Man Pleads Guilty In $24M Kickback Scheme Involving Edison Pharmacy: Feds

EDISON, NJ – A man from Ohio pleaded guilty to committing health care fraud and running a kickback scheme involving a pharmacy in Edison, authorities said.

James D. Feeley, 46, of Grafton, Ohio, pleaded guilty before U.S. District Judge Esther Salas to conspiracy to violate the federal anti-kickback statute and conspiracy to commit health care fraud.

From June 2017 through September 2020, Feeley participated in a scheme with pharmacies, telemedicine companies, and doctors to submit false claims to health care benefit programs, including Medicare and TRICARE, based on a circular scheme of kickbacks and bribes, according to court documents.

Feeley controlled several marketing companies through which he and his conspirators identified Medicare and TRICARE beneficiaries to target for expensive drugs. The marketing companies spoke to beneficiaries by phone to pressure them to agree to try expensive medications, regardless of medical necessity, court documents said.

The employees would deliberately conceal the name of the prescribing doctor – whom the beneficiary had never met before – to increase the likelihood that the beneficiary would agree to accept the medications. Portions of the telephone calls were recorded.

Feeley and his companies then paid kickbacks to telemedicine companies, which in turn paid kickbacks to doctors, to obtain prescriptions for the medications, according to court documents.

Feeley, the marketing companies, and pharmacies chose particular drugs for the prescriptions largely based on reimbursement amount and not medical need.

The pharmacies submitted claims for reimbursement to Medicare and TRICARE, and then sent a portion of the proceeds to Feeley and his companies as payment. In total, more than $24 million in fraudulent reimbursements were filed, authorities said. Feeley also received kickbacks and bribes totaling more than $6 million from Apogee Bio Pharm LLC, in Edison.

William Welwart, Ethan Welwart, and Gary Kaczka from Apogee are charged with health care fraud and related offenses in a separate indictment, authorities said.

Elan Yaish, former president of Apogee, previously pleaded guilty to conspiracy to violate the federal anti-kickback statute.

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