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Two Pharmacy Executives and Pharmacist Indicted for Health Care Fraud, Wire Fraud, and Kickback Cons

Late last month, the U.S. Attorney's Office, District of New Jersey announced the indictment of 69-year-old William B. Welwart of Staten Island, New York, 35-year-old Ethan B. Welwart of Bolivar, New York, and 62-year-old Gary Kaczka of Saddle Brook, New Jersey for their alleged roles in defrauding Medicare and TRICARE by submitting claims for prescriptions that were medically unnecessary. The pharmacy executives, William and Ethan Welwart, have also been charged for paying and conspiring to pay illegal kickbacks.

The indictment states:

“From January 2017 to December 2020, the defendants operated pharmacies, including Apogee Bio-Pharm LLC in Edison, New Jersey. William B. Welwart was the CEO and owner of Apogee. Ethan B. Welwart was director of operations at Apogee and the purported owner of additional pharmacies used to perpetuate the scheme. Kaczka was a pharmacist-in-charge at Apogee. The defendants and others agreed to engage in a scheme to defraud insurance payors, including Medicare and TRICARE, by working with marketing companies to generate medically unnecessary prescriptions through a telemarketing and telemedicine scheme. The Welwarts and others also agreed to pay kickbacks to marketing companies in return for the marketing companies referring prescriptions for expensive medications to the pharmacies.

The marketing companies identified Medicare and TRICARE beneficiaries to target for expensive drugs and contacted the beneficiaries by telephone to pressure them to agree to try expensive medications, such as pain creams, scar creams, eczema creams, and migraine medication. The marketing companies then transmitted recordings of telephone calls with the beneficiaries, together with pre-marked prescription pads for particular drugs that would yield exorbitant reimbursements, to telemedicine companies. The marketers paid the telemedicine companies kickbacks for every beneficiary referred for a prescription, and the telemedicine companies paid doctors to approve the prescriptions. The marketing companies then directed the prescriptions to pharmacies, including Apogee, with which they had kickback arrangements. The pharmacies filled the prescriptions and sought reimbursement from federal health care benefit programs, including Medicare and TRICARE. The pharmacies, including Apogee, then paid a portion of each reimbursement to the marketing companies as a kickback. The defendants and their conspirators caused a loss to Medicare and other federal health care benefit programs of over $33 million.”

As always, they are presumed innocent until proven guilty.

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