Ten Individuals Affiliated With Compounding Pharmacy, Including Owners, Pharmacist, Billing Manager, Sales Reps and Nurse Practitioner, Charged in Compounding Prescription Drug Case

In compounding cases, it is usually some very high billed creams that get attention. In a recent case, the government alleges that the defendants’ fraudulent conduct caused a prescription plan administrator to pay over $29,000 for one tube of a cream advertised as treating “general wounds.”
Another red flag in compounding cases are call centers with marketers. A recent case in Alabama has both. This case is also significant since it targeted many people who worked at the compounding pharmacy including sales representatives, billers, managers in addition to the owners and pharmacist.

On May 6, 2019, ten defendants were charged in a 103-count indictment, including a nurse practitioner, owners, a pharmacist, managers, sales representatives and billers, of an Alabama based pharmacy, Northside Pharmacy doing business as Global Compounding Pharmacy. 

The indictment charges them with fraudulently billing health care insurers and prescription drug administrators for over $200 million in prescription drugs.  An indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.  The charges stem from a larger investigation that has to date resulted in 18 additional individuals being charged and signing plea agreements. 

According to the indictment, Global which allegedly described itself as “one of the top three largest compounding pharmacies in the United States,” primarily shipped compounded and other drugs from its Alabama facility, but did most of its prescription processing, billing and customer service at its “call center” in Clearwater, Florida. The company hired sales representatives who were located in various states and were responsible for generating prescriptions from physicians and other prescribers.  The company also worked with affiliated pharmacies.

The indictment describes a multi-faceted operation in which the defendants billed for medically unnecessary drugs.  The indictment alleges that the wrongdoing 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 including controlled substances such as Tramadol and Ketamine; 
• automatically refilling prescriptions—often as many as 12 times—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 and hiding that conduct from patients by mailing the drugs to the home of Global's owner and president.  

According to the indictment, the defendants evaded and obstructed audits and questions about billings through various efforts, including by providing false information in response to audits and diverting their billing through affiliated pharmacies.  The defendants allegedly billed health insurance plans and their prescription plan administrators over $200 million and were paid over $50 million.

Teva Pharmaceutical Enters Into Deferred Prosecution Agreement And Agrees to Pay More Than $283 Million in Fines For Paying Government Officials in Various Countries to Promote Drugs and Paying Doctors in Mexico to Prescribe Its Drugs

What's the difference between the way the government treats large or public healthcare businesses and medium to small sized businesses when it comes to violating regulations? Plenty.

Well, to begin with, large businesses have the ability to pay huge fines, employ thousands and the government tends to not want them to fail. A recent case involving Teva would have been very different if it were a small or medium sized business.

Deferred prosecution agreements (DPA), for example, are almost impossible to obtain with small to medium size health care businesses. When clients note that large businesses do these same practices, they must remember that being so large gives them benefits as well. In a recent case, Teva obtained a DPA showing that being a large publicly owned company has its benefits. A DPA usually requires a strict compliance program and reporting to the government but it allows the entity to avoid criminal plea which would shut down a business engaged in healthcare in the United States. 

On December 22, 2016, Teva Pharmaceutical Industries Ltd. (Teva), the world’s largest manufacturer of generic pharmaceutical products, and its wholly-owned Russian subsidiary, Teva LLC (Teva Russia), agreed to resolve criminal charges and to pay a criminal penalty of more than $283 million in connection with allegations involving the bribery of government officials in Russia, Ukraine and Mexico in violation of the Foreign Corrupt Practices Act (FCPA) in order to promote its drug products.

We often have clients at early stages who offer to pay back any billings at issue. Those overtures are rejected since local offices for small or medium sized businesses want the criminal conviction and usually want to pursue the owners or executives and not the entity.

