On November 4, 2015, the president and pharmacist-in-charge of Prescriptions R Us, Vladimir Kleyman was sentenced to 20 months in prison by U.S. District Court Judge Joseph H. Rodriquez in Camden, N.J., for paying over $50,000 in bribes to physicians for referring pain cream prescriptions and defrauding private and federal health care benefit programs out of hundreds of thousands of dollars. In addition to the prison term, Kleyman was ordered to pay $1,036,659 in criminal restitution and forfeiture and civil penalties and will be required to serve three years of supervised release. He must also pay $2 million in federal income taxes, interest, and penalties for the 2013 tax year.

According to the criminal complaint and statements made in court, from January 2013 to January 2014, Kleyman provided an employee with more than $50,000 in cash and checks to provide bribes to a physician for referring prescriptions for a compounded pain cream to Prescriptions R Us. Under the federal Anti-Kickback law, it is illegal to offer or pay remuneration to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs for which payments are made under a federal health care program including Medicare, Medicaid and TRICARE.  The compounded pain cream prepared by Prescriptions R Us in this case contains several components, including ketamine (a Schedule III non-narcotic), lidocaine and diclofenac.

In a series of meetings in late 2013 between Kleyman and his employee (who was wearing a wire), Kleyman acknowledged that he arranged for the employee to receive the cash and checks with the understanding it would be used to pay bribes for referrals to Prescriptions R Us. Kleyman also admitted he defrauded health insurance carriers by making false and misleading representations about the quantity of the pain cream that he dispensed and the frequency with which he dispensed it. As a result, private insurance companies paid the pharmacy hundreds of thousands of dollars. Kleyman further admitted that he knew certain private insurance carriers as well as federal health insurance programs including Medicare, did not cover the compounded pain cream, but he dispensed the pain cream and obtained payment from private insurance carriers and Medicare by falsely representing the pain cream to be other covered items.

The employee in this case acknowledged that beginning in February 2013, he participated in paying bribes to the physician on behalf of Kleyman and Prescriptions R Us. The employee cooperated with the investigation, and has agreed to plead guilty for his role in the case.

The physician receiving the bribes was Dr. James Morales, a sports medicine doctor in Toms River, N.J.   Dr. Morales pled guilty to accepting more than $60,000 in cash bribes in return for referring pain cream prescriptions and falsifying health records on behalf of Prescriptions R Us.

In a separate civil settlement with the Justice Department and the Office of Inspector General of the Department of Health and Human Services, Kleyman paid $160,000 to resolve allegations of receiving Medicare funds through referrals and orders by physicians he paid.

For further information on the subject matter of this alert, please contact the following FisherBroyles attorneys.

Brian E. Dickerson

Nicole Hughes Waid

Anthony J. Calamunci