Two Men Plead Guilty In $25 M Healthcare Fraud Conspiracy Targeting NJ Health Benefits Programs

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https://www.justice.gov/usao-nj/pr/two-men-plead-guilty-25-million-healthcare-fraud-conspiracy-targeting-new-jersey-health

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

FOR IMMEDIATE RELEASE
Thursday, August 17, 2017

Two Men Plead Guilty In $25 Million Healthcare Fraud Conspiracy Targeting New Jersey Health Benefits Programs

CAMDEN, N.J. – Two men today admitted defrauding New Jersey state health benefits programs and other insurers out of $25 million by submitting fraudulent claims for medically unnecessary prescriptions, Acting U.S. Attorney William E. Fitzpatrick and New Jersey Attorney General Christopher S. Porrino announced. Matthew Tedesco, 42, a pharmaceutical sales representative from Linwood, New Jersey, and Robert Bessey, 43, of Philadelphia, pleaded guilty before U.S. District Judge Robert B. Kugler in Camden federal court to separate informations charging them with conspiracy to commit health care fraud.
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From January 2015 through April 2016, Tedesco, a leader in the conspiracy, Bessey, a recruiter in the conspiracy, and others persuaded individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the informations as the “Compounding Pharmacy.” The conspirators learned that an entity referred to in the informations as the “Pharmacy Benefits Administrator” would reimburse pharmacies thousands of dollars for a one-month supply of certain prescription compounded medications, including pain, scar, antifungal, and libido creams, as well as over $10,000 per month for certain vitamin combinations.

The conspirators also learned that the Pharmacy Benefits Administrator managed the prescription drug benefit for some New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers. 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.

The conspirators recruited public employees and other individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain compounded medications from the Compounding Pharmacy without any evaluation by a medical professional that they were medically necessary. In return, the pharmacy paid one of Tedesco and Bessey’s conspirators a percentage of each prescription filled and paid by the Pharmacy Benefits Administrator, which was then distributed to other members of the conspiracy.

Once they had recruited an employee covered by the Pharmacy Benefits Administrator, Tedesco, Bessey, and others would obtain the employee’s insurance information and fill out a Compounding Pharmacy prescription form. They would select the compounded medications that paid the most and order 12 months of refills without regard to their medical necessity.

Tedesco and others had prescriptions signed by doctors who never saw the patients and never evaluated whether the patients had a medical necessity for the compounded medication. The prescriptions were then faxed to Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator. Tedesco and others gave money and other benefits to doctors who signed the prescriptions and individuals who agreed to receive the medication.

According to the informations, the Pharmacy Benefits Administrator paid Compounding Pharmacy over $50 million for compounded medications mailed to individuals in New Jersey. Over $25 million of that was for prescriptions arranged by Tedesco and the conspirators working for him. Tedesco admitted receiving approximately $11,166,844.20 for submitting those fraudulent claims. He paid some of that money to the conspirators who worked for him. Bessey received approximately $485,540.09 for his role in the scheme.
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As part of his plea agreement, Tedesco must forfeit $11,166,844.20 in criminal proceeds and pay restitution of at least $28,773,906.97. Bessey agreed to forfeit $485,540.09 and pay restitution of at least $2,693,192.63.
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