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former federal prosecutors


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Oberheiden Attorneys

Defending Compound Pharmacy Fraud Charges Across the US

Compounding pharmacies have been on the rise as many pharmacists see the need for personalized, patient-specific drugs.  Compounding allows pharmacists to reduce the dosage of medicines for children, engineer medicines to work around a patient’s allergy, and create creams instead of pills for those who have difficulty with oral medications.  However, as the usage of these compounds increases, so does the government’s attention to possible incidences of fraud.

Fraud is not only a serious civil allegation; it also may constitute a federal felony.  Monetary liabilities can be enormous, and the government may also seek prison time.  The possibility of being held accountable for Medicare, Medicaid, Tricare, and other health care fraud because of your compound pharmacy practice should caution you to invest your time and resources into a strategic and thoughtful defense plan with an attorney who is experienced in defending this type of case.

Oberheiden & McMurrey, LLP is team of former federal prosecutors and experienced defense counsel. If you are subject to an OIG subpoena, contacted by agents, or a target of a government investigation, you should call 1-800-810-0259 immediately to speak with:

  • Lynette Byrd (Former Dpt. Of Justice, Civil Division, Health Care Fraud, NDTX)
  • Nick Oberheiden (Managing Partner)

We will assess your case for free. Find out what former federal prosecutors think about your case!

What Is Compounding Fraud?

U.S. Attorneys have been increasingly executing criminal search warrants in connection with compound pharmacies in the last few years. Obviously, falsified records and kickbacks are often raised as reasons for indictments in all types of health care fraud.  However, the most common fraud charges relating to compound pharmacies center on the ability of pharmacies to bill for each ingredient in a compound formulation. The government will often allege that ingredients were added to the compound that were not needed or did not benefit the patient, but were merely for the purpose of increasing the pharmacy’s remuneration.

In addition, the federal government will often file fraud charges for kickbacks, overbilling, billing for unnecessary products, providing automatic on-going refills, or for mass compounding or manufacturing compound drugs that are identical to commercially available alternatives.

What Are the Penalties?

Like most allegations of health care fraud and abuse, the government investigates pharmacy and compound pharmacy fraud under the False Claims Act and the general Health Care Fraud Provision. Notably, this avenue gives the government the option to ask for reimbursements and fines (civil penalty) or to prosecute and indict responsible individuals in federal court (criminal penalties, imprisonment).

18 U.S.C. Sect. 1347 (Health Care Fraud)(a) Whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice—(1) to defraud any health care benefit program; or(2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program,

in connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title or imprisoned not more than 10 years, or both. If the violation results in serious bodily injury (as defined in section 1365 of this title), such person shall be fined under this title or imprisoned not more than 20 years, or both; and if the violation results in death, such person shall be fined under this title, or imprisoned for any term of years or for life, or both.

(b) With respect to violations of this section, a person need not have actual knowledge of this section or specific intent to commit a violation of this section.

If found guilty, targets of investigations may be exposed to recoupment requests, non-payment of future claims, civil fines, exclusion from federal health care programs, treble damages, attorney fees, criminal fines, criminal indictment, or incarceration in a federal prison.

31 U.S.C. Sect. 3729 et seq. (False Claims Act)

  1. a) Liability for Certain Acts.—

(1) In general.— Subject to paragraph (2), any person who—

(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;

(B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;

(C) conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G);

is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104–410  [1] ), plus 3 times the amount of damages which the Government sustains because of the act of that person.

It is important to note that liability does not require a specific intent to violate the law; in fact, the government does not even need to prove actual knowledge of the wrongfulness of the transaction. The mere fact that wrong bills were submitted is enough to hold the company responsible.

What Happens In a Fraud Investigation?

Compound pharmacy fraud is investigated by the Office of Inspector General (OIG), the Department for Health and Human Services (HHS), the Department of Labor (DOL), the Department of Justice (DOJ), the Federal Bureau of Investigation (FBI), the Drug Enforcement Agency (DEA), and the Food and Drug Administration (FDA).

Many cases begin with the pharmacy receiving a subpoena issued by the Office of Inspector General. The subpoena will typically ask for the production of documents such as company records, financials, marketing agreements, physician relationships and the like. While such a request may appear harmless, the true danger with these subpoenas is that it is initially unclear if the investigation is civil or criminal in nature. An experienced OIG defense lawyer will often be able to tell from reading between the lines if the document production sought is for a civil or a criminal case.

In the alternative, agents from DEA or FTA or FBI show up at the door and ask to speak with employees or staff. Such request could be based on a presented search warrant or simply as part of a general inquiry. It is absolutely paramount to remain polite but to insist on the right to have an attorney present. Federal agents are trained to interview people and to gather information. Questions may appear innocent and general, but nonetheless the true background and the context of the questions remain unknown. Agents tend to ask questions, not to answer questions.

In either scenario, of which there are variations, it is important to call experienced attorneys such as the former health care prosecutors of the Oberheiden & McMurrey, LLP. Many cases only turn into cases because of mistakes made in the initial stage of an investigation. Harmful answers given or documents volunteered without invocation of procedural and constitutional rights can barely be undone. Thus, don’t wait. When the government contacts you, call us first at 1-800-810-0259. It is your right.

