On January 18, 2024, Elan Yaish, a former president of a pharmacy business, Apogee Bio-Pharm LLC, was sentenced to 36 months in prison, 36 months of supervised release, and an ordered restitution of $32 million, for his part in a health care kickback conspiracy that used marketing companies to persuade Medicare and TRICARE beneficiaries to try expensive prescriptions unnecessarily and direct the prescriptions to specific pharmacies (the “Scheme”). Yaish pleaded guilty on August 16, 2023 to a charge of conspiracy to violate the Federal Anti-Kickback Statute.

The Scheme:

From September 2017 to late 2020, Yaish and others agreed to participate in a scheme to pay marketing companies to direct prescriptions for costly medications to certain pharmacies, including Apogee Bio-Pharm LLC. The marketing companies targeted Medicare and TRICARE beneficiaries for the costly medications, contacted the beneficiaries and attempted to pressure them into agreeing to try expensive medications, such as pain creams, scar creams, eczema creams, and migraine medications. The telephone recordings were provided with pre-marked prescription pads for medications designed to yield exorbitant reimbursements to telemedicine companies. The marketers paid the telemedicine companies kickbacks for every referred beneficiary and the telemedicine companies, in turn, paid doctors to approve the prescriptions. Once the necessary steps were taken, the marketing companies directed the prescriptions to the pharmacies with which they had kickback arrangements, such as Apogee. After filling the prescriptions, the pharmacies claimed for reimbursement from federal health care benefit programs, including Medicare and TRICARE. A portion of each reimbursement was paid to the marketing companies as a kickback.

Other co-conspirators of the Scheme, Gary Kaczka, William B. Welwart, and Ethan B. Welwart are awaiting trial. Another co-conspirator, James D. Feeley, plead guilty in December 2023 to anti-kickback laws after admitting he controlled the marketing companies. The Scheme resulted in an overall loss to Medicare and other federal health care benefit programs in the amount of over $32 million.

The Department of Justice remains committed to investigating all instances of fraud and kickbacks, especially as it relates to federal health care benefit programs.

If you have any questions regarding whether an arrangement is compliant under applicable laws and regulations, please feel free to contact Bill Kalogredis, Esq. or Sonal Parekh, Esq.

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Vasilios J. (Bill) Kalogredis, Esq. has been advising physicians, dentists, and other healthcare professionals and their businesses as to contractual, regulatory and transactional matters for over 45 years. He is Chairman of Lamb McErlane PC’s Health Law Department. Bill can be reached by email at bkalogredis@lambmcerlane.com or by phone at 610-701-4402.

Sonal Parekh, Esq., is an associate at Lamb McErlane PC who focuses on healthcare transactional matters and a broad range of healthcare regulatory-related issues on behalf of healthcare systems, physicians, dentists, and other healthcare providers, and is a pharmacist by education and training. Sonal can be reached by email at sparekh@lambmcerlane.com or by phone at 610-701-4416.

*This alert is for educational purposes only and is not intended to be legal advice. Should you require legal advice on this topic or have any questions or concerns, please contact Vasilios J. (Bill) Kalogredis, Esq. or Sonal Parekh, Esq.