Lawsuit By Orange County Against Pharma Companies for Fraudulently Marketing Addictive Painkillers Dismissed On Grounds FDA Had Exclusive Jurisdiction

On August 27, 2015, a California state court dismissed a groundbreaking lawuit filed last year by Orange and Santa Clara counties accusing the companies of fraudulently marketing addictive painkillers to undermine the effect of warning labels required by the U.S. Food and Drug Administration. The counties say that the efforts boosted sales of the dangerous drugs at the expense of public health. See Los Angeles Times article on this ruling.

In Thursday's hearing before Orange County Superior Court Judge Robert J. Moss, the companies asked that the case be dismissed on the grounds that the FDA had exclusive jurisdiction over the matter. The court ruled that the FDA had exclusive jurisdiction.

The 105-page lawsuit, filed in Orange County by District Attorney Tony Rackauckas, alleges five pharmaceutical companies spent millions of dollars to convince the public that drugs meant only for short-term use by cancer patients should be taken for chronic pain.  The marketing campaign changed prescription opioids from a niche drug to an $8 billion industry by 2010 and contributed to more than 16,000 overdose deaths that same year, putting profits above health, the suit states.

The rise in highly addictive painkillers also created an atmosphere where doctors made life-and-death decisions based not on science but on hype and marketing by the company to doctors directly, the suit states. Orange County was hit particularly hard by this epidemic. 

Rackauckas stated in prior interviews that the pharmaceutical companies are like the tobacco industry. “What we’re after is to make these companies stop the practice of false advertising and false claims that these drugs are benign,” he said. “The effort is to require them to be truthful.” The Orange County DA also apparently wanted to capitalize on the fact that Purdue and its executives plead guilty in 2007 to illegally marketing OxyContin.

The lawsuit was filed after an extensive series of Orange County Register columns over 3 years blaming much of the epidemic on drug companies. The lawsuit named Purdue Pharma (maker of OxyContin), Teva Pharmaceutical Industries, Janssen Pharmaceuticals – a subsidiary of Johnson & Johnson, Endo Health Solutions, and Actavis, as well as affiliated companies.

One reason why the lawsuit was filed is that Purdue, which makes the best-selling painkiller OxyContin, has never gone to trial on a case of OxyContin abuse. It has won dismissals in more than 400 personal-injury lawsuits related to the drug. And while it has settled some product-liability cases related to OxyContin under secret terms, Purdue has defeated more than 10 efforts to wage class-actions against it. 

All the companies were accused of false advertising, unfair competition and creating a public nuisance. With the state court dismissal, Orange County and Santa Clara will have to determine whether an appeal will be filed.  The marketing was not geared to patients but to family practice doctors who treat non-cancer patients. 

One of the issues is that FDA only has limited jurisdiction over the marketing of prescription medications directly to physicians. That is left to the Federal Trade Commission. When Purdue Pharma introduced OxyContin in 1996, it was aggressively marketed and highly promoted. Sales grew from $48 million in 1996 to almost $1.1 billion in 2000. Ultimately, the high availability of OxyContin correlated with increased abuse, diversion, and addiction, and by 2008 OxyContin had become a leading drug of abuse in the United States. 

California Concierge Physician and Her Husband Arrested For Unlicensed Practice of Medicine and Conspiracy to Furnish Morphine After 88 Year Old Patient Dies at Her Home

Concierge medicine that involves Scheduled narcotics appears to be under greater scrutiny, especially where there are unlicensed people involved and bad medical results for elderly patients. 

Last week, Dr. Ellen Crowe (age 54) and her non-physician husband Paul McQuillan (age 61), were arrested and charged in Ventura County Superior Court with  felonies relating to the death last year of 88 year old Polly Duntley of after she was allegedly given morphine. An arrest contains allegations that a defendant has committed a crime. Every defendant, including these, is presumed to be innocent until proven guilty in court.

The case involves a concierge medical practice that makes home visits called “House Call Visits Thousand Oaks” and is allegedly owned by Dr. Crowe and is operated by both she and her husband Mr. McQuillan. A May 15, 2015, Los Angeles Times article on this case  by Matt Hamilton details the allegations in the case.

