Former Compliance Officer Sentenced to 4.5 Years of Prison Time for Role in Health Care Fraud and Wire Fraud Conspiracy
A former chief compliance officer, Steven King, was recently sentenced to four years and six months in prison for his role in a health care and wire fraud conspiracy that resulted in more than $50 million in false and fraudulent claims being submitted to Medicare. King was also ordered to pay $21.7 million in restitution in connection with the scheme.
King was the former chief compliance officer at a pharmacy holding company that fraudulently billed Medicare for dispensing lidocaine and diabetic testing supplies that Medicare beneficiaries did not need or did not want. The holding company, A1C Holdings LLC, operated in various states and pharmacies operated by the company worked to secure prescriptions and refills for medically unnecessary prescriptions for lidocaine and diabetic testing supplies, in direct violation of not only Medicare rules and regulations but also the pharmacy benefit managers’ rules and regulations with which the pharmacies had contracts.
According to the DOJ and charging documents, King and his co-conspirators directed employees of A1C’s subsidiary pharmacies to conceal the ownership rights of the CEO – James Letko – and falsify contracts with pharmacy benefit managers to conceal Letko’s ownership interest. King and Letko allegedly worked in concert to submit credentials and applications to Medicare benefit managers, including CVS Caremark and Express Scripts, to procure authorization for A1C and its pharmacies to submit claims for prescription benefits. The pharmacies also would allegedly waive copayments if recipients of the prescription medication complained, to entice and persuade the patients to accept the unnecessary and/or unwanted items. In other situations, the pharmacies submitted claims for products delivered to consumers without any consent or to patients who were deceased.
The DOJ also notes that evidence presented at trial showed King and his co-conspirators took steps to hide the scheme, including enrolling their mail order pharmacies as brick-and-mortar retail pharmacies to avoid more intense oversight, shipping prescription refills for high-reimbursing medications and supplies without patient consent, concealing the ownership of the holdings company and its pharmacies, and transferring patients between owned pharmacies without patient consent. Each of these actions, according to the DOJ, was taken with the intent of ensuring profitable medications and supplies were billed to Medicare. The DOJ also noted that while King had the authority and ability to prevent and expose the scheme, he opted not to.
After King’s jury trial, the jury convicted him of conspiracy to commit health care fraud and wire fraud and he faced a maximum of 20 years in prison.