Langhorne Man Admits Role In $35 Million NJ Pharma Scheme

BUCKS COUNTY, PA — A Langhorne man was arrested after admitting to his role in a massive compounded-medication kickback scheme, which was being run out of a pharmacy in Clifton, New Jersey.

Robert Schneiderman, 79, pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to two counts of an indictment charging him with one count of conspiracy to commit health care fraud and one count of conspiracy to violate the Anti-Kickback Statute., according to U.S. Attorney Philip R. Sellinger. The first count alone carries a maximum penalty of 10 years in prison.

According to court documents, Schneiderman and his conspirators used Main Avenue Pharmacy, a mail-order pharmacy with a storefront in Clifton, New Jersey, to run a fraud and kickback scheme involving compounded drugs like scar creams, pain creams, migraine mediation, and vitamins, according to a statement from the United States Attorney's Office. Schneiderman was the President of Main Avenue Pharmacy and was a founder and CEO of its corporate parent.

The scheme involved identifying compounded drugs that would "yield exorbitant reimbursements from health insurers", including both federal and commercial payers. The company would create large prescription pads with formulas for compounds, which increased the likelihood that the doctor would not alter the high-paying formula.

Physicians who signed prescriptions that were filled at Schneiderman's company almost never examined or spoke to the patients involved. Once filled, Main Avenue Pharmacy was able to submit claims to health care benefit programs for reimbursement, utilizing Medicare and Tricare in the process.

The company would pay kickbacks to marketers involved in their process. Co-payments for patients whose prescriptions were being refilled on a regular basis were waived as part of the deal, which secured patients keeping their prescriptions even if they didn't need them. Court documents found that Main Avenue Pharmacy had falsified money orders to make it look like patients had paid their co-payments when they had not.

The company was found to have received over $34 million in reimbursements from health care benefit programs, most of which occurred from 2014 to 2016. Approximately $8 million of that total was paid by federal payers, and Schneiderman himself earned over $400,000 through the course of the scheme.

The count of conspiracy to violate the Anti-Kickback Statute carries a maximum penalty of five years in prison. Both counts also are punishable by a maximum fine of $250,000 fine, or twice the gross gain or loss from the offense, whichever is greatest.

Sentencing in Schneiderman's case is scheduled for Friday, Sept. 16.