-Kickback Statute carries a maximum penalty of five years in prison.
Defendant: Robert Schneiderman, 79
Criminal Charges: conspiracy to commit health care fraud, conspiracy to violate the Anti-Kickback Statute
City and State: Newark, New Jersey
Exact Date: Not specified
Sentence or Outcome: Pleaded guilty
Dollar Amounts: $34 million in reimbursements, $8 million from federal payers, $400,000 earned by Schneiderman
Key Facts
- State: New Jersey
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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