Margate, New Jersey, Doctor Pleads Guilty In Healthcare Fraud Conspiracy Targeting New Jersey Health

https://www.justice.gov/usao-nj/pr/margate-new-jersey-doctor-pleads-guilty-healthcare-fraud-conspiracy-targeting-new-jersey

Department of Justice
U.S. Attorney’s Office
District of New Jersey

FOR IMMEDIATE RELEASE
Friday, September 22, 2017

Margate, New Jersey, Doctor Pleads Guilty In Healthcare Fraud Conspiracy Targeting New Jersey Health Benefits Programs

CAMDEN, N.J. – A doctor with a medical practice in Margate, New Jersey, today admitted defrauding New Jersey state health benefits programs and other insurers by signing prescriptions for patients he never saw, Acting U.S. Attorney William E. Fitzpatrick and New Jersey Attorney General Christopher S. Porrino announced. John Gaffney, 55, of Linwood, New Jersey, pleaded guilty before U.S. District Judge Robert B. Kugler in Camden federal court to an information charging him with conspiracy to commit health care fraud.
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Compounded medications are supposed to be specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient is allergic to a dye or other ingredient.

From January 2015 through April 2016, Gaffney’s conspirators persuaded individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the information as the “Compounding Pharmacy.” The conspirators learned that certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply.

The conspirators also learned that some New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers, had insurance coverage for these particular compound medications. An entity referred to in the information as the “Pharmacy Benefits Administrator” provided pharmacy benefit management services for the State Health Benefits Program, which covers qualified state and local government employees, retirees, and eligible dependents, and the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents. The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the State of New Jersey for the amounts paid.

Once they had recruited an employee covered by the Pharmacy Benefits Administrator, Gaffney’s conspirators would obtain the employee’s insurance information and fill out a Compounding Pharmacy prescription form. They then had Gaffney sign prescriptions for compounded medications for numerous individuals, even though Gaffney never saw the individuals or evaluated whether they had a medical necessity for the compounded medication. Gaffney also signed a blank prescription form, which other conspirators copied and used to submit additional fraudulent prescriptions to the Compounding Pharmacy.

Other conspirators submitted fraudulent prescriptions bearing Gaffney’s signature for over 200 individuals, and the Pharmacy Benefits Administrator paid just under $25 million for those prescriptions. Gaffney received payments of thousands of dollars in cash and other benefits to reward him for his role in the scheme.
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