East Tennessee Federal Indictment Charges Massive Healthcare Fraud

Monday, October 15, 2018

The District Court for the Eastern District of Tennessee has unsealed a 32-count indictment charging four individuals and seven companies in a $1 billion health care fraud scheme. The court also unsealed an additional two plea agreements and an information charging another individual and his company for their role in the scheme.

Andrew Assad, 33, of Palm Harbor, Florida, Peter Bolos, 41, of Lutz, Florida, and Michael Palso, 44, of Odessa, Florida, were indicted along with their compounding pharmacies, Synergy Pharmacy Services, located in Palm Harbor, and Precision Pharmacy Management, located in Clearwater.

Co-conspirator Larry Everett Smith, 48, of Pinellas Park, Florida, also a pharmacy compounder, and his companies Tanith Enterprises, ULD Wholesale Group, Alpha-Omega Pharmacy, all located in Clearwater, Germaine Pharmacy located in Tampa, Florida, and Zoetic Pharmacy located in Houston, Texas, were all also named as defendants.

All the defendants were charged with conspiracy to commit health care fraud, mail fraud, and introducing misbranded drugs into interstate commerce.

On Sept. 26, HealthRight LLC, a telemedicine company with locations in Pennsylvania and Florida, and Scott Roix, 52, of Seminole, Florida, and the CEO of HealthRight, pleaded guilty to felony conspiracy for their roles in the telemedicine health care fraud scheme in a criminal information. Roix and HealthRight LLC, also pleaded guilty to conspiring to commit wire fraud in a separate scheme for fraudulently telemarketing dietary supplements, skin creams, and testosterone.

The indictment alleges that from June 1, 2015 through April 1, 2018, these individuals and companies, together with other persons and companies known to the grand jury, conspired to deceive tens of thousands of patients and more than 100 doctors located in the Eastern District of Tennessee and across the country for the purpose of defrauding private health care benefit programs such as Blue Cross Blue Shield of Tennessee out of approximately $174 million. The indictment further alleges that the defendants submitted not less than $931 million in fraudulent claims for payment.    

According to the indictment, the defendants set up an elaborate telemedicine scheme in which HealthRight fraudulently solicited insurance coverage information and prescriptions from consumers across the country for prescription pain creams and other similar products. The indictment states that doctors approved the prescriptions without knowing that the defendants were massively marking up the prices of the invalidly prescribed drugs, which the defendants then billed to private insurance carriers.

Assad, Bolos, Palso, and Smith appeared in court on Thursday before U.S. Magistrate Judge Anthony E. Porcelli in the U.S. District Court for the Middle District of Florida. All four individual defendants were released on bond and are scheduled for an initial appearance and arraignment in the U.S. District Court in the Eastern District of Tennessee before U.S. Magistrate Judge Clifton Corker on Oct. 25.

If convicted, Assad, Bolos, Palso, and Smith face a term of up to 20 years in prison as to each mail fraud charge, up to 10 years in prison for the conspiracy, and up to three years in prison for introducing misbranded drugs into interstate commerce. Additionally, they face fines of up to $250,000 and up to three years of supervised release as to each count. The companies face fines of up to twice the gross loss sustained as a result of the conspiracy. The indictment also seeks forfeiture of approximately $154 million.

In addition to their roles in the health care fraud conspiracy, the Information filed against Roix and HealthRight charged each of them with conspiring to commit wire fraud as part of a scheme to use HealthRight’s telemarketing facilities to fraudulently sell millions of dollars’ worth of products such as weight loss pills, skin creams, and testosterone supplements through concocted claims of efficacy and intentionally deficient customer service designed to stall consumer complaints. 

Roix and HealthRight pleaded guilty before U.S. District Judge J. Ronnie Greer of the Eastern District of Tennessee. Roix faces a statutory maximum sentence of 5 years of imprisonment for each conspiracy. The court set sentencing for Feb. 13, 2019.

The investigation was coordinated by Assistant U.S. Attorneys T.J. Harker, David Gunn, and Anne-Marie Svolto of the U.S. Attorney’s Office for the Eastern District of Tennessee, and Trial Attorney John Claud for the Department’s Consumer Protection Branch. Assistant U.S. Attorneys T.J. Harker and David Gunn will prosecute the telemedicine conspiracy for the U.S. Attorney's Office for the Eastern District of Tennessee. Trial Attorney John Claud will represent the Department's Consumer Protection Branch in court proceedings. 

The investigation was conducted by the Nashville office of the U.S. Department of Health & Human Services Office of Inspector General; the Nashville office of the Food and Drug Administration Office of Criminal Investigations; the Buffalo, New York, office of the U.S. Postal Inspection Service; the Knoxville and Johnson City, Tennessee, offices of the Federal Bureau of Investigation; the Atlanta, Georgia, Office of Personnel Management Office of the Inspector General; and the Tampa, Florida, office of Homeland Security Investigations. The U.S. Marshals Service also assisted in the investigation and the forfeiture of assets.


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