Beneficiary Telemedicine Prescription Fraud: The Patient Collected a Commission

In her telemedicine prescription guilty plea, a pharmaceutical employee admitted taking payments to obtain medically unnecessary compounded medications for herself through her employer’s health plan. A marketing business supplied the forms, selected the pharmacies and paid her for filling the prescriptions. Later, a recruiter directed her to a remote doctor so the prescriptions and payments could continue.

The Justice Department described those admissions in its June 29, 2016 plea announcement. The former employee lived in Missouri and worked for a New Jersey pharmaceutical company. Her role put the person receiving the medicine inside the sales arrangement: she obtained the prescriptions, used her drug coverage and collected commissions from the marketer.

The Prescription Began With a Marketing Form

The marketer’s instructions reached the beneficiary before she asked her doctor for the medication. According to the plea announcement, a former employee of the same pharmaceutical company recruited her in February 2015. The recruiter worked with a business that compounding pharmacies paid to refer people whose insurance would cover their products.

The criminal information, the government’s charging document, explains the business behind those referrals. Compounding involves a pharmacist combining, mixing or altering drug ingredients to meet an individual patient’s medical needs. The marketing company referred insured beneficiaries for products including pain creams, scar creams and vitamins.

That individualized purpose makes the preprinted form telling. According to the plea announcement, the recruiter sent her a form listing compounded medications and creams. She took it to her doctor and asked for those prescriptions. The information adds that the recruiter specified the pharmacy and that she supplied its fax number so the doctor could send the prescription there.

The product and its destination were already chosen when the request reached the doctor. The recruitment email explains why that particular product was requested and why the prescription went to that particular pharmacy.

The plea announcement says a pharmacy outside her home state shipped the compounded products to her. Through the spring, summer and fall, she obtained refills using forms from the recruiter and marketer and received commission checks and wire transfers. The information also alleges that she changed pharmacies at the recruiter’s direction. The patient had become part of the sales force, paid to order medicine at her employer’s expense.

The Employer Funded the Claims, the Marketer Paid the Beneficiary

The criminal information describes a wholly self-funded employer health plan with Express Scripts as its pharmacy benefit administrator. A network pharmacy dispensed the drug, collected any applicable copayment and submitted its reimbursement claim to Express Scripts. Express Scripts processed the claim and paid the pharmacy. The employer reimbursed Express Scripts for expenditures on its beneficiaries at the end of each month.

That payment path matters to someone inside benefits administration or pharmacy billing. The claim went through a pharmacy benefit manager, while the money ultimately came from the employer. The marketer’s payment to the beneficiary was a further transaction connected to that pharmacy reimbursement.

The plea announcement makes the connection concrete. On March 26, 2015, the beneficiary received a $3,565 check from the marketing company. The Justice Department described it as a percentage of what her employer paid the compounding pharmacy for filling the prescription. The information likewise alleges that the marketer passed a percentage of the pharmacy’s reimbursement to her in exchange for filling prescriptions through the employer plan.

Altogether, she received $22,445 for her participation. The Justice Department reported $250,971 in losses from the scheme. The employer funded much more than the commission that kept its employee ordering.

A 2024 Rutgers University Law Review analysis of referral payments highlights sales-based compensation and marketers’ direct contact with prescribers or beneficiaries as features that warrant scrutiny in federal health care arrangements. The payment’s purpose matters: here, it bought the beneficiary’s request for a prescription.

The Remote Doctor Kept the Prescriptions Coming

The beneficiary admitted turning to a telemedicine doctor in fall 2015 to obtain more medically unnecessary pain cream and continue receiving payments. The plea announcement says the recruiter directed her to the doctor, with whom she had no previous relationship. The doctor practiced in New York and was not licensed in Missouri.

The criminal information alleges more about that encounter. During a brief telephone call, the doctor asked neither about her medical history nor about medications she might already be taking. The doctor supplied the requested pain-cream prescription and did not bill her health insurance for the consultation. The charging document says this was no real medical consultation.

The same charging document alleges that the doctor accepted payment from a telemarketing company for referring pain-cream prescriptions to selected compounding pharmacies. It says the doctor did not examine the compounding patients.

The missing consultation bill is a useful detail for an insider reviewing claims. The economic result was further prescribing and pharmacy reimbursement. A review confined to charges for the telephone encounter would leave the prescription business out of view.

What Evidence Is Needed to Prove Fraud?

For this prescription arrangement, the revealing evidence connects the instructions, the medical encounter, the pharmacy claim and the beneficiary’s payment. The criminal information describes an email with a preprinted form, a designated pharmacy fax number, later refills and commission payments.

The form and accompanying instructions show who selected the compounded product and where the prescription was supposed to go. The pharmacy claim and benefit records show who sought payment and whose money funded it. The commission record connects the resulting reimbursement to the person asking for the prescription.

Different insiders can see different parts. Someone handling pharmacy referrals may know who supplied the forms and directed the prescriptions. A benefits employee may see the reimbursed prescriptions. Someone administering marketer payments may know what triggered the checks and transfers. We work with those insiders to connect their knowledge to the orders, payments and decisions it explains.

The Same Prescription Problem Reaches Federal Health Plans

Express Plus Pharmacy provides a close civil parallel. In its November 30, 2017 announcement, the Justice Department reported a $170,000 settlement with the pharmacy and its owner over alleged fraudulent claims to TRICARE for compounded medications. The allegations included prescriptions obtained after brief telephone calls.

The comparison connects the prescriber’s encounter to the pharmacy’s claim. The beneficiary case traced prescriptions into an employer-funded plan. The Express Plus matter concerned claims to TRICARE and a civil False Claims Act settlement. If you recognize the same prescription routing inside your business, we bring the expertise to connect it to the payer and the opportunity for a whistleblower case.

Can You Get Money for Reporting Fraud?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Your knowledge of how the orders were bought is the starting point. Our whistleblower experts work with you to build the case around the prescriptions, the commissions and the claims they produced.

You Know Why the Prescription Was Requested

If you know who supplied the forms, chose the pharmacy or paid people to obtain prescriptions, speak to one of our Whistleblower Experts about how those prescriptions were bought. We build the case with you around the prescribing and payment decisions, bring in healthcare fraud whistleblower lawyers who know pharmacy referral schemes, and stay beside you through the pursuit of a recovery.