DOJ Announces First-of-Its-Kind Prosecution of Alleged Fraudulent Online Adderall Distribution Scheme - Federal Lawyer
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DOJ Announces First-of-Its-Kind Prosecution of Alleged Fraudulent Online Adderall Distribution Scheme

narcotic diversion

While the U.S. Department of Justice (DOJ) continues to target healthcare providers for unlawful opioid distribution, it is now also setting its sights on Adderall. On June 13, 2024, the DOJ announced a first-of-its kind prosecution targeting the CEO and Clinical President of a telemedicine company who are accused of perpetrating a $100 million scheme to illegally distribute Adderall online. Both individuals are facing multiple federal charges, and they face decades of imprisonment if convicted.

CEO and Clinical President Charged with Operating Illegal Telemedicine Adderall Subscription Service

As alleged by the DOJ, the CEO and Clinical President of Done Global Inc., a telemedicine company based in California, exploited the telemedicine rules put in place during the COVID-19 pandemic to unlawfully sell Adderall online. According to the DOJ’s press release:

“[T]he defendants provided easy access to Adderall and other stimulants by exploiting telemedicine and spending millions on deceptive advertisements on social media. They generated over $100 million in revenue by arranging for the prescription of over 40 million pills. . . . These charges are the Justice Department’s first criminal drug distribution prosecutions related to telemedicine prescribing through a digital health company.”

The DOJ also alleges that the defendants engaged in other fraudulent practices in order to “provide easy access to Adderall and other stimulants,” while also incentivizing participating healthcare providers to prescribe these drugs. Specific allegations include:

  • Using and heavily marketing an online prescription system to sell addictive drugs (including Adderall) through a monthly subscription plan;
  • Prescribing ADHD medications that were not medically necessary, and instructing participating healthcare providers to prescribe Adderall even if a member did not qualify;
  • Compensating participating healthcare providers based on the number of Adderall pills they prescribed while not compensating them for telemedicine consultations and other services;
  • Making false statements about the company’s prescription practices to pharmacies in order to induce pharmacies to fill prescriptions; and,
  • Fraudulently billing Medicare, Medicaid, and private insurers.

The DOJ’s press release indicates that the defendants are facing charges for conspiracy to distribute controlled substances and unlawful distribution of controlled substances. Both of these federal crimes carry up to a 20-year federal prison sentence.

The DOJ’s Focus on Adderall and Other Stimulants

In recent years, the DOJ has devoted substantial resources to holding healthcare providers and others accountable for facilitating the nation’s opioid epidemic. But, it has not focused solely on opioid-related crimes during this time. It has also focused on prosecuting telemedicine companies, pharmacies, and other healthcare providers for unlawfully prescribing Adderall, other stimulants, and other prescription drugs.

In the case discussed above, the DOJ asserts that the defendants’ actions, “led customers to addiction, abuse, and overdoses, which the company tried to conceal.” This is a common allegation in drug-related prosecutions involving healthcare entities, including prosecutions involving Adderall. The DOJ is serious about holding individuals and organizations accountable for contributing to others’ drug dependence and drug abuse—particularly when these individuals and organizations are involved in the healthcare sector.

The DOJ’s Focus on Telemedicine

The DOJ has also placed particular emphasis on targeting fraudulent telemedicine practices in recent years. Like many other pandemic-era initiatives, the federal government’s decision to relax the rules for telemedicine services to increase access to remote healthcare consultations and prescriptions proved to be a prime target for fraud. In the case discussed above, the DOJ alleges that the defendants abused the pandemic-era telemedicine rules, relying on the relaxed requirements for online prescriptions to develop a fraudulent Adderall prescription business that both exceeded what the telemedicine rules allowed and involved multiple other forms of healthcare fraud.

The case discussed above is just one of several recent examples of the DOJ’s efforts to uncover and prosecute telemedicine fraud. For example, in April 2024, the DOJ announced that the owner of two telemedicine companies pled guilty to perpetrating a $110 million Medicare fraud scheme. While that case focused on durable medical equipment (DME) rather than Adderall or other prescription drugs, it involved many of the same underlying enforcement priorities as the DOJ’s recent prescription drug-related enforcement actions. Additionally, late last year, the DOJ published a report on its telemedicine enforcement actions from 2022, which targeted 36 defendants and involved more than $1.2 billion in fraudulent losses.

