CAMDEN — Three former executives of a Louisiana compounding pharmacy linked to an ongoing $50 million prescription fraud scheme that targeted state health care plans in South Jersey have been indicted in that case, as well as on charges of defrauding military health benefits programs, officials said Thursday.
A federal grand jury returned a 24-count indictment against Christopher Kyle Johnston, 41, of Mandeville, Louisiana; Trent Brockmeier, 58, of Pigeon Forge, Tennessee; and Christopher Casseri, 52, of Baton Rouge, Louisiana, according to a news release from U.S. Attorney Craig Carpenito. All three were charged with conspiracy to commit health care fraud and wire fraud and conspiracy to commit identity theft by using individuals’ personal identifying information without their consent.
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Casseri also was charged with repeatedly lying to federal agents, officials said. Johnston and Brockmeier face additional charges of conspiring to commit money laundering and substantive counts of money laundering for transactions involving more than $43 million in illicit profits from the scheme.
Officials said Johnston, Brockmeier, Casseri and their conspirators caused more than $50 million in fraudulent insurance claims for compounded medications that were not medically necessary. Johnston received more than $34 million and Brockmeier received more than $5 million in illicit profits, and Casseri got $200,000 in bonuses, according to the release.
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Prosecutors have said the scheme centers on the billing of New Jersey’s public employee health benefit plans for medically unnecessary compounded drugs, with payouts from prescription reimbursements going to all participants.
Conspirators recruited individuals to get expensive and medically unnecessary compounded medications from Central Rexall Drugs Inc., a Louisiana pharmacy, according to the release.
Hayley Taff, 37, the CEO of Central Rexall, pleaded guilty by videoconference last month to one count of conspiracy to commit health care fraud.
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Johnston and Brockmeier in 2013 made an agreement with Taff to take over the pharmacy’s management and expand the compounding business for 90% of the profits, according to the release. Brockmeier became CEO of Central Rexall, and Johnston became general counsel. They hired Casseri as vice president of sales to manage the pharmacy’s outside sales force.
The three men learned certain insurance plans — administered by an entity referred to in the indictment as the “Pharmacy Benefits Administrator” — would reimburse thousands of dollars for a one-month supply of certain compounding medications, according to the release. They designed compounded medications and manipulated the ingredients to obtain high insurance reimbursements rather than serve the medical needs of patients.
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“To determine which ingredients and combinations resulted in the highest insurance reimbursements, Johnston, Brockmeier and Casseri had Central Rexall employees send the Pharmacy Benefits Administrator false prescription claims to test out different combinations of ingredients, but the prescriptions did not exist,” according to the release.
Through trial and error, the men designed the medications with ingredients chosen solely based on the amount of money that insurance would pay.
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“At their direction, Central Rexall sent compounded medications to patients based solely on financial gain, without any research or testing showing that the combination of ingredients was effective,” officials said.
When the Pharmacy Benefits Administrator stopped covering one combination, conspirators would develop a different one, based only on reimbursement, and would send them to patients, according to the release. New combinations were not medically equivalent, and patients and doctors were not told the difference.
The outside sales force used various methods to get doctors to prescribe the medications and patients to accept them, according to the release, including having prescriptions signed without the patient seeing a doctor or knowing about the medications.
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The three men were also charged in a second scheme to commit identity theft, according to the release. They took patients’ names, dates of birth and other information without their consent from pre-existing Central Rexall prescriptions and used the information to make the false test claims to the Pharmacy Benefits Administrator.
If convicted, the charges carry a variety of maximum potential penalties, from 20 years in prison for the health care fraud and wire fraud conspiracy count to a five-year prison term for the false statement count. All of the offenses also are each punishable by a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater.