Investigations Newsletter: Pharmacy Owner and Accountant Indicted in $134m Health Care Fraud Scheme

Arent Fox

Headlines that Matter for Companies and Executives in Regulated Industries

Pharmacy Owner and Accountant Indicted in $134m Health Care Fraud Scheme

Mohamed Mokbel and Fathy Elsafty, of Houston, Texas, were arrested on charges of money laundering, health care fraud, and conspiracy to commit health care fraud for their participation in an alleged pharmacy fraud scheme.

Mokbel served as CEO of 4M Pharmaceuticals, Inc., the parent company of several retail pharmacies that operated in Texas and Florida, and Elsafty was 4M Pharmaceutical’s accountant and tax preparer. Both individuals had ownership interests in the retail pharmacies.

According to the indictment, 4M Pharmaceutical employees operated as call center employees to solicit Medicare, Medicaid, and commercial insurance patients nationwide by offering patients medically unnecessary diabetic supplies and topical creams. Even though many patients rebuffed the solicitation attempts, 4M Pharmaceuticals and its subsidiaries allegedly billed the patient’s insurance plan anyway, including one instance where 4M Pharmaceuticals billed for prescriptions dispensed after a patient’s death. 4M Pharmaceuticals also allegedly sent fax requests for prescriptions that patients did not authorize and sent prescription requests to doctors for deceased patients.

The indictment alleges that as a result of the false claims, 4M pharmacies collectively received over $134 million in payments from Medicare and other healthcare benefit programs that were then used to pay for a $1.5 million residence, $15 million in gambling and casino expenses, and a Ferrari and Bentley.

Read the USAO’s press release here.

Physician Agrees To Pay $350,000 To Resolve False Claims Act and Controlled Substances Act Allegations

Dr. Hugo A. Rojas of San Antonio, Texas agreed to pay $350,000 to resolve allegations that he violated the False Claims Act and the Controlled Substances Act.

According to the USAO’s press release, Dr. Rojas allegedly submitted claims to Medicare for reimbursement of services rendered to Medicare beneficiaries when Dr. Rojas was traveling outside of Texas. These services were allegedly instead provided by mid-level practitioners employed by Dr. Rojas. The government also alleges that Dr. Rojas violated the Controlled Substances Act by: (1) pre-signing prescriptions for controlled substances that were provided to patients when Dr. Rojas was traveling outside of Texas; (2) issuing prescriptions for controlled substances without having examined the patients prior to providing the prescription; and (3) issuing prescriptions for controlled substances for patients who were examined by non-physician personnel.

Read the USAO’s press release here.

Landlord Agrees to Pay $128,000 to Resolve False Claims Act Allegations

Dmitry Royzman of Pennsylvania agreed to pay $128,000 to resolve allegations that he violated the False Claims Act for illegally claiming subsidies from the U.S. Department of Housing and Urban Development by renting a subsidized apartment to his mother-in-law.

According to the USAO’s press release, Royzman allegedly participated as a landlord in the Housing Choice Voucher Program (HCVP), which provides rental subsidies for eligible low-income tenants, and is commonly known as Section 8 housing. Royzman is alleged to have falsely certified that the assisted tenant in his rental property was not an immediate relative, even though the sole tenant was his mother-in-law, which precluded his receipt of HCVP rental subsidies. The settlement contains no admission of liability.

Read the USAO’s press release here.

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