Former Clarence resident accused of costly federal health care fraud

Aug. 6—A former Clarence resident led a multimillion-dollar conspiracy that fraudulently convinced health insurance companies to cover the cost of medically unnecessary but wildly expensive prescriptions, according to the U.S. Attorney's Office in Buffalo.

Michael W. Luehrsen, 38, who now lives in Miami, was indicted by a federal grand jury on charges of conspiracy to commit health care fraud, money laundering and corruptly destroying evidence in the scheme.

Between early 2014 and the end of 2016, Luehrsen, a former pharmaceutical sales representative, and other members of the conspiracy marketed "compounded medications" such as creams and patches that are intended as non-narcotic treatments for scars, wounds and pain, according to the indictment. Luehrsen in 2014 founded a company, MedHype Typ, which traces to the Clarence address where he previously lived, to promote the medications.

Compounded medications typically are formed by adding together or adjusting drug ingredients to produce a medication that targets the needs of a specific patient. However, prosecutors said, Luehrsen and other participants in the scheme instead tailored the medications "to contain ingredients that carried high reimbursement rates from health insurers."

They targeted patients whose health insurance covered compounded medications, convinced the patients they would benefit from the medication and then worked with the patients to obtain the prescriptions, the indictment charges. When pharmacies obtained approval to fill the prescriptions, they would keep half the reimbursement and pay the other half to MedHype, the indictment states.

For example, from roughly January 2015 and December 2016, Luehrsen and his team arranged for one patient to get compounded medications that required monthly refills, at an average monthly reimbursement rate of more than $16,000 per medication, and eventually began prescribing to the patient's three children, generating a total reimbursement of roughly $2.82 million.

Also, according to the indictment, Luehrsen and his associates obtained prescriptions for compounded medication from doctors who had never examined the patients who received them.

One unnamed physician, prosecutors say, signed nearly 150 such prescriptions for 19 patients. The prescriptions were filled 519 times, prompting insurers to pay out more than $8.75 million.

Luehrsen also obtained "a large number of high-reimbursement compounded medications for himself," prosecutors say, worth $326,640.

Further, the indictment also accuses Luehrsen of money laundering in order to hide the fraudulent profits, including illegal wire transfers of hundreds of thousands of dollars at a time.

And, prosecutors say, Luehrsen destroyed emails and other records to impede an FBI investigation.

Luehrsen was arraigned on Aug. 4, before U.S. Magistrate Judge Jeremiah J. McCarthy and released on conditions. It's not clear whether any other participants in the purported conspiracy also have been charged in the matter.

If convicted, prosecutors want Luehrsen to forfeit millions in cash, along with real estate in Buffalo and Miami, investment holdings and his positions in various businesses.

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