Date: March 27, 2020
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 charges.
Jeffrey Black of Destin, Florida entered a guilty plea before U.S. District Judge L. Scott Coogler to one count of conspiring to commit health care fraud, eight counts of health care fraud, one count of conspiring to pay kickbacks to a prescriber, and one count of spending the proceeds of health care fraud. Black is the former co-owner, vice president and chief operating officer of Northside Pharmacy doing business as Global Compounding Pharmacy.
“Today’s plea should serve as a warning to any medical professional considering exploiting their patients for profit: you will be caught, you will be prosecuted, and you will pay a steep price for your actions,” Acting Special Agent in Charge IRS Criminal Investigation, Atlanta Field Office Andrew Thornton, Jr. said. “IRS-CI remains committed to working with our law enforcement partners to bring those seeking to enrich themselves at the expense of the government and their patients, to justice.
“Black conspired with others and compromised his integrity to line his pockets with the proceeds of false claims,” FBI Special Agent in Charge Johnnie Sharp, Jr. said. “I commend the outstanding work conducted by my agents and our great partners to hold Black and others accountable who work to defraud American taxpayers through health care fraud schemes.”
"The Defense Criminal Investigative Service (DCIS) is committed to pursue unscrupulous individuals like Jeffrey Black intent on defrauding and cheating TRICARE, the healthcare system serving our military and veterans. DCIS appreciates the efforts of the U.S. Attorney's Office in the Northern District of Alabama requiring restitution to TRICARE for prescriptions that were not medically necessary or even utilized by many of the beneficiaries," stated Special Agent in Charge Cynthia A. Bruce, DCIS, Southeast Field Office.
“Today’s guilty plea is the result of a significant team effort to safeguard a multitude of federally funded healthcare programs,” Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta Derrick L. Jackson said. “The OIG is committed to dismantling elaborate fraud schemes such as this one.”
“With our nation focused on public health and safety, Jeffrey Black’s guilty plea is a reminder that Americans are cheated out of more than eighty billion dollars a year in higher premiums and out-of-pocket expenses through health care fraud,” Adrian Gonzalez, Postal Inspector in Charge, Houston Division said. “The United States Postal Inspection Service is committed to investigations with our law enforcement partners whenever health care fraudsters try to involve the U.S. Mail in their nefarious schemes, as in this case against Northside Pharmacy of Haleyville, Alabama, doing business as Global Compounding Pharmacy.”
“As detailed in the plea agreement, Black’s actions and role in the fraud scheme took advantage of veterans for personal financial gain,” David Spilker, Special Agent in Charge, VA Office of Inspector General stated. “VA OIG is committed to working with our law enforcement partners to identify and investigate those who commit healthcare fraud against VA programs.”
“Health care fraud is estimated to be in the hundreds of billions each year. We are seeing just how intolerable and critical the effects of frauds related to health care can be,” U.S. Attorney Jay E. Town said. “This plea—and the 21 before it just in this investigation—should send a message to would-be fraudsters that those who choose to steal from our health insurance plans will be held accountable.”
Mr. Black’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, a vice president of sales, an operations manager, a district manager, and multiple sales representatives.
According to the plea agreement, Mr. Black was participating in a multi-faceted scheme to cause the pharmacy he co-owned to bill for medically unnecessary prescription drugs. Aspects of the scheme included paying prescribers to issue prescriptions; directing employees to get medically unnecessary drugs for themselves, family members, and friends, to be filled and billed by Global and other related pharmacies; altering prescriptions to add non-prescribed drugs; automatically refilling prescriptions regardless of patient need; routinely waiving and discounting co-pays to induce patients to obtain and retain medically unnecessary drugs; and billing 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. In addition, the scheme targeted the health insurance plan of Medtronic, a medical device company, where Black previously worked. Black would hire individuals known to be on Medtronic’s health insurance plans, and direct them to get prescriptions for medically unnecessary drugs for themselves, family members, and friends, and then pay them a commission for these prescriptions. Black and a family member personally got a number of these medically unnecessary prescriptions for scar and wound creams, including several for over $20,000 per tube.
The maximum penalty for health care and mail fraud conspiracy 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 kickback conspiracy is 5 years in prison and a $250,000 fine. The maximum penalty for spending proceeds of healthcare fraud is 10 years in prison and a $250,000 fine.
The IRS-CI, FBI, HHS-OIG, DCIS, USPIS, and a United States Attorney’s Office investigator investigated the cases, which Assistant U.S. Attorneys Chinelo Dike-Minor and Don Long are prosecuting. The Veteran Affairs Office of Inspector General Criminal Investigations Division provided assistance in the investigation.