Telehealth fraud: Tampa pharmacy owner faces 10 years for $931M conspiracy

The U.S. Department of Justice announced Monday that four people and one company have recently pleaded guilty in a telemedicine pharmacy healthcare-fraud conspiracy that allegedly lasted for years.

The group was charged with a conspiracy to defraud pharmacy benefit managers out of $174,202,105 by submitting $931,356,936 for fraudulent prescriptions purchased from a telemarketing company.

“Telemarketing fraud is a major threat to the integrity of government and commercial insurance programs,” said Derrick L. Jackson, special agent in charge at the U.S. Department of Health and Human Services’ Office of Inspector General in Atlanta.

“After improperly soliciting patient information, these marketing companies obtained approvals through contracted telemedicine prescribers, then sold those costly prescriptions to pharmacies in exchange for kickbacks,” Jackson continued.


In a written plea agreement on Monday, Larry Everett Smith, a Tampa-based pharmacy owner, admitted to conspiring with Scott Roix, Mihir Taneja, Arun Kapoor and several companies to defraud pharmacy benefit managers into paying for fraudulent prescriptions. 

Smith agreed to pay restitution of nearly $25 million and forfeit about $3 million. He faces up to 10 years in prison.

According to court documents, the defendants set up a telemedicine scheme in which one company, HealthRight, solicited insurance coverage information and prescriptions from consumers across the country from 2015 through 2018.

“The indictment states that doctors approved the prescriptions without knowing that the defendants were massively marking up the prices of the invalidly prescribed drugs, which the defendants then billed to private insurance carriers,” wrote the Justice Department in an October 2018 press release.

Roix and HealthRight had already pleaded guilty in September 2018 to conspiracy to commit healthcare fraud for their roles in the incident, agreeing to pay restitution of $5 million. Like Smith, Roix could be sentenced to up to 10 years in prison.

Mihir Taneja, Arun Kapoor, Maikel Bolos and Sterling-Knight Pharmaceuticals also filed guilty pleas in December 2020, with Taneja, Kapoor and Sterling-Knight agreeing to pay nearly $21 million in restitution and Sterling-Knight forfeiting $6 million. Taneja and Kapoor could each spend three years in prison, while Bolos faces a potential five-year term.

“The protection and integrity of our health care programs are vital to the citizens they serve. Many Tennesseans rely on these health care programs to maintain a healthy quality of life, and it is critical we protect the viability of these programs,” said U.S. Attorney J. Douglas Overbey in a statement.


Concerns about potential fraud have loomed large during the COVID-19 pandemic, with telehealth rates spiking in response to concerns about social distancing. 

Although most of the healthcare-related crimes in the last year have been related to ransomware, security experts have also noted the potential role data theft can play in billing fraud in the context of virtual care.

“Mass adoption of [telehealth] technology will lead to new cybercrime focus, with an emphasis on stealing patient data to enable fraud, target health data in ransomware attacks, trick patients in social engineering schemes, and target remote patient monitoring devices,” wrote the authors of a Booz Allen Hamilton report in October 2020.


“Healthcare fraud is a severe crime problem that impacts every American,” said Special Agent in Charge Joseph Carrico of the FBI Knoxville Field Office in a statement.

“The FBI, with its law enforcement partners, will continue to allocate resources to investigate these crimes and prosecute those that are intent on defrauding the healthcare system,” Carrico continued.


Kat Jercich is senior editor of Healthcare IT News.
Twitter: @kjercich
Email: [email protected]
Healthcare IT News is a HIMSS Media publication.

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