A West Los Angeles pharmacy and its owner pleaded guilty Friday to federal criminal charges stemming from a scheme in which millions of dollars in reimbursements for compounded drugs were generated through the payment of illegal kickbacks for referrals and by fraudulently paying patients’ co-payments.
Navid Vahedi, 41, of Brentwood, pleaded guilty to one count of conspiracy to commit health care fraud and payment of illegal remunerations. He also entered a guilty plea to the felony offense on behalf of his business, Fusion Rx Compounding Pharmacy.
The pharmacy was a provider of compounded drugs, which are tailor-made products that doctors may prescribe when the FDA-approved alternative does not meet the health needs of a patient.
Vahedi and his pharmacy pleaded guilty before U.S. District Judge Christina A. Snyder, who scheduled a sentencing hearing on June 28, Vahedi faces up to five years in federal prison and will pay restitution of more than $4 million.
In addition to his obligation under the plea agreement to pay restitution, Vahedi agreed to forfeit $1.3 million. Under the terms of the agreements, Fusion Rx has also agreed to pay a fine sufficient to divest itself of all its remaining assets, Vahedi agreed to have his pharmacist license revoked, and both Vahedi and Fusion Rx will be excluded from federal health care programs such as Medicare and Medicaid going forward.
Vahedi admitted routing millions of dollars in kickback payments through the businesses of two marketers to steer prescriptions for compounded drugs to Fusion Rx. As part of the scheme, Vahedi and the marketers provided physicians with preprinted prescription script pads that offered options to maximize the amount of insurance reimbursement.
From May 2014 to at least February 2016, Fusion Rx received about $14 million in reimbursements on its claims for compounded drug prescriptions. As part of its contracts with various insurance networks, the pharmacy was obligated to collect co-payments from patients.
Because the co-payments might discourage patients from requesting expensive and potentially unnecessary compounded drug prescriptions, Fusion Rx did not collect co-payments with any regularity and, in other instances, provided gift cards to patients to offset the amount of the co-payments, according to documents filed in Los Angeles federal court.
After an audit raised concerns that Fusion Rx’s failure to collect co-payments would be discovered, Vahedi directed Fusion Rx funds to be used to purchase American Express gift cards, which were then used to make co-payments for certain prescriptions without the patients’ knowledge.
Fusion Rx then submitted claims on those prescriptions to various insurance providers, falsely representing that patients had paid the required co-payments.
The two marketers involved in the scheme — Joshua Pearson, 41, of St. George, Utah, and Joseph Kieffer, 40, of West Los Angeles — previously pleaded guilty and are scheduled to be sentenced by Snyder on May 24 and June 28, respectively.