Potential Charges in Federal Adderall-Related Prosecutions

When prosecuting telemedicine companies and other healthcare entities for unlawfully prescribing or dispensing Adderall (or other prescription drugs), the DOJ can seek indictments for multiple federal crimes. Some examples of these crimes include:

Distribution of Controlled Substances

Unlawfully distributing Adderall and other medications violates the federal Controlled Substances Act (CSA). Under the CSA (21 U.S.C. Section 841), unlawful distribution carries up to 20 years of federal imprisonment in cases involving serious bodily injury or death. It also carries up to a $10 million fine for individuals and $50 million fine for corporate defendants.

Conspiracy to Distribute Controlled Substances

Conspiring to distribute controlled substances carries the same penalties as “successful” distribution. The DOJ can pursue conspiracy charges any time two or more individuals or organizations develop a plan to engage in unlawful distribution and take at least one step toward executing their plan—regardless of whether their efforts lead to the unlawful distribution of any controlled substances.

Health Care Fraud

The federal healthcare fraud statute (18 U.S.C. Section 1347) makes it a serious federal crime to improperly bill Medicare, Medicaid, or any other federal healthcare benefit program. This includes billing one of these programs for improperly prescribed or dispensed prescription drugs. Individuals and entities accused of improperly prescribing or dispensing Adderall will face federal healthcare fraud charges in many cases. Convictions under Section 1347 can result in statutory fines and up to 10 years of federal imprisonment.

Anti-Kickback Statute Violations

The federal Anti-Kickback Statute prohibits telemedicine companies and other entities from paying compensation for referrals out of Medicare or Medicaid-reimbursed funds. This prohibition is extremely broad; and, while violations of the Anti-Kickback Statute often lead to civil enforcement actions, they can also lead to criminal prosecution in some cases. Criminal charges under the Anti-Kickback Statute also carry statutory fines and up to 10 years of federal imprisonment.

False Claims Act Violations, Wire Fraud, Money Laundering, and Other Federal Crimes

Along with the healthcare-specific charges discussed above, federal prosecutions targeting Adderall-related crimes in the healthcare sector can involve a variety of other charges as well. Some examples of these charges include:

  • False Claims Act Violations – The False Claims Act (FCA) prohibits the submission of any false or fraudulent claim for payment by a federal agency or federal program. Healthcare-related prosecutions involving alleged improper billing of Medicare and Medicaid can trigger criminal charges under the FCA, which carry statutory fines and up to five years of federal imprisonment.
  • Wire Fraud – Engaging in any form of criminal activity online can trigger prosecution under the federal wire fraud statute (18 U.S.C. Section 1343). In most cases, wire fraud charges carry statutory fines and up to 20 years of federal imprisonment. However, in cases involving presidentially declared emergencies, such as the COVID-19 pandemic, the maximum penalties increase to a $1 million fine and 30 years behind bars.
  • Money Laundering – Federal prosecutions targeting healthcare-related fraud schemes will often trigger money laundering charges as well. The federal money laundering statute (18 U.S.C. Section 1956) is also extremely broad, and convictions carry fines of up to $500,000 or twice the value of the property involved (whichever is greater) and 20 years of federal imprisonment.

About the DOJ’s Health Care Fraud Strike Force Program

In the press release announcing the first-of-its-kind Adderall telemedicine fraud prosecution discussed above, the DOJ highlights the efforts of its Health Care Fraud Strike Force Program. This program is led by the Fraud Section of the DOJ’s Criminal Division, and it focuses specifically on targeting healthcare providers, telemedicine companies, pharmacies, and other entities for healthcare-related crimes.

According to the DOJ’s press release, since its establishment in 2007, the Health Care Fraud Strike Force Program has been responsible for charging more than 5,400 defendants with collectively engaging in $27 billion in fraudulent healthcare billing practices. It has been increasingly active in recent years, and it is currently working alongside the Centers for Medicare and Medicaid Services (CMS) and the U.S. Department of Health and Human Services’ Office of Inspector General (HHS OIG) to uncover fraudulent billing and prescription practices involving Adderall and other stimulants as well as opioids and other controlled substances. Due to the substantial risks involved, any individual or entity facing scrutiny from the DOJ, CMS, or HHS OIG in relation to its drug prescription or dispensing practices (including telemedicine practices) should engage experienced federal healthcare fraud defense counsel as soon as possible.

Contact the Federal Health Care Fraud Defense Lawyers at Oberheiden P.C.

Our federal healthcare fraud defense lawyers have extensive experience representing healthcare providers, pharmacies, telemedicine companies, and other clients during high-stakes investigations and criminal prosecutions. If you would like to speak with one of our senior lawyers in confidence, please call 888-680-1745 or contact us online to arrange a complimentary consultation.

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