Happy new year.

2019 will be an interesting year in the health care fraud. Here is a short summary of the must watch cases of 2019.

Prosecution of Insys Therapeautics executives. Prosecutors claim CEO Michael Babich, chairman John Kapoor and four sales executives conspired to bribe doctors to prescribe the company’s powerful fentanyl painkiller spray. Prosecutors have brought racketeering charges against the defendants. Babich is set to pled guilty on January 9, 2019. The vice president of sales, Alec Burlakoff, pled guilty last month. The remaining defendants are gearing up for trial.

Prosecution of Two Former Tenet Hospital executives. Prosecutors claim that the two former executives of Tenet engaged in a scheme to accept kickbacks from the head of a clinic that served Hispanic immigrants. The case is hotly contested and there has been extensive litigation over the past two years. It looks like the case will finally go to trial in Atlanta this year.

$1 Billion Telemedicine Case. This case is out of Tennessee. It charges seven compounding pharmacies and four individuals and alleges a telemedicine scheme involving the submission of fraudulent prescriptions for reimbursement by private insurers. Interestingly, the prosecutors did not charge the doctors in this case and has identified them as victims.

In terms of appeals, United States v. Melgen is the case to watch. Melgen was convicted in a health care fraud conspiracy that alleged that the doctor performed medically unnecessary procedures on his patients, among other allegations. The appeal raises numerous issues. Two issues that have been raised and could have a big impact on other cases is whether the admission of statistical peer comparison evidence violated the Rules of Evidence and the Confrontation Clause and whether the court erred by not instructing the juror that the prosecution’s sampling of patients was not random. The issue of “sampling of patients” was hotly contested at trial. The defense claimed that the Government cherry picked the worst patients and didn’t use a statistician. I think this is a common practice by the government. Dr. Melgen is represented by Kirk Ogrosky at Arnold and Porter.

And last but not least, 2019 might be the year we finally get an opinion from the Eleventh Circuit in United States v. AseraCare. The Eleventh Circuit heard oral arguments in this case two years ago. The central issue in this case is whether, when two experts look at medical records and disagree about their meaning, a jury can side with one expert and deem billing fraudulent. A judge in Alabama decided that this type of evidence is insufficient to create FCA liability. This opinion impacts the defense of medical necessity prosecutions that usually revolve around a dispute amongst experts.

Temporary restraining orders—a first-of-its-kind against doctors allegedly prescribing opioids illegally under the Controlled Substances Act (CSA)—were served this week that forbid Michael P. Tricaso, D.O., of Akron, and Gregory J. Gerber, M.D., of Sandusky, Ohio from writing prescriptions.  The Justice Department filed two separate complaints to bar two Ohio doctors from prescribing medications and allege that an investigation revealed the doctors “recklessly and unnecessarily distributed painkillers and other drugs.”  Attorney General Jeff Sessions even made the trip to Cleveland, Ohio to make the announcement.  You can read the press release HERE for more information.

The motions for temporary restraining orders point to the Government’s authority under the Controlled Substance Act for the Attorney General to commence a civil action for appropriate declaratory or injunctive relief relating to any violation of 21 U.S.C. 843(f).

According to the filings, Dr. Tricaso was targeted by a confidential source working for the DEA at a gym.  The confidential source purchased various prescription drugs from Dr. Tricaso, including steroids and Percocet.  The transactions were recorded and Dr. Tricaso is alleged to have made some unfavorable comments including that he would only give the confidential source a prescription for 20 Percocet because that number is “under the radar.”

The allegations against Dr. Gerber are much more extensive, but defensible.  Dr. Gerber was a solo practitioner operating a pain clinic.  The Government claims that Dr. Gerber illegally issued hundreds of prescriptions that exceeded the amount for “legitimate medical purposes.”  As part of its investigation, the Government sent an undercover agent to Dr. Gerber’s offices six times.  The Government alleges that the agent was prescribed by Dr. Gerber a combination of controlled substances, including Oxycodone, with minimal medical examination and no complaints of pain.  The Government also notes that Dr. Gerber was connected to the Insys case and received $175,000 in speaker fees for promoting Subsys.

The motion for temporary restraining order directed at Dr. Gerber attaches an expert medical opinion, patient affidavit, and an affidavit from an agent.  The expert’s affidavit references a review of claims data and medical records.  The expert opines that the prescriptions exceed normal levels.

Also curious is that the Government also attaches as evidence of Dr. Gerber’s illegitimate practices correspondence from Walmart advising that, after an internal review, it will no longer fill prescriptions written by Dr. Gerber.

It will be interesting to watch these cases and see how it develops.



On February 6, 2018, Dr. Andres Mencia was arrested at his clinic on federal charges of Conspiracy to Dispense Controlled Substances, Conspiracy to Commit Health Care Fraud and Wire Fraud, and Money Laundering. The Government alleges that Dr. Mencia and his medical assistants were prescribing high amounts of opioids and other addictive drugs. The Government alleges that Dr. Mencia was prescribing opioids and other drugs in exchange for cash payments.

The prosecution was the result of an undercover investigation involving agents posing as patients. The defense has argued in pleadings that Dr. Mencia is rarely seen on the surveillance video. The defense has also argued that the undercover recordings rarely include Dr. Mencia. The defense also argues that Dr. Mencia’s medical assistants were meeting with the patients and seen pocketing money on video.  The medical assistants quickly pled guilty and will testify against Dr. Mencia.

