CAMDEN — Federal officials announced Thursday that two men have pleaded guilty in a conspiracy that used a network of recruiters, doctors, and state and local government employees to collect millions for unnecessary compounded prescriptions.
“The defendants defrauded the state of New Jersey and other health insurers out of millions of dollars by getting reimbursed for phony prescriptions on expensive and medically unnecessary compounded medications,” Acting U.S. Attorney Fitzpatrick said in a release Thursday. “This conduct, which fraudulently exploited state health benefits programs and left New Jersey taxpayers on the hook for millions in losses, is especially brazen in an era when health insurance is a constant concern for many Americans.”
Several Atlantic County shore towns have seen info about their employees’ pharmaceutical plans subpoenaed in recent months as feds investigated skyrocketing pharmaceutical costs, according to reporting by the Press of Atlantic City.
Matthew Tedesco, 42, an Atlantic County pharmaceutical sales representative, and Robert Bessey, 43, of Philadelphia, both pleaded guilty to conspiracy to commit health care fraud in federal court in Camden Thursday, according to the U.S. Attorney’s Office.
Matt Tedesco leaves the federal courthouse in Camden after pleading guilty to leading a $28 million Rx scheme. pic.twitter.com/TEWY4wmUPf
— Amy S. Rosenberg (@amysrosenberg) August 17, 2017
According to a statement from the office, Tedesco, of Linwood, was a leader in the conspiracy and Bessey helped recruit people to join. Tedesco was paid over $11 million dollars for his role, though he paid some of that to conspirators lower down in the scheme, officials said. Bessey received $485,540.
Between January 2015 to April 2016, Tedesco, Bessey and other conspirators convinced individuals including teachers, firefighters, local and state police and other state employees to agree to accept unnecessary prescriptions from an unnamed, out-of-state compounding pharmacy, officials said.
Drugs from compounding pharmacies cost far more than regular drugs because they are mixed for individual patients. For example, a doctor could order a prescription from a compounding pharmacy if a patient is allergic to a component of an existing medication.
Once an employee agreed to participate, the conspirators would fill out the prescription form for them and select whatever “compounded medications that paid the most and order 12 months of refills without regard to their medical necessity,” the statement said.
Doctors would sign off on the prescriptions though they had never even seen the patients, federal authorities allege.
Among the pricey prescriptions being filled by the compounding pharmacy were various “libido creams” and other creams costing thousands for a months supply, as well as $10,000 in vitamins, officials said.
The compounding pharmacy would fill the prescriptions and bill the patient’s insurance provider. Then a person described only as the “pharmacy benefits administrator,” who oversees the state health benefits programs that cover some public workers, would pay the pharmacy and bill the state the same amount, officials said.
The U.S. Attorney’s Office said that roughly half of the $50 million that the pharmacy benefits administor paid to the compounding pharmacy was for prescriptions that Tedesco and his alleged conspirators had arranged.
For each of those transactions, officials said, the pharmacy paid one of the alleged conspirators a percentage, which was then distributed down the line to other members of the conspiracy, including the doctors who signed the prescriptions.
As part of the plea agreement Tedesco and Bessey accepted, they both agreed to forfeit their profits from the scheme. In restitution, Tedesco has agreed to pay $28,773,907 while Bessey has agreed to pay $2,693,193, the U.S. Attorney’s Office said.
Both are scheduled to be sentenced Dec. 4. They could face as much as 10 years in prison.
The Philadelphia Inquirer reports that three more people are expected to pleased guilty on Friday in connection with the plot, including an Atlantic City firefighter who has resigned.