This case was investigated by the Ventura County Interagency Pharmaceutical Crimes Unit and the State of California Medical Board. The Ventura County Interagency Pharmaceutical Crimes Unit is a task force made up of members of the Ventura County Sheriff’s Office, Simi Valley Police Department, the District Attorney’s Office Bureau of Investigation and the California Highway Patrol.

Dr. Crowe and Mr. McQuillan are a married couple who own and operate a business known as House Call Doctor Thousand Oaks (“House Call DTO”), and Ms. Duntley was a patient, said Sgt. Victor Fazio, of the Ventura County Sheriff’s Office.  The allegations are that on July 30, 2014, a physician (other than Dr. Crowe) from House Call DTO made a visit to Ms. Duntley’s home. Ms. Duntley  had her first appointment at her home with the medical practice and she was complaining of pain in her leg, Sgt. Fazio said. A physician other than Dr. Crowe saw her. This physician ordered x-ray and ultrasounds tests to be performed the next day.   

The next on July 31, 2014, Mr. McQuillan, who has no official medical training, responded to the home of Ms. Duntley in Camarillo on the follow-up visit,  authorities said.

Authorities allege that Mr. McQuillan injected Ms. Duntley with morphine provided by Dr. Crowe and ordered by the other doctor, making the injection just before X-ray and ultrasound tests were to take place at the residence. Ms. Duntley fell into a deep sleep within minutes, authorities said.

After the injection, Mr. McQuillan left the residence to treat another patient in the neighborhood, and in his absence, a technician from another company arrived to perform the ultrasound, authorities said. 

Mr. McQuillan returned while the ultrasound was being conducted, realized Ms. Duntley no longer had a pulse, called 911 and tried to provide first aid, authorities said. Emergency responders resuscitated Ms. Duntley, but she never regained consciousness. She died in a hospital on August 2.

Mr. McQuillan was arrested at his home and a search warrant was served there, authorities said. Dr. Crowe was located in Bakersfield and arrested as well.

Mr. McQuillan was booked into county jail on (1) suspicion of practicing medicine without a license and (2) furnishing morphine, authorities said. 

Dr. Crowe was booked on (1) suspicion of conspiracy to practice medicine without a license and (2) conspiracy to furnish morphine. They were released on bail and are scheduled to be arraigned in Ventura County Superior Court on May 27.

Practitioners need to ensure that they are fully compliant in home visits and concierge medicine. Patients with serious medical conditions may not be appropriate for home care and all steps should be taken to ensure that no unlicensed personnel engage in the unlicensed practice of nursing or medicine.

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law 

FAQ About Rescheduling All Hydrocodone Combination Products from Federal Schedule III to Federal Schedule II

We have received questions from physicians and pharmacies about the new DEA rules for hydrocodone combination products (HCPs).  Effective October 6, 2014, the DEA rescheduled HCPs from federal Schedule III to federal Schedule II.  This change impacts how hydrocodone combination products are prescribed and dispensed in California. Federal requirements for prescribing and dispensing Schedule II controlled substances will apply to all hydrocodone combination products. This means, among other thing, a very limited ability to orally prescribe HCPs (see below) and ability to authorize refills.

This “up scheduling” is a major change for California. According to CURES, over 1 billion dosage units of HCPs were dispensed last fiscal year in California. HCPs are the most frequently prescribed opioid in the United States: nearly 137 million prescriptions for HCPs were dispensed in 2013.

Here are frequently asked questions and answers: 

Question 1: Does this mean California law has also reclassified ALL hydrocodone combination products as Schedule II controlled substances?

Answer 1: This is a technical question where federal law governs. Technically, there has been no equivalent change to California law, or to the controlled substance schedules in California. But for many intents and purposes, the practical effect will be the same: that all prescribers and practitioners in California will be required to treat HCPs as Schedule II controlled substances.

