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New Jersey Pharmacy At Center Of A $33 Million Health Care Fraud Case


As the Allegiant Experts Blog has long exposed, submitting fraudulent claims to Medicare can result in significant consequences. Among such ramifications are indictments and convictions to the tune of decades in prison. As reported by the District of New Jersey branch of the U.S. Attorney's Office this week, two pharmacy executives and one pharmacist have been arrested. They were arraigned on charges of defrauding Medicare and TRICARE.


69 year-old, William B. Welwart, 35 year-old, Ethan B. Welwart and 62 year-old, Gary Kaczka are all accused of submitting fraudulent claims for medically unnecessary prescriptions. The Welwerts operated pharmacies include Edison, New Jersey’s Apogee Bio-Pharm LLC. William was the CEO and owner of Apogee while Ethan was the director of operations. He was also the purported owner of additional pharmacies that were used to commit health care fraud.


Kaczka was a pharmacist-in-charge at Apogee.


Each defendant has been charged with conspiracy to commit health care fraud and wire fraud, and health care fraud. There are 22 indictments in all. In addition to the fraud charges, the pharmacy executives are also charged with paying and conspiring to pay illegal kickbacks. This violates the federal anti-kickback statute. At present, all three men have been released on $250,000 bond.


The indictment contends that between January 2017 and December 2020, the defendants and others agreed to engage in a scheme to defraud insurance payors. They included both Medicare and TRICARE. The scheme involved working with marketing companies to generate medically unnecessary prescriptions through a telemarketing and telemedicine scheme.


The Welwarts and others also agreed to pay kickbacks.


The marketing companies received kickbacks in exchange for referring prescriptions for expensive medications to the pharmacies. As part of the scheme, the participating companies targeted Medicare and TRICARE beneficiaries for expensive drugs. The individuals were contacted by phone and pressured into agreeing to try the medications. Pain creams, scar creams, eczema creams and migraine medication were among the medications being pushed.


“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,” details the U.S. Attorney’s Office report, “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 directed the prescriptions to pharmacies, including Apogee.


They received kickbacks, as a result. The prescriptions were then filled and reimbursement was sought from federal health care benefit programs, including Medicare and TRICARE. Apogee and the other pharmacies then paid a portion of each reimbursement to the marketing companies as a kickback. The scheme cost Medicare and other federal health care benefit programs over $33 million.


The health care fraud and wire fraud conspiracy charges as well as the wire fraud charges carry a maximum potential penalty of 20 years in prison. The health care fraud charges and the charges of payment of illegal kickbacks are punishable by a maximum potential penalty of 10 years in prison. The charge of conspiracy to violate the Anti-Kickback Statute carries a maximum potential penalty of five years in prison.


Are you an attorney who is currently working a health care fraud case?


The clinical experts at Allegiant Experts can help you! We coordinate and support courageous whistleblowers that shine lights on fraud, waste and abuse. Contact us today to schedule a complimentary consultation. Please don’t hesitate to give us a call at 407-217-5831. You may also email us at info@allegiantexperts.com.

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