Pharmaceutical company owners admit $38 million health care fraud scheme

Samantha Zaretzky and Lee Nichols

Two owners of a New Jersey pharmaceutical marketing company admitted their roles in a $38 million compounded medication health care fraud scheme.

Samantha Zaretzky, 42, of Wayne, and Lee Nichols, 43, of Fair Haven, pleaded guilty by videoconference before U.S. District Judge John Michael Vazquez to separate informations charging each with one count of conspiracy to commit health care fraud.

According to documents filed in this case and statements made in court, Zaretzky and Nichols exploited the manner in which health insurance plans processed, screened, and paid for customized drugs known as “compounded medications,” causing tens of millions of dollars of losses to several health insurance plans over two years through their company Synergy Medical LLC.

Zaretzky and Nichols pocketed millions of dollars through this compounding fraud scheme.

Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient.

Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a medical professional determines that an FDA-approved medication does not meet the health needs of a particular patient.

From April 2014 to June 2016, Zaretzky and Nichols used Synergy as a platform through which they could market prescription-based compounded medications without regard to whether a health insurance beneficiary actually needed such medication or whether an FDA-approved medication would have been appropriate and sufficient. 

Zaretzky and Nichols and their conspirators determined which combination of compounded ingredients was most financially lucrative.

Through their sales representatives, they recruited health insurance beneficiaries who were willing to obtain these expensive, but medically unnecessary, compounded medications before a medical professional had evaluated the beneficiaries’ unique and individualized need for the medications.

After convincing the beneficiaries to obtain a pre-formulated compounded medication, in many cases, Zaretzky, Nichols, and their sales representatives steered beneficiaries to a medical professional with whom the beneficiaries had no prior doctor-patient relationship, such as a telemedicine company. 

Although the beneficiaries did not have a prior relationship with the telemedicine doctors, Zaretzky and Nichols paid that company for consulting with the beneficiaries.

On at least one occasion, Zaretzky and Nichols paid an advanced practice nurse, whose license was inactive, to write prescriptions in exchange for cash.

Once those medical professionals issued the prescriptions, Zaretzky and Nichols ensured that the prescriptions were steered to compounding pharmacies that paid them a kickback.

The health care fraud conspiracy charge carries a statutory maximum prison sentence of 10 years and a fine of $250,000 or twice the gross gain or loss from the scheme, whichever is greatest. Sentencing is scheduled for April 23, 2023.

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