Question 2: Are prescriptions written for HCPs before October 6, 2014 that are presented to the pharmacy for dispensing on or after October 6, 2014 to be dispensed as a Schedule II or Schedule III controlled substance? 

Answer 2: If the prescription is first presented on or after October 6, it must follow federal Schedule II requirements. For example, this means no HCP prescription issued on or after this date may authorize any refills. It also means that as of October 6 oral, telephone or fax-transmitted prescriptions for HCPs are no longer possible. 

Question 3:  Can the remaining refills for HCP prescriptions written and filled before October 6 as a Schedule III, be dispensed after October 6?   

Answer 4:  Yes. The DEA has stated that it will allow refills on HCPs written and initially filled before October 6 (under Schedule III requirements and limitations), to be dispensed up to six months from October 6, 2014 (until April 8, 2015). This extends the Schedule III treatment of prescriptions for HCPs written and initially dispensed prior to October 6, 2014 to the maximum allowable period for Schedule III refills. Of course, the original date on the prescription cannot exceed 180 days, or the maximum allowable period for Schedule III refills. 

If there are any questions for prescribing physicians or dispensing pharmacists, err on the safe side and seek consultation so that you comply with the federal laws and regulations. Patients may be frustrated by the change in the law but do not let them pressure you into prescribing or dispensing unless you are fully compliant. 

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law 

Two California Counties (Orange and Santa Clara) Sue 5 Large Opioid Manufacturers For Deception and False Advertising

Two Cali­for­nia counties (Orange County and Santa Clara County) sued five of the world’s largest nar­cot­ics man­u­fac­tur­ers on Wed­nes­day, ac­cus­ing the com­pan­ies of caus­ing the na­tion’s pre­scrip­tion drug epi­dem­ic by wa­ging a “cam­paign of de­cep­tion” aimed at boost­ing sales of po­tent paink­illers such as Oxy­Con­tin. The Los Angeles Times has a link to this lawsuit which is important in the war against prescription painkiller addiction. The physicians and pharmacists have been blamed for this epidemic without looking at the big pharma manufacturers and advertisers.

The U.S. is awash in opioids. In 2010, 254 million opioid prescriptions were filled in the U.S. - enough to medicate every adult in America around the clock for a month. Opioids - once a niche drug - are now the most prescribed class of drug - more than blood pressure or cholesterol. The lawsuit is an education in how big pharma advertise and spend millions to push off label uses of drugs and minimize the serious risks and outcomes of chronic opioid use.

Prescription drug abuse is a serious public health issue which has caused an epidemic heroin addiction problem in Orange County and across the country since prescription drug users will then turn to heroin once they can no longer obtain their prescription opioids. The largest killer of young males under 30 is prescription drugs and it's from the interactions with alcohol and other drugs that cause respiratory failure.

This will be an interesting lawsuit to watch and all health care providers should read it to understand the big picture of pain management with opioids.

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Phone: 213-233-2260
Email: tgreen@greenassoc.com

California Pharmacists: Pharmacists' Corresponding Responsibility And CURES Program

One of the biggest changes in DEA enforcement and Pharmacy Board enforcement these past couple of years is holding pharmacists responsible for "corresponding responsibility."  Certainly, pharmacists for years have known the term but now the government is beginning to charge pharmacists for knowing and intentionally distributing controlled substances as if they are drug dealers. 

We are currently handling one such federal criminal case for a pharmacist and it is something our client never thought he would ever face in his career. Cases like this are being charged across the country. The theory being used in this case and other cases is that the pharmacist deliberately ignored red flags on questionable prescriptions -- not that they "knew" is was not legitimate. 

The federal regulation for "corresponding responsibility" means that the pharmacist who fills the prescription has the same duty as the physician to determine legitimate medical need for a Schedule II prescription. Thus, pharmacists in today's world need to go far beyond determining that the prescription is valid, that a physician issued it and that the prescription has not been tampered with at all, or that the patient is obtaining prescriptions from multiple physicians. Pharmacists need to look at any red flags and document follow up on anything suspicious as well as confirm diagnoses that support the medication being dispensed and show that he or she exercised sound professional judgment.

