Federal takedown is considered the largest healthcare fraud in history.

The Department of Justice (DOJ) has charged hundreds of medical professionals in what was dubbed “the largest healthcare fraud takedown operation in American history.” The DOJ brought charges against 601 defendants (76 of whom are doctors) for their alleged participation in schemes to bill Medicare, Medicaid, TRICARE, and private insurers for medications and treatments that were unnecessary and often never provided.

Over a quarter of these defendants were charged for alleged involvement in prescribing and distributing opioids and other dangerous narcotics. Specifically, the takedown included 84 opioid cases involving more than 13 million illegal dosages of opioids. The DOJ also alleged that co-conspirators received kickbacks for supplying beneficiary information to providers, which used the information to submit fraudulent bills to Medicare.

All told, the DOJ estimated over $2 billion in false billings arising from these frauds. The takedown also produced another impressive statistic when it resulted in 2,700 people being excluded from participation in Medicare, Medicaid, and all other federal health insurance programs.                      

We will focus on four of the 601 defendants to provide a glimpse of some of the individuals caught in DOJ’s dragnet and the specific charges brought against them.

  • Zachary Bird was charged in a six-count indictment with allegedly distributing and dispensing controlled substances not for a legitimate medical purpose and outside the usual course of professional practice. Bird is an anesthesiologist who operated a pain management clinic called Physicians Wellness and Pain Specialists (PWPS) in Tampa. According to court documents, this clinic functioned as a “pill mill” where Bird prescribed large quantities of opiates to his patients. Specifically, from January 2015 to the end of May 2018, Bird allegedly prescribed approximately 5.2 million tablets of hydrocodone, methadone, morphine, and oxycodone at PWPS. Bird was arrested on June 25, 2018.
  • Omar Zoobi, a pharmacist and co-owner of Metro Pharmacy and Metro RX Pharmacy LLC, and Gregory Sikorski, a physician’s assistant, were named in a 10-count indictment charging each with one count of conspiracy to commit healthcare fraud and wire fraud, four counts of healthcare fraud, and one count of conspiracy to defraud the United States and pay and receive healthcare kickbacks. Zoobi was also charged with two counts of paying healthcare kickbacks and Sikorski was charged with two counts of receiving healthcare kickbacks. The charges stem from a scheme wherein Zoobi and another co-conspirator allegedly paid kickbacks to Sikorski in return for prescribing medically unnecessary compounded creams that were billed by Metro and Metro RX to Medicare. Metro and Metro RX also billed Medicare for prescription drugs that were not dispensed or were not dispensed as prescribed, the indictment alleges. As a result of these actions, from approximately January 2012 through February 2018, Medicare paid Metro and Metro RX approximately $5,511,963.53.
  • Michael Frey has pleaded guilty to two counts of conspiracy to receive healthcare kickbacks. In addition to his guilty plea, Frey has agreed to a civil settlement under which he will pay the U.S. $2.8 million to resolve allegations that he violated the False Claims Act in a number of ways, including receiving illegal kickbacks and ordering medically unnecessary laboratory tests. During the relevant period, Frey was a practicing interventional pain management specialist and one of the two principal owners of Advanced Pain Management Specialists, P.A. in Fort Myers, Fla. Beginning in 2010, Frey is alleged to have conspired with the owners of A&G Spinal Solutions, LLC, a durable medical equipment provider, to receive compensation in exchange for referrals to A&G Spinal. Frey was allegedly paid a percentage of A&G Spinal’s profits based on his referrals and referrals from other providers at Advanced Pain. A&G Spinal allegedly rewarded Frey through checks made payable to his wife, creating the impression that Mrs. Frey was an employee of A&G Spinal when she was not. The two principals of A&G Spinal, Ryan Williamson and William Pierce, have pleaded guilty to conspiring to pay healthcare kickbacks to Frey and are currently awaiting sentencing. In addition, from 2013 to 2015, Frey also is alleged to have received cash payments from Williamson in exchange for referrals of compound pharmaceutical pain cream prescriptions. Williamson has also pleaded guilty for his role in this arrangement. In his plea agreement, Frey also admitted that he had received kickbacks in the form of speaker fees paid to him in connection with his participation in largely bogus Insys Therapeutics, Inc. events. Insys manufactures a fentanyl sublingual spray known as SUBSYS. Insys allegedly paid kickbacks to Frey to induce him to write prescriptions for their product. 

    The civil settlement also resolves allegations that, between 2013 and 2016, Frey caused the submission of false claims to Medicare and TRICARE by ordering definitive urine drug testing (UDT) in circumstances in which such testing was not reasonable and medically necessary. In addition, the civil settlement resolves kickback allegations associated with anesthesia services provided by Anesthesia Partners of SWFL, LLC, which was owned by Frey and his partner Dr. Jonathan Daitch. Anesthesia Partners provided anesthesia services exclusively for the procedures performed by the Advanced Pain physicians. They contracted with certified registered nurse anesthetists (CRNAs) to provide the anesthesia services. These CRNAs were paid a contracted rate, and Anesthesia Partners would bill Medicare and TRICARE directly for the anesthesia services they provided. This arrangement resulted in improper reimbursements to Frey as one of the owners of Anesthesia Partners.

Again, these are but four of the 601 defendants charged as part of last week’s takedown.

According to the DOJ, this historic and wide-reaching enforcement action – a coordinated effort between the DOJ, Federal Bureau of Investigation (FBI), U.S. Department of Health and Human Services (HHS), Drug Enforcement Administration (DEA), U.S. Department of Labor, Internal Revenue Service (IRS), 30 state Medicaid Fraud Control Units (MFCUs), and other state and federal agencies (including 58 U.S. Attorney’s Offices) – is just the beginning. The DOJ has a new data analytics team, the Opioid Fraud and Abuse Detection Unit, designed to identify medical professionals associated with high volumes of drug prescriptions, dispensations, and patient overdoses. In addition, U.S. Attorney General Jeff Sessions has assigned a dozen prosecutors to focus exclusively on opioid and drug-related healthcare fraud. Describing opioid addiction as “the deadliest drug epidemic in the history of this country,” Attorney General Sessions affirmed the DOJ’s particular focus in this space:

“Our work is not finished. We are just getting started. We will continue to find, arrest, prosecute, convict, and incarcerate fraudsters and drug dealers wherever they are.”

If, as DOJ suggests, this historic takedown is just the tip of the iceberg, many medical professionals and healthcare providers in pain management clinics, pill mills, and pharmacies dispensing opioids may well be arranging deck chairs on the Titanic.


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