As if defending a pill mill case is not hard enough, forty-six days before the scheduled trial, the Government filed its Fifth Superseding Indictment adding a charge of structuring to avoid reporting requirements. And just 13 calendar days before the trial the Government noticed seven experts for trial. The expert disclosures reveal that the Government will present evidence of overdose deaths, which seem extremely prejudicial. The defense promptly filed a motion to exclude the late disclosed experts, which was denied without prejudice today.

Given the additional charges and the money laundering counts, Dr. Mencia is facing over twenty years if convicted at trial.

Despite overwhelming odds, the trial is moving full steam ahead on Monday. Marcos Beaton of Black, Srebnick, Kornspan, and Stumpf is representing Dr. Mencia at the trial.

UPDATEDr. Mencia found not guilty on 9 out of 10 counts.  The jury voted guilty on the charge of conspiracy to distribute a controlled substance.  The Miami Herald has the story here.

Gazelle Craig, a licensed physician, and Shane Faithful, a clinic owner, were charged in a four count indictment.  The Indictment charged four counts – Conspiracy to Unlawfully Distribute and Dispense Controlled Substances and three counts of Unlawfully Distributing and Dispensing Controlled Substances and Aiding and Abetting.  Craig was an employed physician at Gulfton Community Health Center (“Gulfton Clinic”).  Gulfton Clinic was owned and operated by Faithful.  Gulfton Clinic was an unregistered pain clinic, but the Government alleged it was operating as a pain mill.

The government alleged that the scheme involved recruiters that would bring patients to the clinic.  The patients would line up outside the clinic to get prescriptions from Craig.  It was further alleged that Craig would see patients for minutes and in exchange for $300 would prescribe Hydrocodone and Carisoprodol, a muscle relaxer.

At trial, the government introduced surveillance video and video captured by cooperating patient witnesses.  The government also introduced ledgers and practitioner prescribing history data for Craig.

Craig and Faithful were convicted after a nine day trial and Attorney General Jeff Sessions commented on the convictions in a Department of Justice Press Release:

“Our great country is currently in the midst of the deadliest drug crisis in our history,” said Attorney General Sessions. “Sadly, even some trusted medical professionals like doctors, nurses and pharmacists have chosen to violate their oaths and exploit this crisis for cash.  The consequences have been devastating. In this case, tens of thousands of pills flooded our streets because of the defendants’ actions. We will never know for certain the scale of the damage done. We do know that justice has been served, and so I want to thank everyone who helped secure this conviction, including the DEA and Department of Justice Trial Attorneys Scott Armstrong and Devon Helfmeyer. This conviction will not only help stop the diversion of prescription drugs, it will send a message to every would-be fraudster in America.”


Interestingly, the DOJ Press Release did not mention that the conviction came after a hung jury. The initial trial took place a little over thirty days before the second trial.  After multiple notes from the jury that they could not reach a unanimous verdict, the court declared a mistrial and ordered the parties back for a second trial.  The hung trial is an indication that the facts were not as clear cut as presented by the government.

Litigation over release of data in the opioid litigation gives a glimpse at the volumes of information available to the Department of Justice in health care fraud cases.

Judge Dan Aaron Polster of the Northern District of Ohio is presiding over a multidistrict litigation involving more than 400 federal lawsuits brought by cities, counties, and Native American tribes against makers of prescription painkillers, companies that distribute the painkillers, and pharmacy chains that sell the painkillers. Judge Polster was picked to preside over the litigation for several reasons, including that Ohio has been hard hit by the opioid crisis and that Judge Polster has extensive experience with multidistrict litigation.

In that litigation, the local governments suing the drug companies sought extensive documentation kept by the United States Drug Enforcement Administration (“DEA”) regarding data on painkiller sales. Status reports filed by the parties revealed that the DEA was worried the release of the information would reveal trade secrets.  The DEA also wanted to limit the amount of information provided and wanted a broad protective order to shield the information from release to the media.  The DEA finally relented and agreed to provide some information.

The New York Times has been covering the story, including outlining what data will be released.  A portion of the NYT article and a link to read more is below.


CLEVELAND — The U.S. Department of Justice has shared some federal data about prescription painkiller sales to help with settlement talks between local governments and drug companies targeted in hundreds of lawsuits over the opioid epidemic.

The department previously agreed to release certain data on the grounds it not be circulated publicly and be returned or destroyed when the litigation is finished. The information includes a year-by-year, state-by-state breakdown of companies that made and distributed most of the opioids in each state between 2006 and 2014. It also includes how many pills were sold annually in each state and each drug company’s market share.

DOJ Will Share Rx Painkiller Data For Opioid Lawsuit Talks – WOUB Digital

Interestingly, it seems that the DEA can track sales of opioids to the smallest detail, including state sold, year sold, and even manufacturer.  The DEA’s concerns regarding the trade secret nature of its data gives insight into the value of this information to the Government. In fact, data mining is steering prosecutions, but this data is not only valuable to the Government.  Defense attorneys may find value in this same data when defending health care fraud prosecutions.  Defense attorneys are well served demanding that the Government turn over all documents reflecting data mining resulting in the prosecution of the defendant, including cost reports.