The California Board of Pharmacy is holding a joint training with the DEA on Pharmacist's Corresponding Responsibility and California's CURES program. It will be held on July 25, 2013 in Downey, California and pharmacists and pharmacy technicians can register online. If you cannot attend that seminar, I recommend watching some of the other Pharmacy Board online seminars that have been posted.  

Physicians and the California Medical Association are concerned about the aggressiveness of the DEA and Pharmacy Board in having pharmacists challenge medical necessity for pain medications that are controlled substances. They are asking physicians to contact them if and when they cannot fill medically necessary prescriptions. 

Pharmacies such as Walgreens (who just paid the U.S. a $80 million fine for not having its pharmacists meet their corresponding responsibilities) are asking for information on diagnosis, ICD-9 codes, expected length of therapy and medications previously tried and failed. However, what does the pharmacist do if the information provided is not accurate? How far does the pharmacist need to go? 

Posted by Tracy Green, an experienced health care and pharmacist attorney. 

Email: tgreen@greenassoc.com     Office: 213-233-2260

L.A. Times Article On Illinois Physician Program For Sexual Misconduct Treatment Comes Under Attack. What Do We Do In California For Licensees With Substance Abuse And Sexual Boundary Issues?

In California, if there is a complaint made about a physician that alleges any type of "sexual misconduct," the California Medical Board handles those cases with a presumption that the physician is guilty until proven innocent. The incendiary nature of such an allegation makes it difficult for the Board to refuse to file unproven allegations and often physicians are forced into disciplinary hearings since the Board is reluctant to dismiss weak charges on its own.

The Los Angeles Times ran an article on December 29, 2010 entitled "Doctor misconduct cases monitored in secrecy" regarding a program in Illinois. The article writes about criticisms of the Illinois Professionals Health Program which operates a diversion program for physicians involving alcohol and drug abuse and now sexual misconduct allegations. The article quotes certain opinions that such programs shield physicians and that patients should know about these allegations.

California Does Not Have A Diversion Program
In California, physicians have not been eligible for diversion in lieu of discipline where there are substance abuse allegations since 2008. California does not have any program for the diversion or monitoring of physicians with sexual misconduct allegations where there is also no discipline filed against the physician.

Physicians Can Enroll In Treatment Programs Confidentially Before Disciplinary Charges Are Filed
In California, if a physician has a substance abuse or sexual boundary issue, he or she is free to participate in any treatment program on their own which will remain completely confidential. There is no duty to report the enrollment to the Medical Board. However, if the Board received a complaint that the physician has a substance abuse or sexual boundary problem, the Board investigates the matter to determine if sufficient evidence is found to proceed to disciplinary action.

Most Disciplinary Charges Arising From Substance Abuse Arise From Arrests And Convictions
In our practice, we see most discipline filings relating to substance abuse arising from misdemeanor convictions (such as driving under the influence or wet reckless) and felony arrests and convictions. Physicians (and other health care providers) are required upon renewal to disclose their misdemeanor and felony convictions.

As for arrests, physicians are not required to report a misdemeanor arrest but as for a felony arrest, they must report a felony indictment or a felony information (meaning that in a state criminal case the case has gone through preliminary hearing and the physician has been held to answer).  This means that if a doctor in California is arrested on felony charges, he or she does not need to report until held to answer after a preliminary hearing and an "Information" is filed. We have had cases where a physician was arrested on felony charges and we were able to have the charges dismissed before or at preliminary hearing which did not trigger any self-reporting requirements. Failure to report can be an additional ground for discipline.

Even though self-reporting is not required in felony cases until the Information is filed after a preliminary hearing, there is the risk that the city attorney or deputy district attorneys' office could notify the Board.  Prosecutors in criminal cases are required to notify the Medical Board (and Chiropractic, Osteopathic, Podiatric and "other allied health board") of any felony filings against a licensee upon obtaining information that the defendant is a licensee of that board.   California Business and Profession Code Sections 803.1. Thus, licensee must always be prepared for Board scrutiny where there has been an arrest. 

