BIRMINGHAM, ALABAMA – A federal jury today convicted two defendants in a long-running investigation into a prescription drug billing scheme involving a Haleyville, Ala.-based pharmacy, Northside Pharmacy doing business as Global Compounding Pharmacy. U.S. Attorney Prim F. Escalona, Federal Bureau of Investigation Special Agent in Charge Johnnie Sharp, Jr., U.S. Department of Health and Human Services, Office of Inspector General, Special Agent in Charge Derrick L. Jackson, Defense Criminal Investigative Service Special Agent in Charge Cynthia Bruce, United States Postal Inspector in Charge, Houston Division Adrian Gonzalez, and Internal Revenue Service-Criminal Investigation Acting Special Agent in Charge Andrew Thornton.
The jury returned its guilty verdict against Jessica Linton, 37, of Clearwater, Florida, the manager of the billing team at Global, and John Gladden, 50, of Tallahassee, Florida, a district manager supervising sales representatives at Global, after five days of testimony before Chief U.S. District Judge L. Scott Coogler. Linton was convicted on one count of conspiracy, thirteen counts of health care fraud, three counts of mail fraud, and seven counts of aggravated identity theft. Gladden was convicted on one count of conspiracy, six counts of health care fraud, one count of mail fraud, and one count of aggravated identity theft.
“Today’s convictions brought closure to a long-running illegal prescription drug billing scheme,” said U.S. Attorney Escalona. “These convictions add to the number of defendants who have previously pleaded guilty. Thank you to the prosecutors and our law enforcement partners for their continued efforts in bringing these defendants to justice. We especially want to thank the jury for their time and service.”
Linton and Gladden participated in a scheme to cause the pharmacy they worked at to bill for medically unnecessary prescription drugs. Linton served as the person in charge of billing for the drugs Global made, marketed, and sold; Gladden served as a district manager who supervised a team of sales reps. The scheme involved directing employees to get medically unnecessary drugs for themselves, family members, and friends, altering prescriptions to add non-prescribed drugs, automatically refilling prescriptions regardless of patient need, routinely waiving and discounting co-pays to induce patients to obtain and retain medically unnecessary drugs, and billing for drugs without patients’ knowledge. When prescription drug administrators attempted to police this conduct, conspirators evaded and obstructed those efforts, including by providing false information in response to audits and diverting their billing through affiliated pharmacies. The scheme targeted multiple health insurance plans, including the pharmacy’s Blue Cross Blue Shield of Alabama plan, as well as plans providing health insurance to the elderly, disabled, members of the military, and veterans—Medicare, TRICARE, and CHAMPVA, among others.
Evidence showed that the scheme resulted in pharmacy benefit managers’ paying Global nearly $50 million in claims in just a two-year period. During this period, prescribers who were either paid cash to write prescriptions or whose spouses were employed as sales reps by Global wrote over $13.3 million in Global prescriptions. In addition, Global was paid over $8.4 million for prescriptions obtained by Global employees. For instance, in August 2014, a provider, who was paid cash to write Global prescriptions, wrote a prescription for over one pound of compound cream indicated to treat yeast, ring worm, athlete’s foot, or fungus for a Global employee who was not that prescriber’s patient. Global was paid over $30,000 for that tube of cream. The provider and employee pleaded guilty prior to trial.
The maximum punishment for conspiracy to commit health care and mail fraud is 20 years in prison and a $250,000 fine. The maximum penalty for health care fraud is 10 years in prison and a $250,000 fine. The maximum penalty for mail fraud is 20 years in prison and a $250,000 fine. The penalty for aggravated identity theft is an additional two years in prison.
The FBI, HHS-OIG, DCIS, USPIS, and IRS-CI investigated the cases. Assistant U.S. Attorneys J.B. Ward, Edward Canter, and Don Long prosecuted the case. The Veteran Affairs Office of Inspector General Criminal Investigations Division aided in the investigation.