Fourteen Indicted in Pharmaceutical Kickback Case

Ten doctors, two pharmaceutical executives, and two business entities have been charged in a scheme to bribe doctors for prescriptions, announced U.S. Attorney for the Northern District of Texas Leigha Simonton.

The fourteen defendants were charged in a two-count indictment filed Wednesday.  Medical doctors Robert Leisten, Amy Haase, Arnold Farbstein, Barry Weinstein, Eric Berkman, Jorge Cuz, Katherine McCarty, James Ellis, and David Wolf; executives Amir Mortazavi and Arvin Zeinali; and Management Service Organizations (MSOs) Trinity Champion Healthcare Partners, LLC and Hexamed Business Solutions, LLC were charged with conspiracy to violate the Travel Act by violating the Texas Commercial Bribery Statute and conspiracy to deny patients their right to honest services; and with conspiracy to commit money laundering. Medical doctor Walter Strash was charged with conspiracy to violate the Travel Act by violating the Texas Commercial Bribery Statute and conspiracy to deny patients their right to honest services.

“Our community trusts doctors to write prescriptions that serve their patients’ best interest. Kickbacks and bribes cloud physicians’ judgment,” said U.S. Attorney Leigha Simonton. “The U.S. Attorney’s Office is proud to hold accountable those who abandon the Hippocratic oath in the name of personal enrichment. We will not permit greed to taint the practice of medicine.”

“The alleged scheme in this indictment included doctors who used their positions of trust to profit personally at the expense of their patients. Health care fraud affects all sectors of the economy and costs U.S. taxpayers billions of dollars each year,” said FBI Dallas Special Agent in Charge Chad Yarbrough. “The FBI is committed to investigating and exposing all forms of health care fraud. We will work with our law enforcement partners to hold anyone accountable that uses the health care system for their own personal benefit.”

According to the indictment, several pharmacies allegedly identified profitable prescriptions and recruited doctors to write those prescriptions. The doctors allegedly referred the prescriptions, including highly lucrative pain creams, to those pharmacies in return for a share of the profits on the prescriptions. The pharmacies allegedly tracked each prescription by doctor and illegally funneled a share of the profits back to the doctors through various marketing firms and management service organizations (MSOs), including Trinity Champion and Hexamed. 

The indictment alleges that profits were generally handled as follows: Roughly 45 to 55% of net profits were retained by the pharmacy, which would pay roughly 50 to 55% of profits to a marketer called Med Left. Med Left would take a significant percentage of the payment, sometimes as much as half, and pay the rest to MSOs including Trinity Champion, Hexamed, and Eagle Ridge. Trinity Champion would funnel a small percentage to its managing partner and then pay the remaining proceeds to an entity controlled by Dr. Leisten, who would then pay Drs. Haase, Farbstein, Weinstein, Berkman, and Cuza; Hexamed and Eagle Ridge would pay a small percentage to its managing partner and then pay the remaining proceeds to Drs. McCarty, Wolf, and Ellis.

The conspirators concealed these bribes as returns on investments from physician ownership in the pharmacies. In reality, physician ownership required referrals and ownership was offered for a nominal fee – in some cases, as little as $1,000 or $1,250. Virtually 100% of pharmacy revenues were created by prescriptions written by physician owners, and profits generated from those prescriptions were shared with prescribing doctors.

According to the indictment, in May 2018, a confidential human source met with Mortazavi and Zeinali, saying he represented a group of doctors who wanted to get paid on their prescriptions. Mortazavi and Zeinali allegedly said they would only agree to pay doctors through an MSO model. The following week, the confidential source met with an MSO operator who allegedly explained how the doctors would get paid for prescriptions they sent to pharmacies.

Later that same month, Mortazavi and three of the doctors met for dinner to discuss changing their MSO model. They agreed that the MSO would receive a weekly report of scripts submitted the previous week. A report subsequently sent to an MSO tracked each doctor by the patient, number of prescriptions filled, sum of monies due from insurance companies, sum of cost to fill each prescription, and sum of net. Three weeks later, a person affiliated with one of the MSOs asked Zeinali about which new drugs doctors “can get a good reimbursement on?”

An indictment is merely an allegation of criminal conduct, not evidence. All defendants are presumed innocent until proven guilty in a court of law.

If convicted, each defendant faces up to five years on the Travel Act conspiracy, 20 years on the Deprivation of Honest Services Wire Fraud conspiracy, and 20 years on the money laundering conspiracy charge.

Two businessmen, Andrew Hillman and Semyon Narosov, owners of Next Health, pleaded guilty to charges stemming from this scheme in October 2018. They were sentenced to 66 months (Hillman) and 76 months (Narosov) in prison for conspiracy to launder monetary instruments. The two men, in their capacities as co-owners of a surgical brokerage called Hospital Business Concepts, were also charged in the Forest Park healthcare fraud scheme; they pleaded guilty in October 2018 to conspiracy to pay and receive healthcare bribes and were later sentenced to 60 months (Hillman) and 51 months (Narosov). The owner of marketing firm Med Left, Vinson Woodlee, pleaded guilty in a separate case to conspiracy to solicit and receive kickbacks for referrals to federal health care programs. 

The Federal Bureau of Investigation’s Dallas Field Office, the U.S. Department of Health & Human Services Office of Inspector General, HHS’s Medicaid Fraud Control Unit, the U.S. Department of Veterans Affairs Office of Inspector General, the U.S. Department of Labor Office of Inspector General, U.S. Food & Drug Administration Office of Criminal Investigations, the U.S. Office of Personnel Management Office of Inspector General, the U.S. Postal Inspection Service, the Drug Enforcement Administration’s Dallas Field Office, IRS Criminal Investigations, and the Defense Criminal Investigative Service (DCIS) conducted the investigation. Assistant U.S. Attorneys Chad Meacham, Donna Max, and Marty Basu are prosecuting the case.