V.P. of Sales for North Alabama Compounding Pharmacy Charged in Insurance Conspiracy

U.S. Attorney's Office

Northern District of Alabama

FOR IMMEDIATE RELEASE

Friday, September 21, 2018

V.P. of Sales for North Alabama Compounding Pharmacy Charged in Insurance Conspiracy

Company Executive is 15th Defendant Charged in Continuing Investigation

BIRMINGHAM - Federal prosecutors today charged the vice president of sales for Northside Pharmacy, a Haleyville, Ala.-based compounding pharmacy doing business as Global Compounding Pharmacy, with participating in a conspiracy to generate prescriptions and defraud health care insurers and prescription drug administrators out of tens of millions of dollars.

U.S. Attorney Jay E. Town, FBI Special Agent in Charge Johnnie Sharp Jr., U.S. Postal Inspector in Charge Adrian Gonzalez, U.S. Department of Health and Human Services, Office of Inspector General, Special Agent in Charge Derrick L. Jackson, Defense Criminal Investigative Service Special Agent in Charge John F. Khin, and Internal Revenue Service Criminal Investigation Special Agent in Charge Thomas J. Holloman announced the charges.

The U.S. Attorney's Office filed a 13-count information in U.S. District Court charging PHILLIP NATHAN MARKS, 49, of Winter Park, Fla., with conspiring between November 2014 and June 2016 to defraud multiple insurance plans including Blue Cross and Blue Shield of Alabama, Medicare, and TRICARE, as well as their prescription drug administrators. The information also charges Marks with 12 counts of health care fraud for submitting fraudulent prescription claims to these entities. Prosecutors also filed a plea agreement with Marks.

"Global Compounding stole from insurance programs, including Medicare and TRICARE, by using a marketing scheme that increased the sales of expensive medications without regard for patient need or medical necessity," Town said. "Schemes like this drive up health care costs for everyone. The U.S. Attorney's Office and our law enforcement partners are committed to prosecuting everyone who sought personal enrichment by participating in this pharmacy's health care fraud."

The charges stem from a larger investigation that already has resulted in guilty pleas from 13 individuals. Along with Marks, prosecutors also filed charges today against another Global sales representative, bringing to 15 the number of defendants in the case. The U.S. Attorney's Office charged JODY HOBBS, 45, of Santa Rosa Beach, Fla., in a three-count information alleging conspiracy and health care fraud. Prosecutors also filed an associated plea agreement with Hobbs.

According to the court documents, Global, which described itself as "one of the top three largest compounding pharmacies in the United States," primarily shipped compounded and other drugs from its Haleyville facility, but did most of its prescription processing, billing and customer service at its "call center" in Clearwater, Fla. The company hired sales representatives who were located in various states and were responsible for generating prescriptions from physicians and other prescribers.

The court documents describe a multi-faceted scheme that focused on obtaining and billing for high-dollar fraudulent prescriptions. In the scheme, Global would identify high-dollar drugs and instruct employees to obtain medically unnecessary prescriptions for themselves and family members. Global incentivized prescribers to issue these fraudulent prescriptions by hiring and paying their family members as sales representatives, and by directing sales representatives to work at practitioners' offices to have better access to patients and their files. Global employees obtained prescriptions in various other fraudulent ways, including forging prescriptions. Global maximized proceeds on these fraudulent prescriptions by altering them to add or substitute drugs and automatically refilling and billing for them, regardless of patient need. It also routinely waived co-pays to encourage patients to accept unnecessary medications and refills. When insurance plans and their prescription drug managers attempted to police Global's conduct, Global provided false and misleading information to them, and began billing through affiliate pharmacies. Court filings in Marks' case note that two such affiliate pharmacies were The Prescription Shop in Haleyville and Tropic Pharmacy in Boca Raton, Fla.

According to the court documents, as vice president of sales, Marks routinely directed sales representatives to obtain medically unnecessary prescriptions for themselves and family members. One such drug was Silapak, which Global itself advertised as "not indicated for children." Global employees nonetheless submitted Silapak prescriptions for children, some as young as two years old, which Global dispensed and billed. Nine of the health care fraud charges against Marks include multiple counts of fraudulent Silapak prescription billings for children of Global employees.

According to court documents, Global hired Hobbs as a sales representative because he had high-reimbursing health insurance from his other employer. Global billed for multiple medically unnecessary drugs for Hobbs, including a tube of wound care cream that cost $30,812.

The 13 individuals previously charged and who have pleaded guilty are Global Operations Manager Jeffrey South, District Manager Angie Nelson, National Field Trainer and sales representative Bridget McCune, and sales representatives Roddrick Boykin, Joshylyn Bowen, Vanessa Case, Peter Eodice II, Robin Lowry, Kelley Norris and Dawn Whitten, and billers Fermin Alfonso, Stacey Cardozo, and Christopher Nunez.

The maximum punishment for the conspiracy charge is five years in prison and a $250,000 fine. The maximum penalty for health care fraud is 10 years in prison and a $250,000 fine.

FBI, USPIS, HHS-OIG, DCIS and IRS-CI investigated the cases, which Assistant U.S. Attorneys Chinelo Dike-Minor, Don Long, and Nicole Grosnoff are prosecuting.

An information or indictment contains only charges. Defendants are presumed innocent unless and until proven guilty.

Marks Philip Information (http://www.doj.gov/file/1095791/download" type="application/pdf; length=104632)

Marks Phillip Plea Agreement (http://www.doj.gov/file/1095796/download" type="application/pdf; length=2016949)

Updated September 21, 2018