Reporting also occurs since court clerks are required to report misdemeanor and felony convictions of any persons licensed by the Medical Board and other Boards (Chiropractic, Dental, Osteopathic, Acupuncture, Nursing, Vocational Nursing, Optometry, Veterinary, Pharmacy, Speech-Audiology, Hearing Aid Dispensers, Respiratory Care, Behavioral Science).  California Business and Profession Code Sections 803.1 and 803.5.

Conclusion
Physicians and other licensees can expect that in California, disciplinary charges will be filed in lieu of any type of diversion program. Even where diversion programs exist (such as in nursing), the trend is to file disciplinary charges, place the licensee on probation and then require diversion. The Boards are very attuned to the political climate that they not be perceived as protecting physicians or other licensees and that the process be open to the public.

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.

Any questions or comments  should be directed to Tracy Green, a very experienced California health care attorney, administrative attorney, and California Medical Board attorney.

The firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers in California and throughout the country. Their website is: http://www.greenassoc.com/

Former Biotech CEO Convicted Of Wire Fraud Related To Press Release About Drug Actimmune But Acquitted Of Misbranding The Drug

A rare pharmaceutical fraud case, U.S. v. W. Scott Harkonen, M.D. (the former CEO of InterMune, Inc.), Case No. 08-164 MHP, that went to a jury trial for seven weeks in the Northern District of California before U.S. District Court Judge Marilyn Hall Patel, concluded on June 29, 2009.

The jury, in its third day of deliberations, found Dr. Harkonen guilty of wire fraud related to a press release issued on Aug. 28, 2002 about the efficacy of InterMune’s drug Actimmune (Interferon gamma-1b) as a treatment for idiopathic pulmonary fibrosis ("IPF"). Dr. Harkonen was acquitted of a misbranding charge brought under the Federal Food, Drug, and Cosmetic Act.

The Food and Drug Administration approved InterMune's drug Actimmune to treat two rare childhood diseases. But InterMune also sought to market it to patients suffering from idiopathic pulmonary fibrosis, a lung disease that occurs far more frequently. In 2002, InterMune issued a press release regarding a clinical study that supposedly showed benefits for some IPF patients. Specifically, the press release's headline stated that, “InterMune Announces Phase III Data Demonstrating Survival Benefit of Actimmune in IPF,” with the subheading “Reduces Mortality by 70% in Patients With Mild to Moderate Disease.” One of the issues at trial is whether the press release was true or not.

This prosecution is unusual in that the criminal prosecution of the former CEO came years after he left the company and after the company entered into a deferred prosecution agreement with the Justice Department. Dr. Harkonen left InterMune in 2003. In October 2006, InterMune agreed to enter into a deferred prosecution agreement and to pay nearly $37 million to resolve criminal charges and civil liability in connection with the illegal promotion and marketing of its drug Actimmune. InterMune also entered into a five-year Corporate Integrity Agreement with the Office of Inspector General for the Department of Health and Human Services.

Because the government rarely prosecutes individual health care executives for fraud, attorneys involved in the case probably believed the company's deal would effectively end the criminal investigation. The government continued the investigation and indicted Dr. Harkonen on two counts: wire fraud and felony misbranding of a drug. A copy of the Indictment can be found at:
http://i.bnet.com/blogs/https___ecfcanduscourtsgov_cgi-bin_show_temppl_filefile06123022002607.pdf?tag=content;selector-perfector

The maximum statutory penalty for 18 U.S.C. § 1343 (wire fraud) is 20 years in prison, $250,000 fine, three years supervised release, and $100 mandatory special assessment. However, any sentence following conviction would be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. Judge Patel set a December 18, 2009 hearing for post-trial motions.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in health care fraud cases. Their website is: http://www.greenassoc.com/