Who Is Investigated?

Compound Pharmacy Fraud exposes providers and business owners alike. Statutes apply to any individual or business that directly or indirectly contracts with and is paid for services by the United States government.

  • Business Owners
  • CEOs & COOs
  • Physician Owners
  • Physician Referrals
  • Pharmacists
  • Employees & Marketers
  • Financial Experts like CFO

Our Experience in the Pharmacy Industry

Our pharmacy experience is profound. The attorneys of Oberheiden & McMurrey, LLP routinely advise health care providers, business owners, and physicians on virtually all aspects of health care law including but not limited to toxicology laboratories, DNA testing, surgical implants, hospitals, and surgery centers to name just a few.

Specifically with respect to pharmacies and compound pharmacies, Dr. Oberheiden and his team have advised pharmacy entities, pharmacy CEOs, CFOs, affiliated physicians, pharmacists, and senior management operating pharmacy businesses in Texas, Louisiana, Oklahoma, California, Florida, Michigan, Missouri, New York, New Jersey, and Ohio.

Our vast experience allows us to combine pharmacy law experience with trial and defense experience. For example, we have set up and assisted with:

  • Pharmacy Kickback Defense
  • Pharmacy Health CareFraud Defense
  • Pharmacy DEA Audit Assistance
  • Pharmacy DEA Show Cause Preparation
  • Pharmacy Diversion Conflict
  • Pharmacy DEA Licensing Issues
  • Purchases of State and DEA Licensing

Our attorneys have analyzed, reviewed, and defended hundreds of thousands billed pharmacy claims. Similarly, if you are accused of overbilling or kickbacks, you need lawyers that understand the legal requirements of the pharmacy industry as well as have the necessary court and government experience to get your case dismissed.

How To Get In Touch With Us

We pride ourselves with the fact that we are available for our clients. From the moment you call us, you will only talk to actual lawyers. In fact, you will not talk to secretaries and paralegals. You call and you will be immediately connected to Lynette Byrd (former DOJ) or Dr. Nick Oberheiden (managing partner).

1-800-810-0259

Our Track Record (Fraud Defense)

  • Defense of Medicare entity against investigations by the Department of Justice and the U.S. Attorney’s Office for alleged Medicare Fraud.
    Result: No civil or criminal liability, case dismissed.
  • Defense of a health care services company against an investigation by the Office of Inspector General, the Department of Justice, and the Department of Health and Human Services for alleged False Claims Act and Stark Law violations.
    Result: No civil or criminal liability, case dismissed.
  • Defense of Medicare laboratory against investigations by the Department of Health and Human Services and the Office of Inspector General for alleged Health Care Fraud.
    Result: No civil or criminal liability, case dismissed.
  • Defense of nationally operating health care company against an investigation by the Department of Defense for alleged Tricare fraud.
    Result: No civil or criminal liability, case dismissed.
  • Defense of health care marketing company against an investigation by the Office of Inspector General for alleged False Claims Act and Medicare violations.
    Result: No civil or criminal liability, case dismissed.
  • Defense of a laboratory against an investigation by various branches of the federal government for alleged fraud.
    Result: No civil or criminal liability, case dismissed.
  • Defense of physician owned entity against an investigation by the Department of Health and Human Services for alleged Stark Law violations.
    Result: No civil or criminal liability, case dismissed.
  • Defense of a physician owned entity against an investigation by the Office of Inspector General for alleged fraud.
    Result: No civil or criminal liability, case dismissed.
  • Defense of a physician owned entity against an investigation by the Department of Justice for alleged fraud.
    Result: No civil or criminal liability, case dismissed.
  • Defense of a physician owned entity against an investigation by the Office of Inspector General for alleged Stark Law violations.
    Result: No civil or criminal liability, case dismissed.
  • Defense of a physician owned entity against an investigation by the Office of Inspector General for alleged False Claims Act violations.
    Result: No civil or criminal liability, case dismissed.
  • Defense of a physician owned entity against an investigation by various branches of the federal government for alleged False Claims Act, Stark Law, and Medicare violations.
    Result: No civil or criminal liability, case dismissed.
  • Defense of a physician owned entity against an investigation by the Office of Inspector General for alleged fraud.
    Result: No civil or criminal liability, case dismissed.
  • Defense of a physician owned entity against an investigation by the Department of Defense for alleged Tricare fraud.
    Result: No civil or criminal liability, case dismissed.
  • Defense of a physician owned entity against an investigation by the Department of Justice for alleged Medicare Fraud.
    Result: No civil or criminal liability, case dismissed.
  • Defense of physician owned entity against an investigation by the Department of Health and Human Services for alleged Stark Law violations.
    Result: No civil or criminal liability, case dismissed.
  • Defense of health care management organization against an investigation by the Office of Inspector General, the Department of Justice, and the Department of Health and Human Services for alleged Medicare Fraud.
    Result: No civil or criminal liability, case dismissed.
  • Defense of nationally operating laboratory against an investigation by the Office of Inspector General for alleged fraud.
    Result: No civil or criminal liability, case dismissed.

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