Daily Independent (Ashland, KY)

March 22, 2013

5 charged in health care fraud scheme

Kenneth Hart
The Independent

ASHLAND — Five Scioto County residents are among 44 who have been charged by federal authorities with engaging in a health care fraud and drug distribution scheme stretching from Detroit to southern Ohio,

A 13-page superseding indictment returned in U.S. District Court for the Eastern District of Michigan outlines a conspiracy involving prescription drugs such as OxyContin, Opana, Vicodin and others, U.S. Attorney Barbara L. McQuade said Wednesday.

Seven doctors, four pharmacists and three home health agency owners were among those indicted.

Health care fraud charges were filed against 32 of the defendants, while three defendants were charged with money laundering and three others were charged with being felons in possession of firearms.

The superseding indictment alleges the owners of home health agencies would provide kickbacks, bribes, and other illegal benefits to physicians to induce them to write prescriptions for patients with Medicare, Medicaid, and private insurance.  Patients were recruited into the scheme by patient recruiters or “marketers,” who would pay kickbacks and bribes to patients in exchange for the patients’ permitting the pharmacies and physicians to bill their insurance for medications and services that were medically unnecessary and/or never provided, McQuade said.

Prescriptions were presented to the pharmacists charged in the scheme for filling. The medical professionals and health care agency owners would then bill the relevant insurers for services supposedly provided to the patients, without regard to the medical necessity of those prescriptions and services.  Some of the pharmacists would bill insurers, including Medicare, Medicaid, and private insurers, for dispensing the medications, despite the fact that the medications were medically unnecessary and, in many cases, never provided. Other times, the pharmacists accepted cash from the recruiters for filling and dispensing medications.  

The indictment further alleges a conspiracy to distribute drugs by the home health care owners, physicians, pharmacies, and recruiters to facilitate the submission of false  claims to Medicare, Medicaid, and private insurers.  The home health care owners paid physicians associated with the scheme kickbacks in exchange for prescriptions for controlled substances for their patients which were filled at the respective pharmacies.  The substances involved included oxycodone, hydrocodone, Xanax and codeine.

“The merger of health care fraud and drug trafficking is a disturbing trend that is not only robbing taxpayers, but also fueling addictions to prescription drugs,” McQuade said.  “Prescription drug abuse has become a national epidemic, with more Americans dying from overdoses than from gunshot wounds.”

Those charged from Scioto County were William Ashley Smith, also known as “Cash;” Robert Scott Dials, 25, and Nathan Reed, 31, also known as “Reed,” all of Portsmouth; and Cherish Lewis, 26, and Josh Barnes, 33, both of Wheelersburg.

The Portsmouth Police Department was among the agencies involved in the investigation leading to the indictment.

“Portsmouth is along a corridor of U.S. 23 better known as the drug pipeline,” Chief Robert Ware said. “The flow of drugs from Detroit to Portsmouth and to neighboring cities such as Huntington, W.Va., has changed lives and communities forever.”

A grand jury indictment is a formal accusation of a crime and does not establish guilt.

KENNETH HART can be reached at khart@dailyindependent.com or (606) 326-2654.