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TRENTON – A federal grand jury has indicted two men on charges connected to a scheme to defraud state health benefits by targeting insurance plans that paid hundreds of thousands of dollars for certain prescription compound medications, receiving benefits and commission for the prescriptions they obtained, authorities said.
Keith Ritson, 40, of the Bayville section of Berkeley, and Frank Alario, 63, of Delray Beach, Florida, are both charged with conspiracy to commit health care fraud and wire fraud, as well as conspiracy to wrongfully obtain and disclose patient’s individually identifiable health information, according to a news release from U.S. Attorney Craig Carpenito’s Office.
Alario was additionally charged with making false statements in a health care matter. Ritson was also charged with conspiring to commit money laundering and substantive counts of money laundering.
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An investigation by officials revealed both men recruited unknown individuals who would target insurance plans that paid thousands of dollars for a one-month supply by obtaining expensive and “medically unnecessary compound medications” from a Louisiana pharmacy called Central Rexall Drugs Inc., the statement said.
“Compound medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient,” the U.S. Attorney’s Office for the District of New Jersey said. “Although compound drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines than an FDA-approved medication does not meet the health needs of a particular patient…”
For example, if a patient is allergic to dye or some other ingredient, they would be prescribed a compounded drug such as vitamins or pain creams, according to Carpenito.
Insurance plans would pay for compound medications such as pain, scar, antifungal, libido creams and vitamin combinations from the pharmacy, officials said.
Additionally, the two men learned that some state, local government and education employees had insurance coverage for specific compound medications.
A pharmacy benefits administrator provided pharmacy benefit management services to health benefits programs for state and local government employees as well as teachers, according to court documents.
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The administrator would pay prescription drug claims to the programs and then bill the state and other insurance plans for the amounts paid, the release said.
Ritson received commissions from the administrator for the unnecessary compound medication prescriptions, which Alario would then sign off on. Alario received benefits including free meals, entertainment, travel and other forms of payment from Ritson, according to officials.
Ritson chose the compound medications based on the people who had favorable insurance coverage to cover the expenses and also based off Alario’s medical practices, officials said.
After Alario signed the prescriptions without ever examining the patients or determining if it was necessary for the patient to receive compound medications, he would fax a form to the Louisiana pharmacy in which he falsely stated he did examine the patients, the release said.
Both men prescribed medications not for the patient’s need or request, but for the benefits Alario and Ritson would receive, the statement said.
Furthermore, both men were additionally charged with a separate scheme to wrongfully obtain and disclose their patients’ health information for their own personal gain and commercial advantage, authorities said.
“As a sales representative not affiliated with Alario’s medical practices, Ritson should not have had access to patient’s confidential information,” Carpenito said. “However, since only certain insurances covered the compound medications promoted by Ritson, the defendants accessed patient files and other identifying information to ascertain patients’ insurance coverage.”
During at least one occasion, both men jointly accessed a patient’s information on an office computer for the sole purpose of determining whether insurance will cover the compound medications prescribed to them, according to court documents.
Ritson also had access to parts of Alario’s office and at any point had the opportunity to look up employee-restricted areas which included medical files, fax machines and computers, the release said.
“Ritson was also frequently present in exam rooms during patient appointments with Alario for the purpose of promoting the compound medications, at which time Alario commonly introduced Ritson to his patients as his ‘nephew’ or gave the impression that Ritson was affiliated with the medical practice,” Capenito said.
The charges of health care and wire fraud carries a maximum potential penalty of 20 years in prison and a maximum $250,000 fine. The charges of conspiracy to wrongfully obtain or disclose individually identifiable patient information carries a maximum penalty of five years in prison, while the money laundering charges carries a maximum penalty of 10 years in prison — all with a fine of $250,000.
Carpenito credited the work of the special agents of the FBI, under the direction of Special Agent George M. Crouch Jr. in Newark; the Internal Revenue Services (IRS), under the direction of Special Agent Michael Montanez in Newark; and agents with the New York office of the Inspector General under the direction of Special Agent Michael C. Mikulka in the investigation leading to the indictment
The federal government is represented by Assistant U.S. Attorney Christina O. Hud and David Walk Jr. of the Attorney’s Office in Camden, according to the statement.
Joshua Chung is the 9-5 breaking news and weather reporter. A lifelong Jersey Shore resident, he is a recent graduate of Michigan State University. Contact him at [email protected], 917-703-9373 or on Twitter @Joshchunggg
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