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Pleasantville guidance counselor admits to role in multimillion-dollar prescription benefits fraud

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A Pleasantville schools guidance counselor admitted in Camden federal court to defrauding state insurers out of more than $3 million as part of a far-reaching conspiracy. Michael Pilate, 39, of Williamstown, is the 13th person to plead guilty in the multimillion dollar scheme in which doctors would prescribe unnecessary and expensive compound medications to unseen patients to make money. “Pilate was part of a network of recruiters, doctors, and state and local government employees who abused their access to state benefits plans to rack up millions in reimbursements for medically unnecessary prescriptions, all while profiting off the backs of New Jersey tax payers,” U.S. Attorney Craig Carpenito said. “The health care fraud committed by this individual and his co-defendants costs us all, and cannot be tolerated,” said New Jersey Attorney General Gurbir Grewal. “We appreciate the vigorous pursuit of this conspiracy by our partners at the U.S. Attorney’s Office, and we're glad to collaborate in the effort.” Pilate is only the second state worker to plead. Atlantic City Firefighter Michael Pepper previously pleaded guilty, after quitting his job. Sources have said there are numerous public workers involved, including in Margate, where prescription costs quadrupled. “Today’s plea is a direct result of the commitment by federal, state and local law enforcement to aggressively pursue and charge those who willingly defraud our citizens," stated Special Agent in Charge Timothy Gallagher of the Newark FBI Field Office. “Health Care fraud costs our country billions each year, which is not just absorbed, it is passed down to the consumer. We will remain vigilant to assure that unscrupulous individuals are brought to justice." The conspiracy happened from January 2015 through April 2016, and included recruiting individuals to get expensive and medically unnecessary compounded medications from an out-of-state pharmacy, which has been identified in court papers only as the “Compounding Pharmacy.” Certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply. An entity referred to in the information as the “Pharmacy Benefits Administrator” provided pharmacy benefit management services for the State Health Benefits Program, which covers qualified state and local government employees, retirees, and eligible dependents, and the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents. The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the state. Pilate agreed to personally receive compounded prescription creams that he did not need without being examined by a doctor and helped recruit other public employees and individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain medically unnecessary medications from the Compounding Pharmacy, according to the plea. Pilate secured insurance information from the individuals and passed it along to another conspirator, who had a doctor sign the prescriptions without examining the individuals. The pharmacy would pay a percentage to one of Pilate’s conspirators for each prescription. Pilate paid individuals with the insurance coverage $500 as a reward, according to the documents. As part of the plea agreement, Pilate must forfeit $392,684.20 in criminal proceeds he received for his role in the scheme and pay restitution of at least $3,493,170.18. He faces as long as 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. He is set to be sentenced May 11. Twelve other conspirators – Pepper, Matthew Tedesco, Robert Bessey, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala, Michael Neopolitan, Andrew Gerstel, and Timothy Frazier – have pleaded guilty to their roles in the scheme and are awaiting sentencing.


Lynda Cohen

BreakingAC founder who previously worked in newspapers for more than two decades. She is an NJPA award-winner and was a Stories of Atlantic City fellow.




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