A New Jersey physician faces a decade in prison, tens of millions in restitution, and a hefty fine for selling his signature and signing prescriptions for patients he never saw as part of an elaborate healthcare fraud scheme that spawned $25 million in losses to state health benefits programs, the Department of Justice announced.
John Gaffney, whose practice was in Margate, New Jersey, pleaded guilty to conspiracy to commit healthcare fraud for his role in the fraud scheme where he signed prescriptions for expensive compound drugs without ever seeing the patients.
Compound medications are specialty drugs mixed by a pharmacist and prescribed by a doctor specifically when it has been determined that an FDA-approved drug will not meet the needs of the patient, for example when the patient is allergic to an element of the approved drug. They are often very expensive.
According to the DOJ, the scheme ran from January 2015 through April 2016, during which time Gaffney's conspirators persuaded program beneficiaries in New Jersey to obtain expensive and medically unnecessary compounded drugs from an out-of-state pharmacy. The participants had learned that certain prescriptions, including pain, scar and other creams were reimbursed for thousands of dollars for a one-month supply.
Some New Jersey state and local government and education employees had insurance coverage for some compound medications, and a "Pharmacy Benefits Administrator" provided pharmacy benefit management services for the State Health Benefits Program and School Employees' Health Benefits Program. The administrator would pay prescription drug claims and then bill the State of New Jersey, the DOJ said.
The co-conspirators would recruit an employee covered by the administrator, get their insurance information and fill out a Compounding Pharmacy prescription form. Gaffney signed prescriptions for medications for numerous beneficiaries though he had never seen them or determined whether the medicine was needed. He also signed a blank prescription form, which his co-conspirators copied and used to submit more fake prescriptions to the pharmacy.
Gaffney was paid thousands of dollars in cash and other benefits for his role in the scheme, according to the DOJ.
Per a plea agreement, Gaffney must forfeit $25,000 in criminal proceeds and pay more than $24,950,000 in restitution. He faces a maximum penalty of 10 years in prison and a $250,000 fine. He will be sentenced in January.