Of the 16 people charged in a massive alleged insurance fraud scheme, 11 hailed from South Florida.
The U.S. Attorney’s Office for the Southern District of Florida announced the charges September 2, detailing a complex alleged scheme built on prescription manufacturing, misrepresentations to health insurance providers, kickbacks and more.
The co-conspirators were charged by information, as opposed to an indictment. Charges by information typically precede a plea agreement.
The alleged scheme centers around three companies with offices at the same Boca Raton address –NuMedCare LLC, ClinicalCorp LLC and RX of Boca LLC – and a Texas-based compounding pharmacy that entered into an agreement with NuMed in 2014.
According to the U.S. Attorney’s Office, the two-year conspiracy that resulted in more than $175 million of criminal profit hinged on companies including the Boca Raton trio.
There are many different types of health care fraud, and this alleged scheme was based on compounding fraud, a system set up to generate kickbacks to physicians who prescribed the compounded medications, and the billing of health insurance providers for alleged ingredient costs of the medications.
Health care fraud is rampant in South Florida. This summer, law enforcement announced charges against 100 South Floridians in different cases as part of the largest national health care fraud takedown, and a Miami trio was sentenced for their roles in the largest Medicare fraud payout of 2015.
The 11 South Floridians charged in the $175 million case are:
- Clifford Carroll, 36, of Boca Raton
- Todd Stephens, 52, of West Palm Beach
- Tim Clinton, 30, of Delray Beach
- Joel McDermott, 41, of Boca Raton
- Michael Kenna, 30, of Delray Beach
- Lisa Goldberg, 51, of Fort Lauderdale
- Christopher Mucha, 30, of Davie
- Ian Flaster, 34, of Delray Beach
- Kyle O’Brien, 28, of Boca Raton
- Rhett Gordon, 43, of Boca Raton
- William Earl, 73, of Boca Raton
Carroll was the CEO of NuMed, and the alleged organizer of the scheme. Stephens was the CFO of NuMed, and Clinton the COO.
Kenna, McDermott, O’Brien and Flaster were sales representatives at NuMed. Mucha was, at one time, employed at NuMed, but served as an intermediary between ClinicalCorp and allegedly corrupt physicians. Gordon was a NuMed employee and Earl was the owner of RX of Boca, which entered into an agreement with NuMed in 2013 when RX of Boca was failing, according to the information.
Finally, Goldberg operated businesses that facilitated alleged illegal payments to physicians in exchange for issuing compounded medication prescriptions, according to the information.
In addition to the 11 South Floridians, co-conspirators in New Port Richey, Georgia, Nevada, Massachusetts and Pennsylvania were also charged.
Regulations around compounding are strict. A compound drug is a combination of medicines a patient needs. Drugs can be compounded on an individual basis by a licensed pharmacist or physician who can specialize the medication based on the patient’s need.
Examples of a legal need for compounding include if a patient is allergic to a certain medication and if a child can’t swallow a pill and needs medicine in liquid form.
However, some companies have found that bulk production of widely used compounded medication can be a lucrative source of income. The problem is that compounding is not supposed to be done in bulk, in part because drug production is highly regulated to ensure safety.
The alleged NuMed scheme involved the compounding of prescriptions and a kickback system where physicians were paid to prescribe the drugs sold by NuMed. NuMed also allegedly charged health insurance providers for very expensive drug ingredients, according to the information.
The co-conspirators allegedly purchased privately owned pharmacies that were failing, like RX of Boca and Texas Compounding, to conceal their interest in the product, according to the information.
In addition to the compounding, the scheme also had an alleged call center component where co-conspirators would call potential patients and convince them to send preprinted prescriptions via fax to their physicians, according to the information.
The alleged scheme ran from about 2013 through 2015, according to the information.
If convicted, the co-conspirators could collectively forfeit millions held in bank accounts, as well as real estate.