Former co-owner and CEO of pharmacy pleads guilty in prescription drug billing scheme

 

Date: May 11, 2020

Contact: newsroom@ci.irs.gov

BIRMINGHAM, Ala. – Today an additional defendant pled guilty in a long-running investigation into a prescription drug-billing scheme involving a Haleyville, Ala.-based pharmacy, Northside Pharmacy doing business as Global Compounding Pharmacy. Internal Revenue Service-Criminal Investigation Acting Special Agent in Charge Andrew Thornton announced the guilty plea.

John Jeremy Adams of Panama City Beach, Florida entered a guilty plea before U.S. District Judge L. Scott Coogler to one count of conspiring to commit health care and mail fraud, 16 counts of health care fraud, one count of conspiring to pay kickbacks to a prescriber, and seven counts of spending the proceeds of health care fraud. According to the plea agreement, Adams stipulated to a 10-year sentence.

Adams is the former owner and chief executive officer of Northside Pharmacy doing business as Global Compounding Pharmacy. Mr. Adam's guilty plea brings the total number of defendants who have pled guilty in the larger investigation to 23. Those who have previously pled guilty include two nurse practitioners, the COO, a vice president of sales, an operations manager, a district manager, and multiple sales representatives. Trial against the four remaining defendants is set for June 29, 2020:

  • James A. Mays, III of Winfield, Alabama, a pharmacist, charged in 20 counts;
  • Jessica Linton of Clearwater, Florida, the manager of the billing team at Global, charged in 24 counts;
  • Lisa Holmes of Troy, Alabama, a district manager supervising sales representatives at Global, charged in 12 counts; and
  • John Gladden of Tallahassee, Florida, a district manager supervising sales representatives at Global, charged in nine counts.

According to the plea agreement, Mr. Adams participated in a scheme to cause the pharmacy he co-owned to bill for medically unnecessary prescription drugs. He paid prescribers to issue prescriptions and directed employees to get medically unnecessary drugs for themselves, family members, and friends, to alter prescriptions to add non-prescribed drugs, to automatically refill prescriptions regardless of patient need, to routinely waive and discount co-pays to induce patients to obtain and retain medically unnecessary drugs, and to bill for drugs without patients' knowledge. According to the plea agreement, when prescription drug administrators attempted to police this conduct, the defendants evaded and obstructed those efforts, including by providing false information in response to audits and diverting their billing through affiliated pharmacies. The scheme targeted multiple health insurance plans, including the pharmacy's Blue Cross Blue Shield of Alabama plan, as well as plans providing health insurance to the elderly, disabled, members of the military, and veterans—Medicare, TRICARE, and CHAMPVA, among others.

According to the plea agreement, Mr. Adams as directed the scheme and also joked about it. It describes a text exchange between him and another defendant in which they discuss altering prescriptions. She tells him she will be getting him white out as a birthday gift, and he responds "Yep. Made us money."

The maximum punishment for the 18 U.S.C. § 1349 health care and mail fraud conspiracy charge is 20 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. The maximum penalty for the 18 U.S.C. § 371 kickback conspiracy charge is 5 years in prison and a $250,000 fine. The maximum penalty for the 18 U.S.C. § 1957 spending statute charge is 10 years in prison and a $250,000 fine.

The IRS-CI, FBI, HHS-OIG, DCIS, and USPIS investigated the cases, which Assistant U.S. Attorneys Chinelo Dike-Minor, Don Long, and Edward Canter are prosecuting. The Veteran Affairs Office of Inspector General Criminal Investigations Division provided assistance in the investigation.