Four people involved in a multimillion-dollar scheme to defraud state health benefits programs were sentenced to federal prison Wednesday.
Michael Pilate, 43, a former Pleasantville school guidance counselor, was sentenced to 18 months, for his role in the conspiracy.
The Williamstown man pleaded guilty in February 2018, to stealing more than $3 million.
Tara LaMonaca, a former pharmaceutical sales representative from Linwood, was sentenced to eight months in prison.
Andrew Gerstel, a former pharmaceutical sales representative from Galloway Township, was sentenced to 12 months and one day in prison.
Gerstel, 43, admitted to receiving more than $184,000 during his plea in November 2017.
George Gavras, formerly a pharmaceutical sales representative from Moorestown, was sentenced to 13 months in prison.
Gavras, 43, admitted to getting more than $204,000 when he pleaded in September of 2017.
From January 2015 through April 2016, Pilate, LaMonaca, Gavras and Gerstel, and others, served as recruiters in the conspiracy and persuaded individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the informations as the “Compounding Pharmacy.”
The conspirators learned that 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.
The conspirators also learned that some New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers, had insurance coverage for these particular compound medications. An entity referred to in the informations 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 of New Jersey for the amounts paid.
The conspirators recruited public employees and other individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain compounded medications from the Compounding Pharmacy without any evaluation by a medical professional that they were medically necessary. In return, the pharmacy paid the conspirators a percentage of each prescription filled and paid by the Pharmacy Benefits Administrator, which was then distributed to other members of the conspiracy.
Once they had recruited an employee covered by the Pharmacy Benefits Administrator, the conspirators would obtain the employee’s insurance information and fill out a Compounding Pharmacy prescription form.
They would select the compounded medications that paid the most, without regard to their medical necessity. They would then get the prescriptions signed by doctors and other qualified health professionals who never saw the patients or evaluated whether the patients had a medical necessity for the compounded medication.
The prescriptions were then faxed to Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator.
According to the informations, the Pharmacy Benefits Administrator paid Compounding Pharmacy more than $50 million for compounded medications mailed to individuals in New Jersey.
In addition to the prison terms, the judge sentenced Pilate, LaMonaca and Gerstel each to three years of supervised release, and Gavras to two years of supervised release.
As part of their plea agreements, Pilate must forfeit $392,684 in criminal proceeds and pay restitution of $3.49 million; LaMonaca must forfeit $89,855 in criminal proceeds and pay restitution of $523,831; Gavras must forfeit $204,002 in criminal proceeds and pay restitution of $677,815; and Gerstel must forfeit $184,389 in criminal proceeds and pay restitution of $483,946.
